Estate Planning 101: The Basics
Fullerton Financial • April 6, 2021
You don’t want to leave your family with unanswered questions or chaos when it comes to your estate.
Estate planning can be an overwhelming process. It’s rife with deeply personal issues and designations that can be uncomfortable at best, and wildly divisive at worst. Planning your estate however, is an essential part of a comprehensive retirement plan and overlooking, or putting off addressing it will only make the situation more complicated.
You don’t want to leave your family with unanswered questions or chaos when it comes to your estate. Not having an estate plan leaves the division of your assets to the courts and to your state’s laws of intestacy. We want to remove the mystique of estate planning, answer some basic questions, and help you understand the untold benefits of estate planning.
What is Estate Planning?
When we talk about your estate,
we’re talking about everything that comprises your net worth
- land you own, real estate, possessions, financial securities, cash, and any other assets you may own or have a controlling interest
in. Additionally, it also delegates authority over any medical, financial and legal directives you may have if you become incapacitated.
Estate planning refers to the management of your estate after you have passed away, and includes how and to whom your assets are distributed. One might believe that with all the movies and television shows built around inheritance, we might all understand how important it can be to have a plan for what happens to our material lives; however, one study reports only 42% of adults
have even one estate planning document like a will or living trust. For those who have children under the age of 18, the number drops to 35%. If that’s you, what’s holding you back?
Maybe you think estate planning is only for the very wealthy – those with multiple properties and a jet, perhaps. Many of us don’t think our estates are large enough
to warrant an estate plan, and we’re wrong. Just because you think a situation will work out fine – splitting your estate between your four children, for instance – doesn’t mean it will - especially if you’re not around to give direction.
Aretha Franklin’s
estate ran into this exact issue when she passed in 2018. The legendary soul singer had a multi-million dollar estate at the time of her death, but no will officially filed with her attorneys, the general assumption being she had planned to split the estate evenly between her four sons. However, a year after her death,
two hand-written documents (one found in sofa cushions) seemingly invalidated that claim, and started an inter-family fight. Even as recently as March 2021, new evidence was presented introducing a potential third will
that laid out an entirely different plan than the two others.
For those who do consider an estate plan, they may feel that the time to establish one is when they’re older, well into retirement – but that’s far from ideal.
Take former Zappos CEO Tony Hsieh. Hsieh was a Harvard grad, and tech guru who founded his first company just after graduating from college, and later sold it to Microsoft for some $265 million. He retired in 2020 at 46, after generating a net worth totaling around $840 million. Mere months after retiring however, Hsieh died due to complications of injuries sustained in a house fire. He died intestate, or, without a will. In the months after his death, his family stepped in to help sort through the issues, but in 2021, claims against the estate totaled some $93 million.
That may sound like an extreme scenario, but similar situations happen all the time. In one case, a man was preceded in death by his wife, but because he had not updated his will after her death, when he passed, his estate went to his beneficiary’s (still his deceased wife) next of kin including a woman living in another country and his wife’s estranged daughter, both strangers to him.
When should you start the Estate Planning Process?
A recent study by Caring.com
found that in 2021, 18 to 34 year-olds will be more likely to have a will than 35 to 54 year-olds, and middle- and older- aged adults are less likely to have a will now than they were just one year ago. The importance of this can not be overstated, this is the first time those demographics have been weighted toward youth, and some experts point to how seriously each demographic understood the Covid-19 pandemic. But the best time to plan your estate? Any time.
Who is involved in Estate Planning?
When you’re ready to start planning your estate, who comes to the table and where do you go? If you’ve already created a financial plan, an estate plan is part of that overall process so a certified financial planner is critical in the process.
For some, it may make sense to turn to an Estate Attorney. These lawyers work in tandem with your financial planner, and are specifically dedicated to drafting living wills and mitigating any potential estate taxes (hopefully) long before your passing. Additionally, they can draft powers of attorney
(POAs), avoid conservatorship, help appoint guardianship, sort through and manage complicated estates, and most importantly, make sure your plans for your estate will hold up in court.
