The vast majority of folks are not currently exposed to the federal estate tax, thanks to today’s ultra-generous $12.06 million exemption for singles — or effectively $24.12 million for married couples. Don’t fixate on the whopping big estate tax exemption for a single person. Being exempt is not the end of the story.

If you have minor children and some assets, you probably need an estate plan. Even some famous rich folks inexplicably pass away without having taken steps to express and fulfill their post-demise wishes. Aretha Franklin (estimated net worth $80 million) died without a will, even though she was in poor health and had a special-needs son.

If you die intestate (without a will), the laws of your state determine the fate of your minor children and your assets. Unless you have an inordinate amount of faith in the output of your beloved state legislature, you need a written will to make your wishes known.

The main purposes of a will are to name a guardian for your minor children (if any) and name an executor for your estate. For wills, good do-it-yourself software is readily available online. If you have significant assets, you should probably also set up a living trust to avoid probate.

Probate is a court-supervised legal process intended to make sure a deceased person's assets are properly distributed. Going through probate typically means red tape, legal fees, and your financial affairs becoming public information. That’s where the living trust comes in.
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