Estate Planning in the US: How Wills, Trusts, and Probate Work

Every family living in the US eventually faces one question: when a person dies, who gets their house, savings, and other property, and how? Settling this in advance is called estate planning. Note: this article is general information, not legal advice; the exact rules differ in each state and change over time, so consult a licensed attorney before making important decisions (Source: Nolo — Wills FAQ; American Bar Association — Estate Planning).

What a will is, and what happens if you die without one

A last will and testament is a legal document that states who receives your property after death. Generally the maker must be a legal adult (usually 18+) of sound mind, the document must be in writing, and it must be signed by the maker and typically by at least two witnesses (the exact requirements vary by state). A will names beneficiaries, an executor to distribute the property, and — crucially — a guardian for minor children (Source: Nolo — Wills FAQ; ABA — Estate Planning).

If a person dies without a will, that is called intestacy: state law, not you, decides who inherits. The general rule is that property passes to the closest relatives — usually the surviving spouse and children in shares set by statute, and if there are none, to parents and siblings. A court, not you, also appoints a guardian for minor children. That is why a will matters especially for families with young children (Source: Nolo — Wills FAQ).

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Probate — the inheritance court process

Before a will takes effect it usually goes through probate — a court-supervised inheritance process in which the court validates the will, debts and taxes are paid, and the property is then distributed to heirs. This typically takes from a few months to about a year (longer in disputes) and costs money out of the estate. Importantly, probate is a public court process: the filings, including the will, become public record. For this reason some assets are arranged to bypass probate (Source: Nolo — Probate FAQ).

Assets that pass outside the will

Some property passes directly, regardless of what the will says. These include: life insurance and retirement accounts such as 401(k) and IRA with a named beneficiary; payable-on-death (POD) bank accounts and transfer-on-death (TOD) investment accounts; and jointly owned property with right of survivorship, which passes automatically to the surviving co-owner. The key rule: a beneficiary designation overrides the will. If your 401(k) still names an ex-spouse while your will names your children, the beneficiary form wins for that account. So keep designations up to date (Source: NerdWallet — Payable on Death; Greenleaf Trust — PODs and TODs).

The living trust

A revocable living trust is set up during your lifetime: you transfer property into it and usually manage it yourself while alive. Its main advantage is that it avoids probate — assets titled in the trust pass to beneficiaries without court involvement, privately and often faster (a will alone does not avoid probate). "Revocable" means you can change or cancel it while alive; an "irrevocable" trust generally cannot be changed and is used for asset protection or tax planning, at the cost of giving up control (Source: Nolo — Living Trust vs. Will).

Other key documents

Estate planning is not only about death — if a person becomes seriously ill or unconscious, who decides? Three documents answer this: a durable power of attorney appoints an agent to handle financial matters and stays valid even if the person becomes incapacitated; a healthcare proxy names a trusted person to make medical decisions; and a living will / advance directive sets out your instructions for end-of-life care in advance. These protect a person's wishes when they can no longer speak for themselves (Source: ABA — Living Wills, Health Care Proxies & Advance Directives; Mayo Clinic).

Estate tax — most people owe nothing

The federal estate tax that many people fear actually applies to very few families, because the exemption is extremely high: for 2025 it is USD 13.99 million per individual, and from 2026 it is USD 15 million (indexed for inflation thereafter). The exemption is per individual, so a married couple can shield roughly double. As a result the vast majority owe no federal estate tax at all — only property above the threshold is taxed. The annual gift-tax exclusion is USD 19,000 per recipient for both 2025 and 2026 (Source: IRS — Instructions for Form 706; IRS — Instructions for Form 709).

Note too that some states have their own estate or inheritance tax, often with a much lower threshold. About 12 states plus the District of Columbia levy an estate tax, and five states levy an inheritance tax paid by the heir. So the state where your property is located matters (Source: Tax Foundation — Estate and Inheritance Taxes by State, 2026).

Special points for immigrants

Non-citizens can make a fully valid US will and own property — there is no need to wait for citizenship or immigration status to be resolved. But there is one important exception: if a spouse is a US citizen, the inheritance passes to them tax-free in unlimited amount (the unlimited marital deduction), yet if the surviving spouse is not a citizen this unlimited benefit does not apply. The usual fix is a Qualified Domestic Trust (QDOT): it preserves the deduction but defers rather than eliminates the tax, and requires at least one US-citizen (or US-corporate) trustee. If the surviving spouse becomes a US citizen before the tax return is filed, no QDOT is needed (Source: Nolo — Estate Planning When You're Married to a Noncitizen; Fidelity).

A further practical point for Muslim families: US state intestacy law does not follow the Islamic order of inheritance (faraid). Families who wish to follow a Shariah-compliant distribution can do so through a written will or living trust — a matter of drafting private documents that reflect the family's wishes, carried out in accordance with applicable state law (Source: Nolo — Wills FAQ; ABA — Estate Planning).