What is trust and estate planning?
An estate plan is the umbrella that encompasses what you want to happen to your assets and affairs, both during your lifetime and after your death. The documents inside it, such as wills, trusts, powers of attorney, health care directives, and beneficiary designations, are tools that help you carry out your plan.
Estate planning isn’t only for the wealthy. Anyone with assets, dependents, or preferences about their own medical care can benefit from drafting one. Learn which components of an estate plan could benefit you, how much you can expect it to cost, and how to get started.
Why it matters now: The 2026 tax landscape
Federal tax changes under the One Big Beautiful Bill Act (OBBBA) have changed estate planning. For one thing, the law makes the amount you can leave tax‑free at death much higher — $15 million per individual, or $30 million for a married couple — and locks it in going forward. This means the federal estate tax is only an issue for the very wealthy. But that doesn’t mean other families shouldn’t be concerned about estate planning — it just shifts their emphasis:
Estate and inheritance taxes at the state level are now a greater concern
According to the Tax Foundation, 12 states and the District of Columbia impose taxes on estates valued as low as $1 million (in Oregon), and five states have inheritance taxes (which are paid by heirs rather than the estate), often with little or no exemption.¹ That makes professionals with state-level expertise critical to estate planning.
Bigger opportunity to move money to family during life
Because federal gift and estate tax exemptions have increased, some families have more flexibility to transfer assets to trusts for future generations. Certain transfers may require tax reporting and should be coordinated with legal and tax advisors, but these strategies can help support long-term wealth transfer, asset protections, and legacy planning objectives.
Old wills and trusts may no longer match your wishes
Many older estate plans use formulas tied to the old, lower tax exemption, like “put the maximum tax‑free amount into this trust.” Now that the tax‑free amount is much larger, those formulas could send too much to certain trusts or beneficiaries.
Tax planning remains an important part of estate planning
While federal estate taxes affect fewer families today, tax planning remains an important part of estate planning. Many families focus on issues such as income tax treatment of inherited retirement accounts, capital gains taxes on appreciated assets, charitable giving strategies, and how trusts are taxed during life and after death. As a result, trusts are often used not only for wealth transfer goals, but also to help coordinate tax planning and family objectives.
Plans need flexibility for future law changes
Even though this law gives some stability now, tax rules can still change down the road. New trusts are often drafted with “escape hatches” (such as trust protectors or powers to change certain terms) so families can adjust later without having to start from scratch.
The 5 essentials of estate planning
While recent changes in tax law may shift how they are used, these five documents remain at the core of most complete estate plans:
A will — This directs asset distribution after your death and names a guardian for minor children, if any.
One or more trusts (if needed) — These hold and manage assets, both during life and after death. Having a trust can help your heirs avoid the costs and delays of going through probate.
A durable power of attorney — This authorizes someone to manage your finances on your behalf if you become incapacitated.
Health care directives — Legal instructions that specify your preferences for medical care if you’re incapacitated. They include a health care proxy, which is someone who can make medical decisions on your behalf, and a living will, which clarifies which medical care you do and do not want.
Up-to-date beneficiary designations — These determine who receives life insurance benefits or the funds within your retirement accounts and similar assets after your death. These designations take precedence over a will and override it in the event of a conflict.
Not everyone needs all five estate planning documents; those with modest assets and no dependents may need only a will, a health care directive, and updated beneficiaries. Families with more complex estates (such as business ownership or property in several states) may need more. A financial advisor can help you figure out what applies to your situation.
Wills: What they do and who needs one
A will is a legal document that expresses your wishes for what happens to your property, assets, and minor children after your death. It doesn’t override beneficiary designations, and your estate assets will still go through probate: the legal process, which takes place in a special probate court, which ensures your estate pays what it owes before changing hands.
Who needs a will?
