Estate Planning Isn't Just for Rich People

Why Every Family Needs a Plan (And What That Plan Should Include)

Let me guess. When you hear "estate planning," you picture wealthy people in expensive suits arguing over who gets the summer house in the Hamptons.

Yeah, that's not what we're talking about here.

Estate planning is for regular people with regular families who want to make sure their stuff goes to the right people without their loved ones having to hire lawyers and fight about it in court.

If you own a house, have a retirement account, care about who raises your kids if something happens to you, or just want to make things easier for your family when you're gone, then you need an estate plan.

It doesn't have to be complicated or expensive. But it does need to exist. Let's talk about what that actually means.

What Happens If You Don't Have a Plan

Before we get into what you should do, let's talk about what happens if you don't do anything.

If you die without a will or any estate planning documents, your state decides what happens to your stuff. This is called dying intestate, which is just a fancy legal term for "you didn't leave instructions."

The state has a formula for who gets what. Usually it goes to your spouse and kids, but the exact breakdown varies by state. And here's the kicker: the state's formula might not match what you would have wanted.

Want your best friend to get something? Too bad. Want to make sure your daughter with special needs is taken care of in a specific way? Not happening. Want your brother (who you haven't spoken to in 20 years) to get nothing? Tough luck.

On top of that, everything goes through probate, which is the court process for distributing your assets. Probate is public, slow, and expensive. It can take months or even years, and your family pays for it out of your estate.

So basically, not having a plan means the state makes decisions for you, your family waits forever, and everybody pays more in legal fees. Sounds great, right?

The Basic Documents Everyone Needs

Estate planning doesn't have to be overwhelming. For most people, you need four basic documents. That's it.

1. Last Will and Testament

This is the document that says who gets your stuff and who's in charge of making sure your wishes are carried out (that person is called an executor).

If you have minor children, your will is also where you name guardians. This is huge. If something happens to you and your spouse, who's going to raise your kids? You want to decide that, not a judge who doesn't know your family.

A will doesn't avoid probate, but it does make the process smoother and ensures your wishes are followed.

Pro tip: don't DIY this one with some form you found online. Spend a few hundred bucks and have an attorney do it right. A poorly written will can cause more problems than no will at all.

2. Durable Power of Attorney

This document names someone to handle your financial affairs if you become incapacitated. We're talking about paying your bills, managing your accounts, dealing with your investments, all that stuff.

Without a power of attorney, your family might have to go to court to get permission to manage your finances. That takes time and money, and meanwhile, your bills aren't getting paid.

Choose someone you trust completely. This person will have a lot of power over your money, so make sure it's someone responsible who has your best interests at heart.

3. Healthcare Power of Attorney (or Healthcare Proxy)

This names someone to make medical decisions for you if you can't make them yourself. Different from the financial power of attorney, this one is specifically about healthcare.

This person decides things like what treatments you receive, whether you stay on life support, which doctors you see, all of it. You want someone who knows your values and will respect your wishes, even when the decisions are hard.

Sometimes the same person handles both your finances and your healthcare decisions. Sometimes you split those responsibilities. It's up to you.

4. Living Will (or Advance Directive)

A living will spells out your wishes for end-of-life care. Do you want to be kept on life support if there's no chance of recovery? Do you want aggressive treatment or comfort care? Do you want to be an organ donor?

These are not fun questions to think about, but answering them now saves your family from having to make impossible decisions while they're grieving.

A living will works alongside your healthcare power of attorney. It gives your agent guidance on what you'd want in specific situations.

What About Trusts?

Okay, so we covered the basics. Now let's talk about trusts, because you've probably heard that trusts are some magical estate planning tool.

Trusts can be useful, but they're not necessary for everyone. A trust is basically a legal entity that holds your assets for the benefit of someone else (the beneficiaries). You set the rules for how and when the money gets distributed.

The most common type is a revocable living trust. With this, you transfer ownership of your assets into the trust while you're alive. You control the trust, you can change it anytime, and when you die, the assets pass to your beneficiaries without going through probate.

Benefits of a Trust:

• Avoids probate (faster, cheaper, private)
• Can provide for minor children or beneficiaries who aren't good with money
• Useful if you own property in multiple states
• Provides continuity if you become incapacitated

Downsides:

• Costs more upfront to set up
• Requires you to actually transfer assets into the trust (which some people never get around to doing)
• More paperwork and maintenance

Do you need a trust? Maybe. If your estate is straightforward and not huge, a will might be enough. But if you have complicated family situations, significant assets, or you really want to avoid probate, a trust can make sense.

This is a conversation to have with an estate planning attorney. They can look at your situation and tell you what actually makes sense for you.