You’ll want to appoint an executor, or the person who will administer your estate once you pass. Who you name as executor of your estate is, arguably, the most important person in the entire estate planning process. They can honor your wishes or destroy what you’ve built so, to choose wisely isn’t just sage advice, it’s everything. Sometimes this role is shared – it is common for parents to appoint one or several of their children as co-executors; it’s also common for estate attorneys to serve this role as well. Whomever you choose however, understand that this person will bear the burden of responsibility to execute your plan as you have laid out.
What goes into creating an Estate Plan?
It depends. If you’re creating a broad estate plan, it will require a fair amount of paperwork including all of your financials and tax documents. The more layered your estate is -- and that’s not necessarily a bad thing -- the more complicated an estate plan can be. Generally, there are four main parts, sometimes called “the big four”:
1. A Last Will and Testament
This is the most common estate planning document, and lays out what you want to happen to your assets upon your death. We refer to this generally as a “document” but in the wake of Covid-19 pandemic (in which there was a significant uptick in those interested in preparing these documents) there has been a rise in video submissions. These documents lay out how and when beneficiaries will receive their inheritance, as well as establish who the executor(s) will be.
2. A document granting an executor Power of Attorney
The executor of your estate will need your Power of Attorney to make decisions on your behalf. There are different kinds of POAs, so it’s important to be specific when you’re making this designation. An executor is entrusted with four major functions: to gather and keep safe all relevant assets until they’re given to their beneficiaries; pay all debts of the decedent including funeral expenses, and any estate administration fees; handle all tax matters including filing the decedent’s final tax returns; and distributing all other assets specifically named in the will.
3. An advanced medical directive
Also known as a living will that will designate someone with your healthcare power of attorney or HCPA. This directive allows you to empower another person to make medical decisions on your behalf. If at any point in your life, you suffer a medical emergency and cannot communicate your wishes, this person will make those decisions for you, ideally, previously communicated by you.
4. Revocable living trust
A living trust is so-called because it is created when the owner, or trustor, is still alive and revocable in that it can be changed (a will, in contrast, only goes into effect once the owner has passed away). It is sometimes considered an either/or -- either you have a will, or you have a trust. That’s not a hard and fast rule, and it’s possible to have both. They operate similarly, but whereas a will must go through probate (the legal process that gives recognition to the will and hears objections), a trust does not. It can help streamline the inheritance process, but you’ll also tend to pay more for the pleasure.
How is an Estate Plan executed?
An estate plan is generally executed by filing the will and testament with the probate court, which will review the will and swear-in the named executor, thus giving them the go-ahead to begin performing their functions. The executor will file a public notice, and begin paying any debts – this is where having a financial plan in place will make the process easier on your friends, family, and the executor if they are neither. After distributing the assets as laid out in the will, the executor will close the estate.
How often should someone revisit an estate plan?
Like any part of your financial plan, you want to revisit your estate plan when you experience major life changes or invest or acquire real estate or anything else that might be considered an asset. This can include anything from marriage, divorce, birth of a child, when you buy or sell land and property, and if you or a beneficiary are diagnosed with a chronic illness. If you move out of state -- it’s especially important to revisit your estate plan because estates are governed by the laws in the particular state
you’re in, or that it was filed in.
Generally, experts suggest
revisiting your estate plan every 3-5 years.
Navigate the Challenges of Estate Planning with Professionals
At Fullerton Financial Planning, our goal is to help you enjoy your retirement with confidence, not worrying about whether or not you have enough money to enjoy it.
Our certified fiduciaries and experienced investment advisors have decades of combined experience helping people find answers to difficult financial questions. Sit down with a Fullerton Financial Advisor today
to discover if you are on the right track for your retirement goals.
We understand how important your financial future is to you and your family; we also understand how difficult making these plans can be. Incorporating an estate plan into your overall retirement vision can be challenging to tackle on your own, especially with such personal and complicated subjects. When you schedule a call with Fullerton Financial Planning, we’ll help you develop an all-inclusive plan that checks all the boxes and lets you sleep better at night.
Don’t leave your financial future to chance.
