A guide to estate planning: 7 key steps to prepare for the future

By Joseph M. Dionisio, CFP®, Senior Wealth Strategist I Citizens Private Wealth

_{As a Senior Wealth Strategist, Joseph has more than three decades of experience working with high-net-worth individuals, families and business owners to provide comprehensive personal financial planning services.}

Estate planning is one of the most meaningful ways to prepare for the future and protect your loved ones — no matter what happens to you. Regardless of your age or amount of wealth, it’s never too early to get started.

Estate planning is all about creating a plan for how you want to control who receives your assets, guardianship(s) and medical care if you become unable to make decisions for yourself or pass away. It can make it easier on your family to know what your wishes are for important decisions, providing clarity and peace of mind for your loved ones.

The following serves as a guide for understanding estate planning, the benefits of creating an estate plan and what you’ll need to get started.

What is an estate plan?

Your estate plan serves as a record of how you want your assets disbursed after death. It typically involves creating a will (and revocable trust) which designates how your assets will be distributed and formally names the beneficiaries of your estate.

Your estate encompasses everything you own, including physical assets and digital records. Your home, car, retirement plan, life insurance policy, bank accounts, licenses and even your social media accounts are all considered a part of your estate. Depending on the size and complexity of the estate, other entities, such as a trust, may be established to help minimize the taxes your beneficiaries will pay on inherited amounts.

Your estate plan should also include a heath care proxy or directives, which state your requests if you become incapacitated and are unable to make health care decisions on your own. If you have any dependents or young children, estate planning should also include a plan for how they will be taken care of and financially supported.

Why should you create an estate plan?

Referred to as intestate, state laws generally dictate how to distribute your assets if you pass away without a will or other estate plan documentation. This can lead to a long, drawn-out process, and the end result may not match your expectations. Having a clear estate plan can help prevent unnecessary family disputes or putting loved ones in an uncomfortable position around making key decisions on your behalf.

Some advantages of a well-crafted estate plan include:

• Distribution of property according to your wishes: An estate plan provides legal instructions for handling your estate. Within your will, you can make general statements about the distribution of assets or bequeath specific items, such as your wedding ring or your home, to the people or organizations you want to have them.
• Determination of how to take care of surviving family members: If you are a caregiver to your children or other dependents, you can leave directions for their care and set aside funds for their support. Within your will, you can also name guardians for your children should you and all other legal caregivers die before they they reach the age of majority (age 18 – 21, depending on the state).
• Preferences for medical treatment: You may provide advance health care directives or a living will to lay out your preferred course of action should you become unable to communicate your wishes and require medical care.
• Power of attorney designation: An estate plan can include naming someone to serve as your legal representative and decision-maker if you become incapacitated.
• Minimizing estate taxes paid by your survivors: A trust and estate attorney may be able to help you create a will that passes your assets on in a way that limits taxes owed by the estate and its beneficiaries.
• Formation of trusts that avoid probate unless part of a will: By creating certain types of trusts before your death, you'll allow your assets to pass directly to your beneficiaries without the need to go through probate.

7 key steps in the estate planning process

The complexity of your estate plan depends on many factors, including your total assets, type of assets, current tax laws, your wishes or intent and the number of beneficiaries. If you're not sure how to start the estate planning process, here's a checklist to consider:

1. Make a list of your assets and debts

Estate planning begins with the important step of taking inventory. You'll include items such as your house, car and investments, but don't forget the not-so-obvious as well. Tangible personal property, such as valuable artwork, musical instruments and rare collectibles like baseball cards, should be included in your will if you would like them to be distributed in a particular way. Also, any ownership interest or investment in a business should be addressed within your estate plan.

2. Choose an executor

Typically a close family member or loved one, the executor (also referred to as a personal representative in some states) carries the fiduciary responsibility to distribute your assets according to the instructions in your will. They also hold the responsibility of arranging for the payment of your outstanding debts and other financial obligations, such as bills and taxes. Some additional executor duties include maintaining your property after your death until it is sold, and, if necessary, they may be asked to represent your estate in court.

If you do not have a will or fail to name an executor, the probate court will name an estate administrator. This person is likely to be someone close to you, such as your spouse or an adult child.

3. Draft and execute a will and revocable trust

Your will comprises the foundation of your estate plan. Once you know the value and contents of your estate and have chosen an executor, you can work with a trust and estate lawyer to draft your will. Within this document, you'll state your wishes about the distribution of your assets to beneficiaries, how to handle tangible personal property, specific bequests and including donations to charities.

You'll also name a guardian for your minor children if needed. The benefit of using a legal professional to create your will is that they'll recommend including certain necessary language for your particular situation or in accordance with your state's laws.

