As a financial advisor, I’ve seen it all—people who are laser-focused on retirement savings, tax efficiency, or paying off their mortgage early… but haven’t given a moment’s thought to what happens to all that careful planning after they’re gone. It’s like building a beautiful sandcastle and forgetting about the tide.

Estate planning is an unsung hero of financial wellness. Especially for those who are married, have children, or are in non-traditional relationships, having a plan in place is a must. And no, you don’t need to be a billionaire or own a yacht (although, if you do, let’s chat).

Despite its importance, many people push off or hesitate to create an estate plan. So why the delay? Some think they’re too young, others don’t like thinking about the end of life, and a few assume their family will just “figure it out.” Spoiler alert: “figuring it out” often involves probate court, higher legal fees, and a lot of stress for your loved ones.

The Core Documents Everyone Should Have

For many people, creating an estate plan does not need to be overly complicated. At a minimum, a basic estate plan typically includes:

Last Will and Testament – Specifies who inherits your assets and names guardians for minor children, if applicable. 

Durable Power of Attorney – Appoints someone to manage your financial affairs if you become incapacitated. Think of it as your financial pinch-hitter.

Healthcare Proxy / Medical Power of Attorney – Designates a trusted individual to make medical decisions on your behalf if you are unable to do so. 

Living Will / Advance Directive – Outlines your preferences for end-of-life care and medical interventions. 

Having these foundational documents in place provides clarity, ensures your intentions are respected, and helps your family avoid potentially expensive and time-consuming legal challenges—because let’s face it, no one wants to add “court appearances” to their grief to-do list.

Estate Planning for Young Adult Children: Healthcare Power of Attorney

For families with young adult children—such as those heading off to college—it’s important to understand that, legally, your child becomes an adult at age 18. Which means overnight they can vote, get a tattoo, or sign a lease—but you can’t access their medical records. If your adult child experiences a serious medical issue and is unable to communicate their own preferences for their care, this lack of access for their parents can create significant complications.

To ensure critical medical decisions can be made without delay or confusion, young adults should consider executing a Medical Power of Attorney and Advance Directive, appointing a trusted individual—often a parent—to act on their behalf if necessary.

Beneficiary Designations: More Powerful Than You Think

Many people are unaware that certain financial accounts—such as IRAs, 401(k)s, and life insurance policies—pass directly to the named beneficiaries, regardless of what your will or trust states. 

It’s wise to conduct a review at least annually. I’ve met with clients where an ex-spouse or deceased individual was still listed as a primary beneficiary. Also, if your employer changes 401(k) plan administrators, your beneficiary designations may not carry over. 

Similarly, Transfer on Death (TOD) designations on brokerage or bank accounts allow those assets to pass directly to designated heirs without going through probate. These are simple but powerful tools. But like assembling IKEA furniture, things can go sideways if not done correctly. When establishing TOD designations, it is important to ensure they are integrated with your overall estate plan.

When a Trust May Make Sense

While not everyone requires a trust, there are certain situations where they can offer substantial benefits:

Revocable Living Trusts can help your estate avoid probate, preserve privacy, and provide greater control over how and when your assets are distributed. 

Irrevocable Trusts are often used for more advanced planning strategies, including asset protection and qualifying for Medicaid. These trusts generally cannot be changed after creation, so commit wisely

If you’re concerned about the rising costs of nursing homes or long-term care, Medicaid planning through the use of irrevocable trusts may be an effective way to preserve assets for your heirs—but it requires careful, proactive planning well in advance. As with any major financial decision, establishing and funding a trust comes with both advantages and trade-offs that should be thoughtfully evaluated before moving forward. 

How Thoughtful Estate Planning Can Minimize Taxes and Leave More to Your Heirs

The current federal estate tax exemption is high enough that it’s not a pressing concern for most individuals. As of 2025, individuals can exclude up to $13.99 million (or $28.98 million for married couples) from federal estate taxes. While this generous exemption is scheduled to expire at the end of 2025 (and would be cut in half), Congress is currently working to pass legislation that would permanently make the exemption level $15 million per person.

Even if your estate is well below the federal threshold, state-level estate taxes, inheritance taxes and/or probate costs can still pose a challenge for much smaller estates. For instance, Pennsylvania has an inheritance tax as follows:

• 0% for surviving spouses or charitable organizations

• 4.5% for lineal descendants (children and grandchildren)

• 12% for siblings

• 15% for other heirs (sorry, favorite barista)

Understanding how both federal and state tax laws apply to your estate is key to protecting the assets you intend to pass on.

