How Planning Your Estate Can Help You Prepare for the Future

During your life you will likely accumulate money, property and other items of value—these are your assets. Taken together, these assets — also known as your estate — paint a picture of the wealth you’ve built over time. And rather than lose all you’ve built when you die, planning your estate ahead of time can help you preserve your wealth by transferring your assets to your children or other beneficiaries.

Grandparent holding child

What is estate planning?

Estate planning refers to the process of deciding where and how assets are distributed once the original asset holder is incapacitated or has passed away. Typically, the process involves professional advisors such as your lawyer, accountant, financial planner and others.

Why do I need an estate plan?

You have spent a lifetime building wealth; planning your estate helps you protect it. Estate planning can help you define your legacy on your terms by determining when and how to transfer wealth or assets to your beneficiaries and by preparing for the unexpected.

How do I begin planning my estate?

To start the estate planning process, determine who you want to protect, what you want to protect and the legacy you plan to leave. You should gather and store all essential documents in a safe location. This includes legal documents and other important papers.

Legal documents:

  • Medical directive: A legal document stating your preferences for care if you are unable to make decisions for yourself.
  • Durable power of attorney for finances, health care or HIPAA release: A legal document that enables someone to act on your behalf if you become incapacitated, typically to handle financial and medical affairs.
  • Your will and/or trust: A will is a legal document that directs who will inherit your assets in the event of your death, whereas a trust allows a legal representative to use your estate according to your instructions.  

Other important papers:

  • Birth certificate.
  • Marriage license.
  • Divorce papers.
  • Updated beneficiary designation.
  • Life insurance.
  • Long-term care insurance.

Although estate planning requirements can vary by state, ensuring you have these documents safe and accessible will make it easier to transfer your estate when the time comes.

Who can help me estate plan?

Once you’ve decided to create an estate plan and gathered all important documents, it’s time to contact a trusted advisor to create your will or trust — if you don’t already have one — and set your power of attorney. You can contact legal and financial professionals who specialize in estate planning, and/or learn more about legal service benefits from your employer.

There are affordable options available, such as:

  • Pro bono legal services: Free legal services for low-income individuals.  
  • Low bono affordable legal services: Low-cost legal services for those of moderate means who do not qualify for pro bono assistance.

Other estate planning resources

Last reviewed: July 18, 2024

My Home in your inbox

Sign up to receive resources, tools and tips about buying, owning, refinancing, selling and renting a home in your inbox.