Estate Planning Basics: Protecting Your Net Worth

Estate Planning Isn't Just for Rich People

When most people hear "estate planning," they picture sprawling mansions and teams of lawyers. The reality? If you own anything — a car, a savings account, a retirement fund — you have an estate. And without a plan, the state decides what happens to it.

Estate planning basics aren't complicated, but they are important. Whether your net worth is $10,000 or $10 million, having a plan protects the people you care about and ensures your wishes are followed.

Let's break down the essentials so you can stop putting this off.

Start With the Full Picture: Know Your Net Worth

Here's the thing most estate planning guides skip: you can't plan for what you don't know you have.

Before you draft a will or name beneficiaries, you need a clear, accurate snapshot of everything you own and everything you owe. That means every bank account, retirement fund, brokerage account, piece of real estate, vehicle, and outstanding debt.

This is where tracking your net worth with Nova becomes the foundation of your estate plan. When all your assets and liabilities are in one place, you can make informed decisions about who gets what — and you won't accidentally leave anything out.

Think of your net worth as the table of contents for your estate plan. Without it, you're planning blind.

The Four Pillars of a Basic Estate Plan

Estate planning for beginners comes down to four key documents. You don't need all of them on day one, but understanding each one helps you prioritize.

1. A Will

A will is the most fundamental estate planning document. It specifies:

• Who inherits your assets (spouse, children, friends, charities)
• Who becomes guardian of your minor children
• Who serves as executor to carry out your wishes

Without a will, your state's intestacy laws decide everything. That might mean your assets go to relatives you barely speak to, or a lengthy court process that drains your estate's value.

The good news: A basic will doesn't require an expensive attorney. Online legal services can help you create one for a few hundred dollars. Just make sure it's valid in your state.

2. Trusts

Trusts sound intimidating, but the concept is simple: a trust holds assets on behalf of someone else, managed by a person you choose (the trustee).

Why consider a trust?

• Avoid probate — Assets in a trust pass directly to beneficiaries without the time, cost, and public nature of probate court.
• Control timing — You can specify that children receive assets at age 25 instead of 18, or that funds are used only for education.
• Protect assets — Certain trusts shield assets from creditors or lawsuits.

A revocable living trust is the most common type for regular people. You maintain full control while you're alive and can change it anytime. When you pass, assets transfer smoothly to your beneficiaries.

Trusts aren't just for the ultra-wealthy. If you own a home, have retirement accounts over six figures, or want to avoid probate, a trust is worth exploring.

3. Beneficiary Designations

Here's something that catches many people off guard: beneficiary designations override your will.

Your 401(k), IRA, life insurance policies, and many bank accounts let you name beneficiaries directly. When you pass, those assets go straight to whoever is listed — regardless of what your will says.

This means that if you named your ex-spouse as beneficiary on your 401(k) ten years ago and never updated it, they're getting that money. Even if your will says otherwise.

Action items:

• Review beneficiary designations on every financial account
• Update them after major life events (marriage, divorce, birth of a child)

This is another reason knowing your complete financial picture matters. With Nova's dashboard showing all your connected accounts, you can quickly identify which accounts need beneficiary reviews — instead of hunting through old paperwork.

4. Power of Attorney

Estate planning isn't only about what happens after you die. What happens if you're alive but incapacitated?

A financial power of attorney authorizes someone you trust to manage your finances if you can't — paying bills, managing investments, handling insurance claims.

A healthcare power of attorney (or healthcare proxy) designates someone to make medical decisions on your behalf.

Without these documents, your family may need to petition a court for legal authority to help you — an expensive, slow process during an already difficult time.

Why Net Worth Tracking and Estate Planning Go Hand in Hand

Estate planning isn't a one-and-done task. Your net worth changes — new accounts, new assets, paid-off debts, changing property values. Your estate plan needs to keep pace.

When you actively track your net worth, you:

• Spot gaps in your plan — New investment account? Make sure it has beneficiaries listed.
• Keep documents current — A major net worth change (inheritance, home purchase, business growth) often means your will or trust needs updating.
• Simplify things for your family — If something happens to you, your family can see exactly where everything stands instead of scrambling through filing cabinets.

Nova keeps your full financial picture updated in real time, which means your estate planning conversations — with your spouse, your attorney, or your financial advisor — start with accurate numbers instead of guesswork.

Getting Started: A Simple Checklist

You don't need to do everything at once. Start here:

1. Calculate your net worth. List every asset and liability. Better yet, connect your accounts and let automation do the work.
2. Review all beneficiary designations. Check every retirement account, life insurance policy, and bank account.
3. Draft a basic will. At minimum, specify who inherits your assets and who would care for your kids.
4. Set up powers of attorney. Choose someone you trust for both financial and healthcare decisions.
5. Consider a trust if you own property, have significant retirement savings, or want to avoid probate.
6. Schedule an annual review. Life changes. Your plan should too.

The Bottom Line

Estate planning basics aren't glamorous, but they're one of the most important things you can do for the people you love. And it all starts with knowing exactly what you have.

You don't need to be wealthy to protect your net worth. You just need a plan — and the clarity that comes from understanding your complete financial picture.