Estate Planning Basics: Probate, Beneficiaries, Wills and Trusts

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"Estate planning" sounds like something only wealthy people need. It isn't. If you have children, a home, a retirement account, or a life insurance policy, you have an estate. This page covers the basics so you can have a better conversation with an estate attorney.

What probate is

Probate is the court process that settles a person's estate after they die. The court confirms the will (if there is one), makes sure debts and taxes are paid, and transfers property to the right people.

Probate can take months or longer, can involve court and attorney fees, and is usually public record. The rules vary by state, and many states have a simpler process for small estates. Good planning can help some assets skip probate entirely.

For example, property owned jointly "with right of survivorship" usually passes straight to the surviving owner. But a house titled only in one person's name often has to go through probate before it can be sold or transferred.

Beneficiary designations: the forms that often outrank a will

Life insurance, 401(k)s, IRAs, annuities, and bank or investment accounts with payable-on-death (POD) or transfer-on-death (TOD) designations usually pass straight to the people named on the account. They generally don't go through probate.

Here's what surprises many families: the beneficiary form usually controls, even if your will says something different. Common mistakes include:

An ex-spouse still listed after a divorce
No contingent (backup) beneficiary
Naming "my estate," which can send the money into probate
Naming a minor child directly (see the FAQ below)

Wills

A will says who receives your property, names an executor to handle your affairs, and is usually where parents name a guardian for minor children. That last part matters a lot for young families.

If you die without a will, state law decides who inherits, and a court decides who raises your children.

Trusts

A trust is a legal arrangement where a trustee manages property for your beneficiaries.

Revocable living trust: You can change it during your life. Property titled in the trust can generally pass without probate and more privately. It can also manage money for children until they're older.
Irrevocable trust: Harder to change. Some families use an irrevocable life insurance trust for estate tax or control reasons.

A trust only controls what's actually placed in it, or "funded." Trusts cost more to set up than a simple will, so an attorney can help you decide if one makes sense.

Where estate taxes fit

According to the IRS, the federal estate tax exclusion is $15 million per person for 2026, so most families won't owe federal estate tax. Some states have their own estate or inheritance taxes with lower limits. Even without estate tax, life insurance can give your family cash to pay final bills and debts without having to sell a home or business at a bad time.

Questions people ask

Do beneficiaries pay income tax on life insurance?

Generally, no. According to the IRS, life insurance proceeds paid because of the insured person's death generally aren't taxable income. Interest earned on the proceeds may be taxable.

Can I name my minor child as a beneficiary?

You can, but insurance companies generally can't pay large amounts directly to a minor. A court may need to appoint someone to manage the money. Many parents name a trust or a custodian under their state's transfers-to-minors law instead. Ask an attorney.

How often should I review my beneficiaries?

After any big life event, such as marriage, divorce, a birth, or a death, and every year or two otherwise.

Sources: IRS, "What's new — Estate and gift tax" (irs.gov); IRS guidance on life insurance proceeds (irs.gov).

WEDOIT education, led by Dr. Joel M Tchafack, PharmD, licensed life insurance professional in NM, CO, MD, NC, SC, TN, TX, VA and WY (NPN 19623090). WEDOIT LLC, Carlsbad, New Mexico · 575-266-3119 · info@wedoitinsurance.com

Consult an attorney. This content is for education only and isn't tax, legal, or investment advice. Coverage and benefits depend on the product, carrier, state, and underwriting.