Let us help you create a personalized plan so you can enjoy the retirement you’ve worked so long and hard for.
Even with a will in place, your estate plan might not be as complete as you think. Life changes, such as getting married, buying property, or watching your family grow, can quickly make once-adequate estate plans outdated or incomplete. If you don’t have documents like a healthcare power of attorney or a living trust in place, there could be important gaps you’re not aware of. A quick review of your estate planning paperwork can go a long way in making sure everything still reflects your current wishes and needs. Signs That It’s Time to Revisit Your Plan You Don’t Have a Power of Attorney in Place A power of attorney allows someone you trust to make decisions on your behalf if you’re unable to. These documents are often divided into two categories: financial and healthcare. The financial power of attorney gives your designated person the ability to manage money, pay bills, or handle investments, while the healthcare version allows someone to make medical decisions based on your preferences. Without powers of attorney in place, your loved ones may be left scrambling during a crisis. Courts may need to get involved, and that can delay decisions and add unnecessary stress during already emotional situations. Your Will Hasn’t Been Updated in Years If it’s been more than a few years since you last reviewed your will, there’s a good chance it needs updating. A lot can change in five or ten years. Children grow up, family dynamics shift, and financial situations evolve. Your current will may not account for grandchildren, stepchildren, or even charitable organizations you now want to support. It’s also worth checking who you’ve named as executor. Is that person still the best choice? Are they still willing and able to serve in that role? A quick review every couple of years, or after any major life event, can help keep your plan aligned with your current intentions. You Don’t Have a Trust and Your Estate Is Growing You don’t need to be ultra wealthy to benefit from a properly structured trust. A revocable living trust can be a valuable tool for anyone who owns a home, has significant financial assets, or wants to reduce the burden on their loved ones after they pass. Trusts can help bypass probate, which often leads to fewer court delays and lower costs for your heirs. They also offer more control. For example, you can set rules for how and when beneficiaries receive their inheritance, which is something you can’t do with a basic will. If your estate has grown in recent years, adding a trust might be a smart next step. Your Beneficiaries Are Out of Date or Missing Beneficiary designations on retirement accounts, life insurance policies, and bank accounts can override the instructions in your will. That’s why it’s critical to keep them updated. You may need to update your beneficiary designations after a marriage, divorce, the birth of another child, or a death in the family to ensure those changes are reflected on all relevant accounts. Also consider naming contingent beneficiaries in case your primary choice is unable to inherit. Overlooking this detail can result in assets being passed through probate, even if everything else is in order. You’ve Moved to a New State Estate laws affecting probate rules, powers of attorney, and advance healthcare directives can vary from state to state. While most documents created in one state remain valid if you move to another, they may not align with your new state’s specific requirements or best practices. If you’ve relocated, especially across state lines, it’s worth having your documents reviewed by an estate planning professional familiar with local regulations. They can help ensure your plan is still structured to meet your goals and avoid unnecessary complications. Your Estate Planning Goals Have Changed When you first created your estate plan, your primary goal may have been ensuring your spouse or children were provided for. This is particularly common for people who initially draft their plans in their 30s or 40s. Over the years, a person’s priorities may shift, their family may grow, or they may experience unexpected life changes. Maybe your adult children are now financially independent and can take care of themselves, and you’d prefer your resources go toward charitable causes or protecting assets for your grandkids. Your documents should reflect your current goals and financial picture, not provide safeguards for contingencies that are no longer relevant. If you’ve built more wealth, your kids have grown up, you’ve separated from your spouse, or you’ve simply rethought how you want your legacy to look, it’s worth reviewing whether a plan you drafted decades ago still supports your goals. Are You a Phoenix, Peoria, Tempe, or Scottsdale Retiree Who Needs Estate Planning Assistance? Creating an estate plan isn’t a one-time exercise. It should grow and change with your life. If it’s been years since you looked over your documents, or your financial or family situation has changed since you drafted them, it may be time for a review. Fullerton Financial Planning offers comprehensive estate planning services for retirees, savers, and families throughout the Valley. Our estate planning professionals can help you identify what’s missing and modify plans based on your current life and preferences. Call us at (623) 974-0300 to schedule a meeting.
