How to Start Estate Planning When You Have No Idea Where to Begin

Estate Planning Can Feel Overwhelming, But It Doesn’t Have to Be

They say everyone needs a will, but where do you even start? Can you open a Google document and say go, or do you need a lawyer? A lot of people delay estate planning because they assume it’s complex and expensive. But estate planning isn’t only for the wealthy. It protects your loved ones, ensures you’re in control of your medical and legal affairs, and you can start small.

In this guide, we will break down the estate planning process into simple, doable steps. No legal background is required.

Step 1: Understand What Estate Planning Really Means

Estate planning involves picking who makes decisions for you and who inherits your belongings. To put it simply, an estate plan is generally meant to:

• Protect your assets
• Clarify your healthcare and financial decisions
• Reduce confusion, conflict, and costs for your loved ones
• Decide guardianship for minor children

You may think estate planning is only for after your death, but it actually includes planning for many life decisions too, like what medical treatment you accept and who can close a real estate deal on your behalf.

What happens if you don’t have an estate plan

A will makes for a basic estate plan. Without a will, your death will prompt a lengthy probate process to begin. The probate court will have to review all of your assets and decide who gets what.

If you have any minor children but didn’t formally say who gets guardianship of them, the court will have to decide what happens to them. It is of utmost importance that you have a basic will that grants guardianship if you have any minor children since it is so life-changing.

With a will, you can make probate easier and less stressful for your loved ones.

Step 2: Take Inventory of What You Have

Assets and investments

Look through your assets. You can list them on a piece of paper or a spreadsheet for easier overview. List out your assets, car, savings, retirement accounts, and life insurance. Also remember to include your digital assets, such as cryptocurrency and social media accounts.

Debts

List out your financial obligations and debts, such as mortgages, loans, and credit cards. Your debts matter because they can impact your estate/actual assets. By knowing what you actually don’t have, you can better plan out your asset distribution.

Choose beneficiaries

The beneficiary is who (or what entity) receives your assets, inheritance, or life insurance death benefit.

Pro tip: Use an online estate planning checklist or spreadsheet to stay organized.

Step 3: Decide Who You Trust to Make Decisions

In an estate plan, several people are appointed to have legal, medical, and/or financial authority to make decisions on your behalf. These are:

Executor: The person or entity who will manage your estate after you pass away. The executor ensures your will and asset distribution plans are carried out. They also need to handle taxes and debts.

Power of attorney: Someone with power of attorney can handle finances or healthcare decisions if you’re incapacitated.

Guardians: Do you have any minor children or dependents? You need to appoint a guardian in your will. Otherwise, the court would choose who gets custody, and your minor children may be put into foster care.

Trustee: If you want to establish a trust to bypass probate or have specific asset goals, you will need to choose a trustee to manage the trust. Living trusts can be managed by yourself while you are alive.

Tip: Choose people who are responsible, honest, and good communicators. Don’t pick relatives by default. Your loved ones may not be financially responsible or able to react during emergencies.

Step 4: Create the Essential Documents

Last Will and Testament

Your will determines who inherits your property and who cares for any minor children. You can use accessible tools like LegalZoom to create one affordably online. A basic online will is the best way to start your estate plan.

Living Trust

Trusts are optional financial arrangements that let you avoid probate and keep your affairs private. You can create certain types of trusts for specific purposes. For example, charity trusts and dynasty trusts are useful for special legacy planning. A Special Needs Trust (SNT) is useful for dependents with any disabilities to ensure they still qualify for government benefits.

Power of Attorney (POA)

Signing a power of attorney grants your designated agent the authority to handle financial or legal decisions if you become incapacitated.

Healthcare Directive (Living Will)

An advance healthcare directive details your medical preferences and end-of-life care wishes, such as what life support you are willing to receive.

Beneficiary Designations

Choosing a beneficiary means your life insurance, retirement accounts, and/or bank accounts go directly to the right people. It is good to choose backup contingent beneficiaries in case the first beneficiary chosen cannot or refuses to receive the benefit.

Step 5: Protect Your Loved Ones Financially

A large component of estate planning is creating financial security for your loved ones. After you go, what assets will be granted to your loved ones? If you have no trust with a fast inheritance process and no liquid money transferred to your dependents, it can take a long time to go through probate court.