Don’t Forget the Step-Up in Basis

One of the most overlooked benefits of estate planning is the step-up in cost basis. When someone inherits an appreciated asset—such as real estate or stocks—the asset’s cost basis is adjusted to its market value at the time of the original owner’s death. Translation: your heirs might dodge a big capital gains tax bullet.

This is a crucial consideration when deciding whether to gift assets during your lifetime or transfer them upon death. In many cases, patience really is a virtue—especially if you’re holding appreciated assets.

Example of Thoughtful Estate Planning

Working with a qualified estate planning attorney, tax professional, and financial advisor can help ensure your estate plan is both legally sound and tax-efficient. Here’s a simplified illustration:

Jane, a widow in Florida, owns the following assets:

• $2 million in a tax-deferred Rollover IRA

• $1 million in a tax-free Roth IRA

• $1 million in taxable brokerage assets

Jane intends to divide her estate equally between her daughter Julie—a physician in the 37% federal tax bracket—and to her church, a tax-exempt organization.

If Jane simply splits each of her three asset types evenly, Julie’s portion of the Rollover IRA would be fully taxable. Instead, Jane could leave the full Rollover IRA to the church and the tax-free assets to Julie:

• Church receives $2 million (tax-free)

• Daughter receives $2 million (also tax-free)

• $370,000 in income taxes avoided

While this example involves an estate well below the federal exemption threshold, it illustrates that meaningful tax-saving opportunities still exist for “smaller” estates.

Gifting Assets as Part of Your Estate Strategy

Another effective strategy to reduce the size of your taxable estate—and potentially avoid inheritance or probate costs—is to take advantage of annual gifting. For 2025, the IRS allows individuals to give up to $19,000 per person per year without filing a gift tax return. Married couples can combine their exclusions to give up to $38,000 per person per year.

It’s a win-win: you reduce your estate and get to enjoy the warm fuzzies of helping your loved ones now. 

Can Roth Conversions Make Sense as Part of an Estate Planning Strategy?

Roth IRA conversions aren’t just a retirement income strategy—they can also play a valuable role in estate planning. In certain circumstances, Roth conversions can help minimize the future tax burden on your heirs—especially if your beneficiaries are in higher tax brackets than you are now.

Under the SECURE Act, most non-spouse beneficiaries must fully withdraw inherited IRA funds within 10 years of inheritance (for IRAs inherited in 2020 or later). For those inheriting large account balances, this compressed withdrawal timeline can result in a significant tax burden and potentially push beneficiaries into higher income tax brackets.

By converting some or all of a Traditional IRA to a Roth during your lifetime, you prepay the taxes at your current rate. Your heirs then inherit a Roth IRA, which continues to grow tax-free and can generally be distributed tax-free within 10 years—giving them more flexibility and fewer tax migraines.

A Special Consideration: The Surviving Spouse

Another compelling reason to consider Roth conversions is their potential benefit for a surviving spouse. When one spouse passes away, the survivor may suddenly find themselves filing as a single taxpayer, which can mean higher marginal tax rates on the same income. For example, while a married couple filing jointly may find themselves in the 12% marginal tax bracket today, the surviving spouse could easily end up in the 22% bracket as a single tax filer based on the same level of income.

By doing Roth conversions earlier—ideally while both spouses are alive and filing jointly—you can lock in today’s potentially lower tax rates and also reduce your future Required Minimum Distributions (RMDs). 

Final Thoughts

Estate planning isn’t just for the wealthy or the elderly. It’s for anyone who wants to protect their family, preserve their legacy, and ensure their wishes are carried out. With thoughtful planning, you can reduce unnecessary taxes and legal costs, prevent confusion, and spare your loved ones from avoidable stress during an emotional time.

As a recap, consider taking these steps to shore up your estate plan:

• If you do not currently have an estate plan in place, consider working with an estate planning attorney to, at a minimum, draft and execute the basic estate planning documents.

• Review your retirement account beneficiaries to ensure they are listed, current, and aligned with your overall estate plan.

• Once your estate plan is in place, consider reviewing it every three to five years—or whenever you experience a major life event (marriage, divorce, birth of a child, or death of a beneficiary).

If you’re unsure where to begin, start by consulting an estate planning attorney or a financial advisor for guidance. An hour or two spent planning today could save your family months—or even years—of complications later.

Let’s take the guesswork out of your future. Contact me if I can be of any assistance with your wealth planning needs.