Wealthy PotEstate Planning Basics: The Documents Everyone Needs
Estate planning is not only for the wealthy. It is the set of documents that decides who gets your money and belongings, who cares for your children, and who makes decisions for you if you cannot. Without it, state law and the courts make those choices. This guide covers the documents most people need, the one step many people forget, and whether federal estate tax is likely to apply to you in 2026 (for most people, it will not).
The Short Answer
- The core documents: a will, a durable power of attorney for finances, and advance directives for health care (a living will and a health care power of attorney).
- Sometimes a living trust, to manage assets and potentially avoid probate.
- Beneficiary designations on retirement accounts and life insurance, which often pass outside your will.
- Federal estate tax generally applies only to estates above $15 million in 2026, per the IRS.
The Core Documents
The National Institute on Aging's checklist is a good government summary of what most adults should have:
| Document | What it does |
|---|---|
| Will | Says how your property, money and other assets are distributed when you die; can name a guardian for children under 18 and address dependents and pets |
| Durable power of attorney for finances | Names someone to make financial decisions for you if you cannot |
| Living trust | Names a trustee to hold and distribute property on your behalf when you can no longer manage your affairs |
| Living will | Tells doctors how you want to be treated if you cannot make decisions about emergency care |
| Durable power of attorney for health care | Names a health care proxy to make medical decisions if you cannot communicate |
The two health care documents are known together as advance directives. According to the NIA, you do not need a lawyer for them: most states provide the forms free and you can complete them yourself.
If you have young children, the guardianship clause in a will may be the single most important line you ever write. Without it, a court decides who raises them.
Beneficiary Designations: The Overlooked Half
Much of what people own does not pass through a will at all. Retirement accounts such as 401(k)s and IRAs, life insurance policies, and many bank and brokerage accounts let you name a beneficiary directly. Those designations generally control who receives the money, even if your will says something different.
That makes them easy to get wrong. An ex-spouse left on a 401(k), or a beneficiary who has died, can send money somewhere you never intended. Review every designation after a marriage, divorce, birth or death, and name a contingent beneficiary as a backup.
Will You Owe Estate Tax?
Almost certainly not at the federal level. The IRS lists the basic exclusion amount at $15,000,000 for deaths in 2026, up from $13,990,000 in 2025, after Public Law 119-21, signed July 4, 2025, raised it. Estates below that amount generally owe no federal estate tax (large lifetime gifts count against the same exclusion).
- Married couples can combine exclusions. A surviving spouse can use the unused portion of the deceased spouse's exclusion ("portability"), but it must be elected on a timely filed estate tax return, even if no tax is due.
- Annual gifts. In 2026 you can give up to $19,000 per person to as many people as you like without using any of your lifetime exclusion or filing a gift tax return for those gifts.
- State taxes are separate. Some states levy their own estate or inheritance tax with much lower thresholds. Check your state's rules.
Do You Need a Lawyer?
Not always. A simple situation, with modest assets, clear beneficiaries and no special needs in the family, can often be handled with state forms for advance directives, a straightforward will and careful beneficiary designations. A lawyer is worth it when things are complicated: blended families, a business, a child with special needs, property in more than one state, or an estate large enough for tax planning. The NIA suggests asking about fees before your first appointment.
A Simple Checklist
- Write or update your will, including a guardian for minor children.
- Sign a durable power of attorney for finances.
- Complete your state's advance directive forms.
- Check the beneficiary on every retirement account, insurance policy and bank account.
- Consider a living trust if you own property in several states or want to avoid probate.
- Tell someone you trust where your documents are.
- Review everything after major life events.
FAQ
What documents do I need for estate planning?
Most people need a will, a durable power of attorney for finances, and advance directives for health care. Some also benefit from a living trust. Beneficiary designations matter just as much.
What is the federal estate tax exemption in 2026?
$15,000,000 per person, according to the IRS.
How much can I gift without paying tax in 2026?
$19,000 per recipient per year under the annual exclusion.
Do beneficiary designations override a will?
Generally, yes. Accounts with a named beneficiary pass to that person regardless of what the will says, so keep them up to date.
Do I need a lawyer to make a will?
Not always, but the rules for signing and witnessing a valid will vary by state, and complex situations are worth professional help.
This article is for general information and is not legal or tax advice. Estate law varies by state. Federal figures are from the IRS and document descriptions from the National Institute on Aging, checked on 2026-09-24. Consult an estate planning attorney about your situation.