You may also want to consider creating a revocable trust, also known as a living trust. This is a legal arrangement in which a grantor places assets into a trust during their lifetime. Typically, the grantor also serves as a trustee, retaining control over the assets and the ability to modify or revoke the trust.

While a will outlines how assets should be distributed, a revocable trust can allow assets to bypass probate, making the distribution process more efficient. However, certain matters that can be handled in a will, such as naming a legal guardian for minor children, are not possible with a revocable trust. This is why a will and revocable trust are often used together to create a more comprehensive estate plan.

4. Make beneficiary designations

Did you know that not all assets are necessarily distributed based on the stipulations in your will? Some assets carry beneficiary designations that overrule your will. For example, if your spouse is a 100% beneficiary of your life insurance policy, they will receive the full proceeds even if you decide to portion out the rest of your estate differently. As you work through the estate planning process, it's a good idea to check the current beneficiaries you have listed on these types of accounts and update them as needed:

• Trusts
• Retirement accounts, such as an IRA or employer-sponsored 401(k)
• Life insurance plans
• Any transfer-on-death accounts

Naming a beneficiary ensures the funds can be immediately transferred to this chosen person or persons. They will not need to wait for a legal transfer of assets through probate or by the executor. It also ensures this person will receive the full funds from the account and won't be subject to any outstanding debts you have at the time of your death.

5. Choose an agent for your power of attorney

Assigning an agent for power of attorney allows them to legally stand in for you if you cannot act on your own behalf. A power of attorney may be called upon to make legal, financial or medical decisions, so you should choose someone who best understands what your preferences would be in these situations.

6. Plan for taxes, fees and other expenses

Estate planning also has tax considerations. The federal estate tax is a tax on the transfer of a person’s estate at death. In 2025, the IRS has an estate tax exemption of $13.99 million,¹ which means you could pass up to that amount to your heirs without paying any federal estate tax. Married couples can combine their exemptions, allowing them to transfer up to $27.98 million without owing federal estate tax.

While this law allows individuals to pass on a significant amount of wealth free of federal estate taxes, it is set to expire in 2026. If the law is not extended by Congress, the amount will drop to about $7.2 million. Also, in some cases, you may have a separate state estate or inheritance tax to consider.

There is also a federal gift tax that applies to assets or property that you transfer during your lifetime. In 2025, the annual gift tax exclusion allows you to give away up to $19,000 per year (per person, per donee) to any individual without typically needing to report it on a gift tax return.² Gifted amounts over the $19,000 annual limit must be reported to the IRS and the excess will be subtracted from the $13.99 million lifetime exemption, that applies to both gift and estate taxes.

Don’t forget about other local expenses needed to settle an estate too. Your local government will have a registrar, county clerk or probate court that charges fees to validate your will and create the paperwork needed to give your executor permission to make decisions. Additional fees may also be owed to the executor, an attorney and a tax preparer for their assistance.

To minimize both taxes and estate expenses, consider taking advantage of the annual gift tax exclusion or asking your attorney about placing your assets into a trust.

7. Review and revisit your plans

Even after you've signed the documents and stored them safely, you're not finished yet. Plan to review and update your estate documents again in the years to come. Anytime you have a major life event, such as getting married, divorced or having children or grandchildren you'll want to revisit your will and other estate documents. This also applies if there are any changes in the estate tax laws.

Estate planning FAQs

Still have questions about estate planning? Learn the answers to common questions below.

What is probate?

After your death, your estate passes through a process referred to as probate, which involves a special court or designated legal officer verifying your will. They will approve your executor and empower them to take any actions needed to settle your estate. If no executor exists, the court names an estate administrator.

During the probate process, a judge or other official may supervise the distribution of assets, payment of any debts and handling of personal affairs in accordance with the will. If no will exists, a judge will need to step in and order the distribution of assets according to state law.

How does life insurance factor into estate planning?

The death benefit from life insurance may help your beneficiaries pay living expenses or pay off debt obligations such as a mortgage. This can be particularly important if you're the primary wage earner. Because a life insurance beneficiary designation supersedes your will, consider who would need these funds and how they would be used when planning your estate. You also need to pay close attention to having the proceeds of your life insurance includable in your estate for estate tax purposes.

What is portability in estate planning?

"Portability" allows survivors to assume an unused estate tax exemption remaining after their spouse passes away. This means that any unused portion of the federal estate and gift tax exemption can be transferred between married couples as long as a proper election was made.

Estate planning can help give you peace of mind

Proper estate planning is a comprehensive process that ensures your wishes are honored when you pass away or if you become incapacitated. Creating an estate plan now will help ensure your loved ones are protected, your legacy is preserved and that you’re prepared for the unexpected. Find out how a Citizens Wealth Advisor* can help you plan for the future.

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