For many investors, retirement savers, and households, estate taxes feel like a distant concern; something only the ultra-wealthy need to think about. The truth is a bit more complicated. The current limits are fairly high, and the vast majority of households are exempt. However, the exemption amount can drop, potentially exposing more families to steep estate taxes. Whether or not your estate ends up being taxed, planning ahead can make a meaningful difference in how much of your legacy stays with your loved ones. What Is the Estate Tax, and Who Does It Affect? The federal estate tax applies to the total value of your estate at the time of your death, including your home, savings, investments, and other assets. As of 2025, estates valued under $13.99 million per individual or $27.98 million for married couples are exempt from federal estate tax. Unless Congress takes action, the exemption is projected to decrease by roughly half to $6.8 million per individual or $13.6 million for married couples in 2026. In addition to federal taxes, some states impose their own estate or inheritance taxes, each with different rules and exemptions. Arizona, for example, currently has no estate or inheritance tax, but it’s still important to keep an eye on federal changes and how they might affect your long-term planning. Take Advantage of the Annual Gift Tax Exclusion One of the simplest ways to reduce the size of your taxable estate is by making gifts during your lifetime. In 2025, you can give up to $18,000 per person per year without triggering gift tax reporting. Married couples can combine their exclusions to give up to $36,000 per recipient each year. Gifting over time can gradually reduce your estate’s value while transferring funds to your intended beneficiaries without tax. Refine the Way Your Trusts Are Structured Not all trusts are designed to reduce estate tax exposure. Irrevocable trusts, such as irrevocable life insurance trusts (ILITs), charitable remainder trusts (CRTs), and grantor retained annuity trusts (GRATs), can remove specific assets from your estate and transfer them in a tax-efficient way. Reviewing how your trusts are structured and funded with an estate planning professional may uncover opportunities to improve tax outcomes or adapt to changing laws. Review Your Beneficiary Designations and Asset Titles Certain accounts, like retirement plans or life insurance policies, pass directly to named beneficiaries outside of probate. However, they’re still considered part of your taxable estate in many cases. Reviewing how these accounts are structured with an estate planning professional can help families minimize the risk of double taxation, reduce administrative delays, and ensure their plan is as tax-efficient as possible. Larger Estates May Want to Explore Lifetime Giving Strategies Estates that exceed the estate tax exemption threshold may benefit from more complex strategies than the typical family might require. These include grantor retained annuity trusts (GRATs), family limited partnerships (FLPs), or even strategic life insurance planning to offset potential taxes. These tools are inherently complex, which is why families often benefit from the assistance of a team of financial planners , tax professionals , and estate planning experts working in conjunction on a comprehensive plan. Work With Professionals Who Stay Abreast of Changes to Estate Tax Law Unless new legislation is passed, the current estate tax exemption is scheduled to revert to roughly half its current amount in 2026. That change could pull many more families into taxable territory, particularly those with valuable real estate, closely held businesses, or significant investment portfolios. The exemption amount and rate have changed frequently. In 2001, the exemption was just $675,000 with a 55 percent top rate. It rose to roughly $5 million in 2011, indexed for inflation, with a 35 percent rate, which increased to 40 percent in 2013. It wasn’t until the Tax Cuts and Jobs Act that the exemption doubled. If recent history is any indication, households should plan as if the current exemption and rate will not reflect the tax situation at the time of their passing. Having a plan that’s thorough and flexible, and working with professionals who can track changes and recommend modifications when needed, can help ensure your estate plan stays aligned with your goals. Don’t Overlook Step-Up in Basis Rules For many families, the step-up in basis can be just as important as estate tax planning. When heirs inherit certain assets, like real estate or stocks, the value is typically stepped up to the fair market value at the time of death. This can significantly reduce capital gains taxes when those assets are later sold. Trust structures and asset transfers can be designed with this rule in mind. Coordinate With Your Broader Financial Plan Effective estate tax planning doesn’t happen in isolation. It’s important to coordinate with your overall retirement plan, charitable goals, and income tax strategy. For example, decisions about when to draw from retirement accounts, whether to convert traditional IRAs to Roth accounts, and how to use donor-advised funds can all impact your estate’s long-term tax exposure. A team that incorporates financial advisors, tax experts, and estate planners can help align your estate plan with your broader financial picture. Planning Isn’t Just About Taxes for Arizona Families While reducing taxes is an important goal for many families, estate planning is ultimately about ensuring your wishes are carried out, your family is protected, and your legacy is preserved. Working with a financial professional can help you identify gaps, explore opportunities, and build a strategy that fits your goals today and in the future. Learn more about your exposure to estate taxes and receive guidance on tax planning strategies that may reduce their impact by calling Fullerton Financial Planning at (623) 974-0300.