Life insurance is a key component of estate plans, especially if you have dependents or are the main income earner. If you pass away, your life insurance beneficiaries can claim a death benefit. The amount depends on your chosen policy. Death benefits can be $50,000 to $1,000,000, with an average of ~$200,000. Typically, people choose a policy with a death benefit of ~10 times their annual income.

Whole vs term life insurance

Term life insurance lasts for the duration of your choosing, such as 5, 10, or 20 years. You pay a recurring premium (usually monthly) to maintain coverage. There may be a medical exam at the start of a term to see if you qualify for life insurance and what cost it will be. After the term, you may need a new medical exam. Having health conditions or habits like smoking can greatly increase the life insurance premium.

Whole life insurance lasts your entire life as long as you keep paying the premium. It can offer tax advantages for those with complex or large estates. It lets you lock in a lower premium, and can provide dividends and value through cash growth.

However, whole life insurance is a big financial commitment. It’s important to carefully consider whether it’s beneficial to you.

We recommend choosing Ethos for quick, affordable coverage. Ethos doesn’t require a medical exam for many applicants, which makes the process faster and easier for those who have health concerns.

As for your savings and emergency funds, make sure that your family can access them if needed. Giving them your account passwords, or telling them where to find the details, is crucial.

Tip: Update your beneficiaries for your will, trust, and life insurance policies regularly.

Step 6: Store and Share Your Documents Safely

You want your estate plan components to be accessible but safe. That means no one can steal it easily, and a fire can’t destroy all of it. Ideally, you want to keep the documents of an estate plan in a fireproof home safe. A safety deposit box could be a good idea, but ensure you can keep it active and yours (moving states or not paying could lead to loss of the safety deposit box). A secure digital vault is also an excellent idea on top of physical copies.

Once you have stored your estate plan documents safely, you should tell your executor, trustee, and/or key family members how to access them.

Don’t forget to include digital assets and access codes you may have. For example, provide info on how your trusted ones can find your account passwords, crypto, email, and social media logins.

Tip: Leave a “Letter of Instruction” with personal notes, funeral wishes, or final messages. This can clarify anything that may be confusing and also convey your final messages to your loved ones.

Step 7: Review and Update Regularly

Many people mistakenly create an estate plan and then leave it to collect dust. It is unfortunately not a one-and-done thing because life evolves. Relationships change. After any major life event, you should review your estate plan components and make updates as needed. Major life events that are triggers for an estate plan review include:

• Marriage
• Divorce
• Children
• New property
• Major financial or relationship changes

Why do I need to review my estate plan?

Even if there are no major life events, it is still good practice to review it routinely. Outdated documents can cause confusion or invalidate your wishes. Set a calendar reminder to revisit your plan every 3-5 years.

Read our guide on How Often to Update Will or Estate Plan for detailed information.

Common Mistakes to Avoid

Thinking you don’t have “enough” to plan for

Many people fall under the assumption that only the wealthy require a will. The truth is, everyone should consider drafting an estate plan. You don’t need significant assets to your name. Even if you have no dependents or loved ones at the moment, you can still gain more control over your own life (e.g. medical decisions and where assets go after you pass away) if you have a proper estate plan.

Forgetting to name backup (contingent) choices

Beneficiaries, agents for power of attorney, executors, and trustees can refuse your appointment. For example, a beneficiary may be unwilling (or unable) to accept an inheritance from you. In these cases, it helps to have a backup contingent beneficiary. Otherwise, the court will have to review your assets, potential beneficiaries, and see who should get that asset. How this is done is based on your state’s intestacy laws.

Not telling your loved ones where your documents are stored

Having everything planned but the plans not being accessible is a real nightmare. You want to make sure your loved ones know how to find your estate plan–otherwise it might be as if you had no estate plan, or they miss out on your final wishes and messages.

Failing to update after big life changes

No matter if it is the pain of divorce or the joy of new children, you need to update your estate plan accordingly. Anything that involves naming beneficiaries or agents should be reviewed and updated after a big life change. Look at your will, life insurance beneficiary, and power of attorney designations.

Conclusion: Take One Small Step Today

Estate plans can be complicated, but you don’t need to have everything figured out to start. Even creating a simple will is a huge step forward in protecting you and your loved ones. You can get started today with a single, valid document through LegalZoom, then build from there.

Also check out Ethos for reliable, affordable life insurance products that create a financial safety net for your loved ones.