Estate Planning 101: Why Everyone Needs a Plan (Not Just the Wealthy)

Insights from Domain Money's Estate Planning Webinar with Steward

When you hear "estate planning," you might think it's only for the ultra-wealthy with sprawling mansions and trust funds. But here's the truth: everyone has an estate, regardless of net worth, and everyone needs a plan for what happens to their assets and loved ones when they're gone.

In a recent webinar, Domain Money partnered with Steward*, a modern estate planning firm, to break down the essentials of estate planning and dispel common misconceptions. Here's what every family should know about protecting their future.

What Is Estate Planning, Really?

Estate planning is simply a series of legal documents that plan for what happens to you and your assets after you pass away or become incapacitated. At its core, most people need four key documents:

The Foundation Documents

1. Last Will and Testament or Revocable Trust with Pour-Over Will

• A will goes through probate (a court-supervised process that can be time-consuming, costly, and public)
• A revocable trust acts as your "alter ego" during your lifetime but avoids probate when you pass away

2. Durable Power of Attorney

• Allows someone to make financial decisions on your behalf if you become incapacitated

3. Advanced Healthcare Directive (Living Will)

• Specifies your wishes for medical care and appoints someone to make healthcare decisions for you

Will vs. Trust: Which Do You Need?

While many people start with just a will, there are compelling reasons to consider adding a revocable trust to your estate plan:

Benefits of a Revocable Trust

• Avoids probate: Your assets transfer directly to beneficiaries without court supervision
• Maintains privacy: Unlike wills, trusts don't become public record
• Provides continuity: If you become incapacitated, assets in the trust can still be managed for your benefit
• Easier to modify: Changes don't require the formal witness and notary requirements of will updates
• Simplifies administration: Makes things easier for your loved ones during an already difficult time

As Samantha Smith, Head of Legal at Steward, explained in the webinar: "I'm not really aware of any situation where I think people would have only a will—it would be both."

Estate Planning Isn't Just for the Wealthy

One of the biggest misconceptions about estate planning is that it's only necessary if you have significant assets. Here's why that's not true:

Probate Thresholds Vary by State

• In California, estates over $140,000 may be subject to probate
• Other states have much lower thresholds—some as low as $20,000
• Even modest assets can trigger the probate process

It's About More Than Money

Estate planning allows you to:

• Name guardians for minor children: Perhaps the most important decision for parents
• Specify where your assets go: Ensure your wishes are followed, not state defaults
• Plan for blended families: Address complex family dynamics
• Protect against creditors: Shield assets designated for beneficiaries
• Avoid family conflict: Clear documentation prevents disputes among loved ones

When to Start (Hint: It's Now)

"It's never too early to start thinking about this stuff," Smith emphasized. Common life events that trigger estate planning include:

• Getting married
• Having children
• Buying a home
• Divorce
• Significant changes in assets
• Moving to a different state

The Reality Check

As Adrianna Adams, CFP® and Head of Financial Planning at Domain Money, puts it: "Everyone has an estate plan. It's just a matter of whether it's the one that the state you live in drafted and is going to impose on you, or it's one that you created yourself."

If you don't create your own plan, your state has a default template—and it probably doesn't match your wishes or your family's needs.

Key Considerations Before You Start

Before sitting down to draft documents, couples should discuss:

The Big Questions

• Guardian selection: Who would care for your children if you can't?
• Backup guardians: What if your first choice can't serve?
• Asset management: Who's good with finances and can manage your assets?
• Geographic considerations: Should guardians live nearby? In the same country?
• Incapacity planning: Who would make financial and medical decisions if you're unable to?

Pro Tip: Separate Roles

You don't have to choose the same person as both guardian and trustee. Often, the best caregiver for your children isn't the same person who's best suited to manage finances. This separation allows you to choose the right person for each role.

State-by-State Variations

Estate planning laws vary significantly by state, with key differences including:

Community vs. Separate Property States

• Community property states (like California): Assets acquired during marriage belong equally to both spouses
• Separate property states (like New York): Each spouse can dispose of their own assets as they wish

Estate Tax Considerations

• Some states impose their own estate taxes beyond federal requirements
• Florida, for example, has no state estate tax
• New York has its own estate tax that kicks in at lower thresholds

The Attorney Question

While it's ideal to work with an attorney licensed in your state, many practitioners (like those at Steward) are licensed across multiple states and can provide appropriate guidance for your jurisdiction.

Common Estate Planning Mistakes

Based on years of experience, estate planning professionals see these mistakes repeatedly:

1. Not Having a Plan at All

This is the biggest mistake. Any plan is better than letting the state decide your family's future.

2. Failing to Update Documents

Life changes—marriage, divorce, new children, relocations—all require plan updates. The good news? Trusts are relatively easy to modify compared to wills.

3. Poor Communication

Your chosen guardian and trustee should be able to work together effectively. If they can't communicate or actively dislike each other, reconsider your choices.

4. Inadequate Funding

Having a trust but failing to transfer assets into it defeats the purpose. This process, called "funding the trust," is crucial for the plan to work.

Making It Easier for Your Loved Ones

One of the most thoughtful gifts you can give your family is organization. As Meg Palazzolo, Head of Client Success at Steward, noted: "Let that be your last gift. Just be organized now and put up the work up front, instead of letting them have to take months or years to figure this out on their own."

Document Storage Best Practices

• Keep originals in a safe, accessible place (NOT a safety deposit box)
• Maintain electronic copies
• Ensure your executor or spouse knows where to find important documents
• Consider a fireproof box for physical documents
• Create an "if I go missing" folder with account information and important contacts

The Modern Approach

Traditional estate planning often meant stuffy law offices and intimidating legal jargon. Modern firms like Steward are changing this by:

• Using technology to streamline the process
• Providing mobile notary services
• Offering clear, ongoing communication
• Making updates easier and more accessible
• Integrating with financial planning teams for comprehensive service

Taking Action

Estate planning might seem overwhelming, but it doesn't have to be. The process typically involves:

1. Initial consultation: Discuss your situation and goals
2. Document preparation: Using AI and attorney expertise to draft your documents
3. Attorney review: Legal advice and recommendations specific to your situation
4. Document review: You review and approve all documents
5. Execution: Notarization (often at your home) to make documents legally binding
6. Trust funding: Transferring assets into your trust if applicable

The Bottom Line

Estate planning isn't about having enough money—it's about protecting the people you love and ensuring your wishes are carried out. Whether you have $20,000 or $20 million, whether you're single or have a large family, you need a plan.

The peace of mind that comes from knowing your family is protected and your wishes will be honored is invaluable. And in many cases, the cost of proper estate planning is a fraction of what your family might spend on probate proceedings without a plan.

Don't let another day pass thinking you'll "get to it eventually." Your family's future is too important to leave to chance—or to let the state decide for you.