Every adult who wants control over their assets should have a will, but there are three groups of people for whom it’s especially important:
Married people: You may assume that if you're married and die without a will, your surviving spouse will inherit all of your assets and property, but that's not always the case. For example, in some states, if your spouse is not the parent of your children, they may receive only a portion of your assets, depending on the state and the circumstances.²
People with property: If you own property and die intestate (without a will), then the state decides where your assets go: to your spouse, your children, their descendants, and so on, according to state statutes. If none of these people can be located, the state can claim all your assets and property after all creditors have been paid. If you want a say in what happens to your property after you die, you need a will.
People with children: If you have children who are below the age of majority in your state (usually 18; 19 in Alabama and Nebraska and 21 in Mississippi), you need a will to appoint the guardian of your choice to care for them after your death. You can also appoint the successor to that guardian. Without a will, the state will choose the guardian.
Pros and cons of having a will
A will has many benefits: It provides some control over the distribution of your assets, even after you’re gone. You can choose who is responsible for carrying out your directives as the “executor” of your will. And you can assign a guardian to care for your children (or even your pets) after your death.
However, there are some trade-offs. A will is a public legal document, so your privacy isn't protected from the curious after your death. Even with a will in place, your estate must still pass through the probate process. And relatives can take legal action if they believe they may be entitled to some portion of your estate, which could draw out the process and delay your intended heirs from receiving their due.
How to set up a will
The standard approach is to work with an estate planning attorney who will draft the will in accordance with state requirements. Some people choose to use online services, which are best suited for very simple estates without property, businesses, or complex family structures.
Before your meeting, think about what assets you have and who you want to distribute them to. For a full asset checklist, see Guardian's Estate Planning Checklist.
Trusts: What they do and who needs one
A trust is a legal arrangement in which a grantor transfers assets to a trustee, who manages them for the grantor's beneficiaries in accordance with the grantor's terms. A grantor is the person granting the right to manage the assets. For some trusts, the grantor may serve as the initial trustee and in others, the trustee is a third party with a fiduciary responsibility to act in accordance with your wishes. The beneficiary of the trust is the person designated to receive its benefits.
You can have a trust while you’re alive, and it can continue after you’re gone, making it a valuable part of the estate planning process. The trust will specify the terms, including listing the assets, stating when and how they will be distributed, and whether (and under what conditions) the trust will be dissolved.
There are two main types of trusts: revocable and irrevocable. In a revocable or living trust, assets can be changed or pulled back, and the trust itself can be modified during your lifetime. In an irrevocable trust, you must give up control of the assets, and you generally cannot modify its terms. However, with certain types of irrevocable trusts, those assets may be shielded from creditors.
Who needs a trust?
Trusts are especially useful for the following situations:
Larger, more complicated estates: Trusts can provide privacy for people with high net worth or complicated financial situations. They can also help manage tax liabilities.³
Parents with minor children or blended families: Trusts give you greater control not only over who your assets go to, but also over when they are distributed. Blended families can also use trusts to provide for a current spouse while also protecting children from a previous marriage.
Families of people with special needs: A special needs trust (SNT) can provide for a family member with special needs without disqualifying them from government assistance programs like SSI or Medicaid.⁴
How to set up a trust
Creating a trust is a complex undertaking that requires an attorney. It involves retitling assets and complying with state laws. Upfront costs are higher, and trusts require ongoing maintenance and administration. Trusts are not for everyone, but in the right situations, the tradeoffs are worth it.
Common types of trusts at a glance
Trust type | What it does |
|---|---|
Revocable living trust | Can be modified or revoked. Helps avoid probate and provides greater control over asset distribution and timing. |
Irrevocable trust | Cannot be changed once established. Can be designed to remove assets from your control and taxable estate; may offer creditor protection. |
Testamentary trust | Created through a will; takes effect after death. Useful for managing assets left to minor children or others who benefit from oversight. |
Special needs trust | Provides for a beneficiary with a disability designed to retain their eligibility for government benefits. |
Charitable trust | Allows assets to benefit a charitable cause, often alongside income or tax benefits for the grantor or heirs. |
Irrevocable life insurance trust (ILIT) | Owns a life insurance policy so the death benefit sits outside the insured's taxable estate. Requires an attorney to set up and maintain. |
QTIP trust | Provides income to a surviving spouse for life, with the remainder directed to other beneficiaries — often used in blended families or to manage estate taxes. |
Choosing between (and combining) wills and trusts
You’ll rarely need to make an either/or choice between a will or a trust. Many estate plans use both. One common strategy is to pair a revocable trust with a "pour-over" will, which receives any assets you don’t add to the trust.
