The core documents, in plain English, and how to keep them current.
An estate plan is a handful of documents that answer two questions: who makes decisions for you if you cannot, and who receives what you leave behind. This page explains what each core document does, what it does not do, and how revocable and irrevocable trusts differ.
General education, not legal, tax, or investment advice. Estate law differs by state; an estate planning attorney licensed in your state can say which documents fit your situation.
Says who receives what you own in your name alone, who settles your estate, and who would raise your minor children.
What it does:
What it does not do:
Without a will, state law decides who inherits (called intestacy) and a court chooses a guardian for minor children. Signing rules, such as witnesses and notarization, differ by state.
A trust you control during your life and can change or cancel at any time. Property titled to it can pass to heirs without probate.
What it does:
What it does not do:
It is usually paired with a short "pour-over" will that sends anything left outside the trust into it, though those assets may still go through probate first. While you are alive, the trust's income is generally reported on your own tax return. At your death it becomes irrevocable.
A trust that generally cannot be changed or canceled once it is signed. Giving up control is the point: what it holds can be outside your estate.
What it does:
What it does not do:
It usually has its own tax ID and files its own income tax return, unless it is set up as a "grantor trust" whose income stays on your return. Income kept inside a trust reaches the top federal income tax rate at a far lower amount than an individual's income does. For Medicaid, most states review transfers made in the five years before an application.
Names someone (your agent) to handle money matters if you cannot: paying bills, managing accounts, filing taxes.
What it does:
What it does not do:
Without one, family may have to ask a court to appoint a guardian or conservator to manage your money. Some banks and brokerage firms ask for their own forms or review a power of attorney before accepting it.
Names someone to make medical decisions for you when you cannot speak for yourself.
What it does:
What it does not do:
Names and forms differ by state, and many states combine it with a living will in one "advance directive." Once a child turns 18, parents no longer have automatic authority to make medical decisions for them, so young adults need their own.
Puts in writing the end-of-life care you want or do not want, such as life support, if you cannot say so yourself.
What it does:
What it does not do:
Pair it with a health care power of attorney: the living will says what you want, and your agent speaks for you in situations the document did not foresee.
Lets the people you name receive your medical information, so they can talk with your doctors.
What it does:
What it does not do:
Federal privacy law (HIPAA) limits what providers can share, even with a spouse or adult child, unless they are your personal representative or you have authorized it.
The forms on retirement accounts, life insurance, annuities, and many bank and brokerage accounts that say who receives them. They pass outside the will.
What it does:
What it does not do:
A form left naming an ex-spouse, or a beneficiary who has died, is a common problem. Naming backup (contingent) beneficiaries matters, and naming a minor directly can mean a court appoints someone to manage the money. Most people who inherit a retirement account from someone other than a spouse must empty it within 10 years.
| Question | Revocable living trust | Irrevocable trust |
|---|---|---|
| Can you change or cancel it? | Yes, at any time while you are able. | Generally no. |
| Who runs it? | Usually you, as trustee, until you cannot. | A trustee, usually someone other than you. |
| Does it avoid probate for what it holds? | Yes. | Yes. |
| Does it count in your estate for estate tax? | Yes. | Generally no, if set up and funded correctly. |
| Does it protect assets from your creditors? | Generally no. | Often, depending on state law and its terms. |
| Whose income tax return? | Yours. | Usually its own, unless it is a grantor trust. |
| Common reasons people use one | Avoiding probate, planning for incapacity, privacy, and paying an inheritance out over time. | Estate tax planning, life insurance, a family member with special needs, asset protection, and charitable gifts. |
Each person can leave $15 million free of federal estate tax ($30 million for a married couple that claims the first spouse's unused amount). The top federal estate tax rate is 40%. Gifts of up to $19,000 per recipient per year do not count against the exclusion.
Twelve states and the District of Columbia have their own estate tax, some starting well below the federal amount: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington, plus the District. Five states tax what heirs inherit: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Spouses are exempt from all of these inheritance taxes.
Most estate plans are built from the same core pieces: a will; a durable financial power of attorney; a health care power of attorney; a living will (advance directive); a HIPAA authorization; and up-to-date beneficiary designations on retirement accounts, life insurance, and other accounts. Many plans add a revocable living trust, and some add one or more irrevocable trusts.
A revocable trust can be changed or canceled at any time, and the person who creates it usually runs it. It avoids probate but does not reduce estate tax or protect assets from that person's creditors. An irrevocable trust generally cannot be changed once signed, and someone else usually runs it. Giving up control is what can move its assets out of the estate for estate tax and, depending on state law, protect them from creditors.
It depends on the situation and the state. Many people with simple situations use a will plus current beneficiary designations. A revocable living trust is commonly considered by people who want to avoid probate, own real estate in more than one state, want privacy, or want an inheritance paid out over time. An estate planning attorney licensed in the state can say which fits.
State law decides who inherits, usually a spouse, children, and then other relatives in a set order (called intestacy), and a court appoints someone to settle the estate and, for minor children, a guardian. Accounts with a beneficiary designation and property owned jointly with a right of survivorship still pass to the named or surviving owner.
No. A will is carried out through probate. Property in a trust, accounts with a beneficiary designation, and property owned jointly with a right of survivorship pass outside probate.
Generally, yes. Retirement accounts, life insurance, annuities, and payable-on-death or transfer-on-death accounts go to whoever is named on the account's form, even if a will says something different. That is why these forms are reviewed alongside the will.
In 2026, each person can leave up to $15 million free of federal estate tax, counting taxable gifts made during life; the amount is indexed for inflation after 2026. A married couple can use both amounts, $30 million, if the first spouse's unused amount is claimed on an estate tax return after the first death, even when no tax is due. Above it, the top rate is 40%. Gifts of up to $19,000 per recipient in 2026 do not count against it. Twelve states and the District of Columbia have their own estate tax, some starting well below the federal amount: Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, and Washington, plus the District. Five states tax what heirs inherit: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Spouses are exempt from all of these inheritance taxes.
No. Assets in a revocable trust still count as part of the estate for estate tax. Reducing an estate for tax purposes generally takes gifts or an irrevocable trust.
Funding means moving property into the trust: retitling bank and brokerage accounts and recording a new deed for real estate in the trust's name, or naming the trust as beneficiary where that fits. A trust that is signed but never funded controls nothing, and the property outside it may still go through probate.
After any major life event, such as a marriage, divorce, birth, death, move to another state, or large change in wealth, and many attorneys suggest a look every few years even when nothing has changed. Beneficiary designations are worth checking at the same time.
An estate planning attorney licensed in the state drafts the documents and makes sure they are signed correctly. A financial advisor can help line up account titles and beneficiary designations with the plan, and a tax professional can help with gift and estate tax returns. Multi-Cycle Capital does not practice law or prepare legal documents.
The interactive version adds optional questions that show why a document often comes up in a situation, a state picker for state estate and inheritance taxes, and a checklist that stays in your browser.
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