Charitable giving isn't just a way to support causes you care about. It can also be a powerful tool for shaping the kind of legacy you want to leave behind. Whether you're passionate about education, health care, faith, or local community development, the way you give can reflect your values. Charitable giving can do more than allow you to make an impact after you’re gone. It can offer tax advantages and play a useful role in your broader estate plan. With the right approach, it’s possible to support meaningful causes, reduce estate tax exposure, and preserve more wealth for your heirs. Defining the Legacy You Want to Leave Legacy planning and estate planning are two separate but intertwined processes. Legacy planning is less focused on how assets will be distributed and more about defining and actualizing the imprint you want to leave on the world. Legacy planning can involve people, causes, or communities that matter most to you. For many individuals and couples, this includes supporting nonprofits, faith-based organizations, or universities that reflect their values. Some choose to leave a specific dollar amount or percentage of their estate to a favorite charity. Others go a step further and build giving into the structure of their estate, using tools that allow for ongoing or strategic impact. Incorporating Charitable Giving Into Your Estate Plan Bequests in a Will or Trust You can name a charity as a beneficiary of a specific amount, a percentage of your estate, or a particular asset, like real estate or stock. This is one of the simplest ways to give and can be adjusted as your priorities evolve. Beneficiary Designations Retirement accounts, life insurance policies, and donor-advised funds can be directed to charitable organizations by simply updating the beneficiary paperwork. This bypasses probate and allows for fast, direct transfers. Charitable Trusts A charitable remainder trust (CRT), for example, provides income to you or your heirs for a set period before passing the remainder to a charity. This can reduce your taxable estate and may offer income or capital gains tax benefits as well. Tax Benefits of Giving Strategically Charitable giving can provide immediate and long-term tax advantages depending on how it's structured. For example: Assets donated to qualified nonprofits are typically excluded from your taxable estate. Donating highly appreciated assets, like stock or property, can help you avoid capital gains tax while still getting a deduction. A charitable trust can generate income tax deductions, provide lifetime income, and reduce estate tax liability. Balancing Giving With Family Goals Leaving something behind for loved ones and giving to charity aren’t mutually exclusive. In fact, many families find that charitable planning opens up new conversations about values, priorities, and what legacy really means. In some cases, family members are involved in helping direct donations or even managing a donor-advised fund that allows them to continue giving over time. Your estate plan can be designed to provide for your heirs while also reflecting the impact you want to make beyond your lifetime. The key is to be intentional and diligent in researching and vetting organizations. Map out what matters to you and find a strategy that reflects both generosity and financial wisdom. You can maximize the impact of your legacy planning by finding reputable partners you trust to wisely use your dollars. Working With Estate, Tax, and Financial Planning Professionals Who Understand Your Vision Legacy planning isn’t one-size-fits-all. The best approach depends on your assets, your goals, and the types of causes you want to support. A team with investment management and financial planning experience can help you evaluate options, establish trusts, or efficiently invest in donor-advised funds that align with your goals. Most people give to charity because it aligns with their values, not because of the tax benefits, but there’s nothing wrong with giving in a way that does both. Learn more about making charitable giving a lasting part of your legacy by calling (623) 974-0300 to schedule a meeting with Fullerton Financial Planning.