If you’re trying to decide whether to start with a trust or a will, create an estate planning checklist by asking yourself a few questions:
How big is my estate? Is the estate tax an issue?
Do I need (or will I soon need) someone else to manage my finances?
Do I need or want to protect assets from creditors?
Do I have minor children?
Am I remarried, with children from other marriages?
Do I have reasons to want to avoid probate?
A trust is especially suitable for managing complex or high-net-worth estates and families with unique needs. Smaller estates and simple family structures may require only a will for estate planning. You can have both a will and a trust if it suits your situation.
Trust | Will | |
|---|---|---|
When it takes effect | Immediately after setup | After your death |
Probate | Not for assets in the trust | Required |
Private | Yes | No — public record |
Cost to set up | Higher | Lower |
Ongoing administration | Required (funding and maintenance) | Minimal |
Ability to manage incapacity | Yes — trustee can manage assets | No |
Control over timing of distribution | Yes | No |
Able to be changed later | Yes, for revocable trusts, no, for irrevocable trusts | Yes, until death |
How life insurance fits into an estate plan
Life insurance proceeds typically pass to beneficiaries outside of probate, making them a useful tool for estate planning. With life insurance, the benefit is liquid, and beneficiaries are clearly named. And compared to assets distributed through a will, which could take months to settle, life insurance benefits are paid out quickly.
Life insurance plays a few key roles in an estate plan:
Replacing your income for your dependents.
Providing liquidity to pay estate taxes or final expenses, such as burial costs.
Equalizing inheritances among your heirs.
Funding a buy-sell agreement so business partners can buy out your portion of the business at the appropriate value.
There is a special type of trust called an irrevocable life insurance trust (ILIT) that is designed to hold a life insurance policy. With an ILIT, the death benefit sits outside of your taxable estate, which may help you manage estate taxes. ILITs are complex and require an attorney to set up.
For life insurance to work best, you must keep your beneficiaries up to date. A life insurance beneficiary supersedes the instructions in a will; neglecting to update your beneficiaries could derail your whole estate plan.
Explore how you can use life insurance as part of your wealth-accumulation strategy. As a mutual company with a 160-year track record, Guardian is built for the long-horizon role that life insurance plays in estate planning.
What estate planning typically costs
The cost for estate planning can vary significantly depending on what you need. Generally speaking, your options from least to most expensive would be:
DIY and online tools: Creating your own will from a template or self-service platform might cost $100 to $200.
Attorney-drafted, will-only estate plan: A will could cost $1,500 or more when drafted by an attorney.
Attorney-drafted will-and-trust plan: For an estate plan that also includes a trust, power of attorney, and health care directive, the cost could run to $5,000.⁵
Complex multi-trust plans: These are the most expensive, as they require many hours from a knowledgeable attorney.
The main factors driving your costs include the state you live in, the complexity of your estate, the number of trusts involved, and whether real estate or business interests are involved. Ongoing trust maintenance costs are also an important consideration.
However, it’s important not to ignore estate planning because of the price. Consider the cost of doing nothing: Probate fees, drawn-out delays in asset distribution, and even conflict among family members. The price of an attorney-drafted will or simple trust is likely to be much lower than that of a contested probate proceeding.
Who's on your estate planning team
You’ll typically call on more than one professional when planning your estate. Here’s who’s likely to help, and the role they play:
Estate planning attorney: Drafts legal documents, including wills, trusts, and powers of attorney; advises on state-specific rules and trust structures; ensures compliance with the law. Essential for anything beyond a very basic will.
Financial advisor: Helps coordinate financial accounts, beneficiary designations, life insurance, and retirement planning with the estate plan. They work with the legal documents from your attorney to help ensure your accounts operate as intended.
