Estate Planning: Don't Let the State Decide

Estate planning is one of the most important financial and family conversations a person can have, yet it's one of the most commonly delayed. Recent studies show that a majority of Americans either have no estate plan at all or they're missing key documents such as a will, revocable trust, or powers of attorney. Even among those who understand its importance, many don't take action until a major life event, health scare, or family crisis forces the issue.

Several recent high-profile celebrity cases have served as public reminders that estate planning isn't just about creating documents. It's about keeping them current and ensuring they reflect your life today. No plan, an outdated plan, or an unfinished plan can create unintentional confusion, potential for increased conflict, and costly delays for loved ones.

The good news? Creating or updating your estate plan may be easier than you think. I sat down with Schwab's Devin Heitman, Senior Financial Planning Specialist in Colorado for his insights on estate planning.

Cindy: Why do so many people put off estate planning?

Devin: Honestly, most of the delay I encounter is emotional rather than logistical. Estate planning forces you to confront your own mortality, and that is an uncomfortable feeling. It's far easier to file it under "someday" than to spend an afternoon contemplating your own death.

I saw this firsthand with my wife. When we sat down to name a guardian for our three kids, I could tell it wasn't the legal language that was hard for her. It was the thought itself. Picturing someone else raising our children in a world where we weren't there to do it brought up feelings of grief and pain. It was an emotional exercise, and what finally got us through it was reframing the exercise: Naming a guardian wasn't inviting tragedy into our lives; it was an act of protection for the people we love most in this world. Once we saw it that way, we were able to finish the plan, but I'll never forget how much harder that one decision was than every financial detail combined.

Beyond the discomfort, two other assumptions get in the way. The first is the belief that there is plenty of time—that estate planning is something to handle later, once you are older or wealthier. The second is a desire to avoid family conflict. People worry that naming who gets what, or who is in charge, will stir up tension, so they sidestep the conversation entirely. Ironically, avoiding the plan usually creates far more conflict than the plan itself.

Cindy: What are the benefits of getting your estate plan in order?

Devin: The biggest one is control. Without a plan, state law decides who gets your assets, not you. An estate plan puts you back in the driver's seat and makes sure your wishes are carried out. It also means naming who can step in and make decisions on your behalf if you're ever unable to, so your family isn't left guessing or forced into court just to act for you.

But honestly, the part I believe matters most is what it does for your family. Clear instructions remove the ambiguity that so often turns into conflict between heirs. That's really the gift of estate planning: it's not about the documents themselves; it's about giving your family clarity and confidence when they're already going through one of the hardest moments of their lives.

Cindy: Before creating an estate plan, what's the first step people should take?

Devin: I believe the most valuable work happens before you ever sit down with an attorney or advisor: the prep work. Start by taking a full inventory of your financial life—everything you own, everything you owe, how each asset is titled, and who your current beneficiaries are.

That single exercise clarifies more than people expect.

From there, spend time getting clear on your goals, priorities, and identifying your key people—who you would want to make decisions, potentially serve as executor or trustee, and who your backups would be.

Finally, do not plan only for death. Incapacity is equally as important, and often comes first, so make sure your thinking accounts for a scenario where you are still living but unable to manage your own affairs.

Cindy: What documents should every estate plan include?

Devin: There is a foundational set that nearly everyone needs:

• a last will and testament
• a financial power of attorney
• a healthcare power of attorney
• an advance directive

Together, these cover who receives your assets, who manages your finances if you cannot, and who makes medical decisions on your behalf. Beyond foundational documents, several other documents are optional depending on your situation. A revocable living trust—paired with a pour-over will—can help you avoid probate and manage assets more privately. A letter of instruction to your family, while not legally binding, can be one of the most helpful things you leave behind, giving your loved ones practical guidance and context the legal documents do not capture.

Cindy: Once the paperwork is complete, is the job done?

Devin: I think about the estate planning process like a ship setting sail. Plotting the destination and signing off on the plan are the easy parts—the hard work is everything that comes after you cast off. Skipping periodic reviews is like a captain locking the wheel at departure and assuming the ship will stay on course indefinitely.

Conditions change constantly. A good captain must account for storms (changes in tax law), currents (changes in your family), equipment malfunctions (assets that were never retitled or beneficiary designations that were never updated), and even a new destination along the way (the growth of your assets over time). The plan only works if you keep adjusting course.

Cindy: How should people talk with heirs and family members about their plans?

Devin: I would frame this around several questions and practical steps. First, why have the conversation at all? Because clarity now prevents confusion, resentment, and guesswork later. Heirs who understand the plan are far better equipped to honor it.

Second, what should and shouldn't you share? You do not have to disclose every dollar figure; often, the more useful thing to communicate is the structure, the roles people will play, and the reasoning behind your decisions.

Third, think about the ideal conversation structure for your situation—whether it's one family meeting or a series of smaller conversations, and whether an advisor should be in the room. Mentally prepare for friction points ahead of time and anticipate where disagreement or hurt feelings might surface. Go in ready to explain your "why" rather than simply defending the "what."

Cindy: What tax issues should people be thinking about?

Devin: One of the most overlooked issues is that different accounts are taxed very differently depending on who—or what—inherits them. A Roth IRA passes tax-free to individuals, pre-tax IRAs pass tax-free to charities, and taxable brokerage assets receive a step-up in basis for individual heirs under current tax laws. Matching the right asset to the right beneficiary can meaningfully change the after-tax result.

On the estate tax side, the federal estate tax has become less of a concern for most families given today's high exemption levels. Several states, however, impose their own estate or inheritance taxes at thresholds far below the federal level.

Cindy: What does it mean to prepare heirs—not just documents?

Devin: When wealth fails to survive multiple generations, the culprit is rarely a lack of assets—it is a lack of preparation. Preparing heirs means honestly assessing where they stand as financial stewards and then planning a gradual handoff rather than a sudden one, so they grow into the responsibility instead of being handed it all at once.

It also means communicating the "why" behind your decisions, not just the "what," and integrating heirs into key professional relationships—the attorney, accountant, and advisor—they will eventually rely on. Where family dynamics are complicated, address them directly rather than hoping they resolve themselves. Practical tools help here, too: regular family meetings and a letter of instruction that communicates your shared values can turn an abstract plan into something the next generation understands and embraces.

Cindy: How often should people revisit their estate plans?

Devin: As a rule of thumb, every three to five years is a reasonable cadence. It can help to tie that review to a specific recurring event, like tax filing or year end, so it does not slip off your radar after several years.

There are two important exceptions. The first is event-driven: major life changes, such as a marriage, divorce, birth, death, or a significant change in assets, should trigger a review regardless of when the last one happened. The second is complexity: The more complicated your financial situation, the more frequently you should be revisiting the plan to make sure it still holds together.

Cindy: What are the biggest estate planning mistakes people make?

Devin: The mistakes I see tend to fall along a spectrum. At one end is never creating a plan at all. Close behind is creating a plan but never following through on it. Then there are communication failures—never telling anyone what the plan is or where to find it—and incapacity blind spots, where people plan for death but not for the very real possibility of being alive but unable to manage their affairs.

The thread running through most of these is a disconnect between the paperwork and the mechanics. I have seen plenty of situations where the legal documents look great on paper, but the titling, the funding, and the family communication were never actually connected to them. A beautiful estate plan means very little if the assets it is meant to govern were never titled to align with it.

Cindy: What's one thing readers can do this week to get started?

Devin: Focus on taking inventory of everything—it is the least emotionally loaded step and the natural foundation for everything else. Make a list of your real estate, investment and retirement accounts, bank accounts, business interests, life insurance, personal property, and your liabilities.