Estate Planning Basics

If you own assets, you have an estate, regardless of its size. You need a will to ensure your assets are distributed according to your wishes after you pass away. A will names guardians, directs asset transfers, shortens probate, quells family disputes, and keeps the state’s default intestacy statute from dictating your legacy.

The 2026 backdrop changes the strategy. The One Big Beautiful Bill Act (Public Law 119-21) (OBBBA) ( Public Law 119-21), signed in mid-2025, made the federal estate and gift tax exemption permanent at $15 million per individual — $30 million for a married couple — indexed for inflation, with no scheduled sunset. For almost every reader of this book, this ends the era in which estate planning was largely a defense against a reversion to a $5 million exemption. The work pivots toward maximizing the step-up in basis at death under IRC §1014 (section “Capital Gains Resets With Inheritance”), deliberate lifetime transfers using the now-large unified credit while valuations and discounts are favorable, and tightening the choreography between taxable, pre-tax, and Roth assets so heirs inherit the right mix.

State-level estate taxes still bind at far lower thresholds — Oregon at $1 million, Massachusetts and Washington in the low single-digit millions, several others a step above — and most are not indexed for inflation, so the squeeze tightens every year by silent drift. Where the binding constraint is a state estate tax instead of the federal one, the toolkit shifts: a GRAT moves the appreciation on a high-growth asset out of the taxable estate at near-zero gift-tax cost, and an Irrevocable Life Insurance Trust (ILIT) keeps the death benefit of a large policy outside the state taxable estate even when the federal exemption is more than sufficient. The full treatment is in chapter “Estate planning”.

Ensure you establish a complete estate stack:

Will

A legal document designating beneficiaries and guardians; it must pass through state probate.

Power of Attorney

A designation authorizing a trusted agent to manage financial affairs if you become incapacitated.

Advance Healthcare Directive

A medical power of attorney combined with a living will, directing medical interventions when you cannot speak for yourself.

Revocable Living Trust

A legal entity that holds title to your assets, bypassing the delay and public expense of probate to transfer wealth directly to heirs.

Note that assets holding named beneficiary designations — including life insurance policies, qualified retirement plans, transfer-on-death bank accounts, and trust assets — bypass the probate court entirely, regardless of what is written in your will. Ensure your beneficiary designations are synchronized with your overall estate plan.