Tax professional or CPA (certified public accountant): Advises on income tax and estate tax implications, especially for larger estates or situations involving real estate, business interests, or charitable giving.
Not everyone needs all three types of professionals. For a simple estate, you may only need an attorney, while complex estates benefit from a coordinated team of professionals.
A Guardian financial advisor can help you work through how your financial accounts and insurance policies fit into your broader estate plan. Connect with a Guardian financial advisor.
How to get started
Begin by taking an inventory of your assets and how they’re currently titled. Think about who should receive what and who should make decisions when you can’t. Then:
Review and update beneficiary designations.
Decide whether you need an attorney or a self-service online tool.
Schedule important conversations with family.
Set up appointments with estate planning professionals.
You should review your estate plan every three to five years, or after major life events such as marriage, divorce, birth, death, major asset changes, or moving to a new state.
Getting started on your estate plan is the hardest part. A financial advisor can help you map out the financial pieces, while an attorney handles the legal aspects. Together, you’ll help ensure that your plan is appropriate, thorough, and legally sound.
Top asked questions about setting up wills and trusts
An estate plan is the complete set of documents and financial arrangements that direct what happens to you and your assets, particularly after your death. A trust is one of the possible tools within an estate plan that can hold assets and distribute them to beneficiaries and charitable organizations according to your wishes. Anyone can have an estate plan, but not everyone needs a trust as part of it.
When your home is in a trust, the trust owns the property, not you. While a trust can help avoid probate, it also involves important considerations. There may be a “due on sale” clause in your mortgage that could require the balance to be paid off immediately on transferring the title to the trust. Giving up ownership can also affect your ability to qualify for a homestead exemption or make refinancing more complicated. There’s also a risk that the property value would be reassessed, which could affect property taxes.⁶
A trust can contain a wide variety of assets, but there are a few you cannot, or should not, place in a trust. These include health savings accounts, which are already tax-advantaged, and retirement accounts, such as 401(k)s, IRAs, and 403(b)s. It’s usually best to exclude your vehicles (unless they're collector’s items) and everyday financial accounts as well. UGMA/UTMA accounts are for the benefit of the minor child named on the account, and if you predecease the child, it could pull the trust into probate. In most cases, naming a primary and secondary beneficiary, or a successor custodian for UGMA/UTMA accounts, is preferred.⁷
It depends. In a grantor trust, you continue to pay tax on the trust income. A revocable living trust is a common type of grantor trust. Irrevocable trusts can also be grantor trusts, which allow you, as the grantor, to make gifts to the trust, removing the assets from your taxable income, yet the assets are considered owned by you as the grantor. An irrevocable trust could also be a non-grantor trust, filing its own tax return, Form 1041, with distributed income taxed at the beneficiary’s rate and any undistributed income taxed and paid by the trust at the trust tax rate. Talk to a tax professional about the specific tax implications of a particular trust.
SSDI (Social Security Disability Insurance) is based on work history, not assets, so a trust typically doesn’t affect your eligibility. For SSI (Supplemental Security Income), assets held in a trust could count as your resources, which would affect your eligibility. With a revocable trust, the entire trust is considered a resource; with certain types of irrevocable trusts, only the portion that could pay a benefit to you would be considered a resource.⁸
The One Big Beautiful Bill Act changed some rules about gift and estate taxes. For estate tax purposes, the biggest change is that the lifetime exemption was permanently increased to $15 million for singles and $30 million for couples (indexed for inflation). This increase means the focus for many estate plans is no longer reducing the size of the estate but rather managing future growth.⁹
The biggest mistake to avoid when setting up a trust fund for your children is choosing the wrong trustee. It's important to select a trustee who understands the requirements of trust fund management and can undertake the responsibilities.
Trusts can be more complex and costly to set up than a will. From a functional standpoint, a significant disadvantage of trusts, especially irrevocable trusts, is that you're transferring assets out of your name — and your control — into the trust's control. If you're uncertain about relinquishing control of your assets, a trust may not be the right step, or you may need to be more selective in choosing the type and terms of the trust.