Don't Forget About Beneficiary Designations

Here's something that trips people up: a lot of your assets pass to beneficiaries directly, completely outside of your will or trust.

This includes:

• Life insurance policies
• Retirement accounts (401k, IRA)
• Annuities
• Some bank and brokerage accounts (if they have transfer-on-death designations)

The beneficiary designations on these accounts override whatever you put in your will. So if your will says everything goes to your spouse, but your 401k still lists your ex as the beneficiary, guess who's getting your 401k? Yep, your ex.

Review your beneficiary designations regularly. Make sure they're current and they match your intentions. This is especially important after major life events like marriage, divorce, or the birth of a child.

And here's a pro tip: name contingent beneficiaries too. If your primary beneficiary dies before you and you don't have a backup, the money might end up going through probate anyway.

What About Estate Taxes?

Good news: most people don't have to worry about federal estate taxes.

The federal estate tax exemption for 2026 is over $15 million per person (over $30 million for a married couple). Unless your estate is worth more than that, federal estate taxes don't apply to you.

Virginia doesn't have a state estate tax either, so if you're living here in Charlottesville, you're in the clear on that front too.

That said, your heirs might face income taxes on things like retirement account distributions. And if you own property, there could be capital gains tax implications down the road.

The point is, estate planning isn't just about avoiding taxes (though that can be part of it). It's about making sure your wishes are followed and your family isn't left dealing with a mess.

Common Estate Planning Mistakes

Let's talk about the mistakes I see all the time.

Not Having a Plan at All

This is the biggest one. People put it off because they don't want to think about death or they think they're too young or they don't have enough money. But if you have a family, own a home, or have any assets at all, you need a plan.

Estate planning isn't morbid. It's responsible. It's a gift to your family.

Not Updating Your Plan

Creating a plan is great. But if you never update it, it becomes outdated fast. Laws change. Your life changes. Your relationships change.

Review your estate plan every few years, and definitely after major life events like marriage, divorce, having kids, buying a house, or coming into a large sum of money.

Choosing the Wrong Executor or Power of Attorney

Just because someone is family doesn't mean they're the right choice to handle your estate or your finances. You need someone responsible, organized, and capable of making tough decisions.

If your brother can't manage his own money, he's not a good choice to manage yours. Be practical.

Not Talking to Your Family

You don't have to share every detail, but your family should know the basics. Where are your documents? Who's your executor? What are your wishes?

Surprises after you're gone lead to confusion, hurt feelings, and sometimes legal battles. A little communication now can prevent a lot of drama later.

And if you're making any decisions that might be controversial (like leaving more to one kid than another), it's worth explaining your reasoning while you're still around to do it.

Using DIY Documents Incorrectly

Look, there are online services that sell estate planning documents cheap. And sometimes they work fine for very simple situations.

But if you have kids, own real estate, have any complexity in your family situation, or you're not sure what you're doing, hire an attorney. A couple hundred bucks now can save your family thousands (or tens of thousands) later.

Estate planning documents need to comply with your state's laws. One mistake can invalidate the whole thing.

It's Not About You, It's About Them

Here's the thing about estate planning: you won't be around to deal with the consequences if you don't do it right. Your family will.

When you die without a plan, you're basically saying, "Figure it out yourselves." And they will, but it'll take longer, cost more, and cause more stress than it needed to.

Estate planning is one of the most loving things you can do for your family. You're making their lives easier during one of the hardest times they'll ever face.

You're making sure they don't have to guess what you wanted. You're saving them from family fights. You're protecting them from unnecessary legal fees and court battles.

That's worth a few hours of uncomfortable conversations and some money spent on legal documents.

How We Help With Estate Planning

At Iron Eagle Advisors, estate planning is part of the comprehensive financial planning we do with our clients here in Charlottesville.

We're not attorneys, so we don't draft legal documents. But we help you understand what you need, coordinate with estate planning attorneys, and make sure your financial plan and your estate plan work together.

We help you think through questions like:

• How should you title your assets?
• Are your beneficiary designations up to date?
• Do you need a trust, or is a will sufficient?
• How can you mitigate taxes for your heirs?
• What happens to your retirement accounts when you die?

We also review your existing estate plan (if you have one) to make sure it still makes sense and aligns with your current situation and goals.

Estate planning doesn't have to be scary or complicated. It just needs to get done. Let's sit down and make sure you have a plan that protects your family and gives you peace of mind.

Ready to Protect Your Family's Future?

Let's create an estate plan that gives you confidence. Schedule a free consultation with Iron Eagle Advisors today

This material is for informational purposes only and does not constitute tax, legal, or investment advice. Please consult a qualified tax professional regarding your individual circumstances.