The Ins and Outs of Estate Planning Estate

Estate Planning 101

Max Vesper | May 2025

Estate planning is one of those tasks many people tend to put off, even though they know how important it is. Thinking about a time when you’re no longer around to manage your affairs can feel uncomfortable or overwhelming. But the reality is that estate planning is a crucial part of ensuring that your assets are properly protected and distributed according to your wishes, no matter how sizable your estate may be. In this blog, we will give an overview of the ins and outs of estate planning, including components of an estate plan, mistakes to avoid, and why it is important to have one. 

What is Estate Planning? 

Put simply, estate planning is the process of preparing for the management and distribution of your assets in the event of your death or incapacity, created through a collection of legal documents and strategies put in place. Along with providing peace of mind for you and your family, estate planning can also be a great way to minimize taxes and avoid legal complications. 

Key Components 

• Wills: The cornerstone of any estate plan, a will is a legal document that outlines how your assets, such as property, money, and possessions, are distributed after your death. Additionally, a will names an executor, which acts as a manager responsible for ensuring your goals are carried out. Because a will can address important things like guardianship of minors and asset distribution, it is important to make sure that it is kept up to date.
• Trusts: A trust is a legal arrangement that transfers your assets into the ownership of a trustee, who then manages and distributes them in accordance with your plans for the benefit of your chosen beneficiaries. Trusts give you or your beneficiaries the ability to avoid the probate process and gives you greater control over how your assets are handled and distributed after your death. There are several different types of trusts, with the two most common being revocable trusts and irrevocable trusts:
  • Revocable trust: Also called a living trust, a revocable trust allows the creator of the trust to make changes to the trust or dissolve it completely at any time if needed. This type of trust gives you the most control of your assets while you are still alive. While a revocable trust does offer a lot of flexibility, the assets are still subject to estate taxes.
  • Irrevocable trust: An irrevocable trust is a type of trust that cannot be altered or dissolved without the consent of the beneficiaries. When you transfer your assets into an irrevocable trust, you give up control of them. An irrevocable trust becomes a separate legal entity, meaning the assets are no longer considered part of your estate, and therefore they are not subject to estate taxes.
• Powers of Attorney: A power of attorney (POA) is a legal document designating an agent of your choice to act on your behalf in the event that you become incapable of making decisions on your own. There are several different types of powers of attorney:
  • Springing power of attorney: While a traditional power of attorney gives your agent the power to make decisions for you immediately, a springing POA only gives your agent the power to act when specific conditions are met. This type of POA is used in estate planning, where the specified condition is that you are unable to make decisions on your own.
  • General power of attorney: With a general power of attorney, you essentially give your agent the ability to act for you in all circumstances allowed, including legal, financial, medical, and business affairs. While this type of POA gives your agent a substantial amount of power over your matters, they still cannot make changes to your last will. A general POA can either be durable or non-durable depending on preference.
  • Durable power of attorney: With a durable power of attorney, an agent has authority to make decisions for you even if you have become incapacitated. Durable POAs are used for estate planning, because you are planning for the event that you are not able to act on decisions on your own.
  • Financial power of attorney: A financial power of attorney is a limited power of attorney, giving your agent the ability to make decisions on your behalf regarding certain financial areas of your choosing. These areas may include things like paying for bills, making deposits or withdrawals, managing retirement benefits, managing your real estate, or filing taxes.
  • Medical power of attorney: Like a financial power of attorney, a medical power of attorney is limited, giving your agent the authority to make healthcare decisions on your behalf. These decisions could include medical treatment, medication, surgery, end-of-life care, and choosing hospitals and doctors for your care.
• Beneficiary Designations: A beneficiary designation allows you to name individuals or entities to receive assets immediately after your death, bypassing the probate process. These assets typically include things like retirement accounts, life insurance policies, or bank accounts. Beneficiary designations are usually made when setting up an account or policy but can be added or altered at any time. These designations take priority over your will, so it is important to make sure they are accurate.
• Healthcare Directives: A healthcare directive, also known as a living will, states your medical preferences if you are ever unable to communicate them yourself. The instructions included in this document may include preferences for life support, organ donation, or end-of-life care. With a healthcare directive, your loved ones and healthcare providers can get a better understanding of your wishes and help eliminate conflict and confusion in difficult situations. 

Mistakes to Avoid 

Procrastination: The most common reason that estate plans are put off is due to the difficulty and discomfort of the topic. However, by choosing not to establish an estate plan, you are just delaying the difficulties for your loved ones in the future. 

Not Updating Your Plan: Whether it’s the birth of a new child, the death of a family member, or a new business venture, life is constantly changing. It is always important to make sure that your estate plan changes along with it. Individuals should regularly review the preferences, designations, and goals established in their estate plan to ensure they align with their current life situation. 

Not Considering Tax Implications: Estate taxes can eat away at your wealth, especially if your estate exceeds the federal exemption threshold for estate tax, which currently sits at $13,990,000 as of 2025. By planning strategically and finding the right tools, you can help minimize tax liabilities. 

Failing to Communicate Your Plan: It is essential that your goals and preferences for the distribution of your assets, end-of-life care, and agent and beneficiary designations are made clear in your estate plan. Ensuring this is the case will save your loved ones and others involved from confusion and potential family disputes.

Conclusion 

Estate planning is essential for everyone, regardless of your age or financial status. While it may seem daunting at first, estate planning can become a smooth and worthwhile process with the right guidance and a good understanding of the components mentioned above. By making sure appropriate documents like a will, trust, and power of attorney are created, and that your beneficiary designations and the care preferences are accurate, you can be confident that your assets will be distributed, your loved ones are cared for, and your legacy is protected after your passing. Ready to start your estate plan or have a few questions? We would love to be of assistance! Just call us at 419.496.0770.

Crosby Advisory Group, LLC is a registered investment advisor providing financial planning, insurance and business growth strategies. This blog is for information purposes and does not represent individual investment advice. Not all investments are suitable for all people. You should carefully consider all risks and fees before making an investment.