About 10 years ago, financial advisor Andrew Rafal was involved in helping a husband and wife create an estate plan. Six days after all the documents were in order and signed, the husband unexpectedly died from an aneurysm.
Thanks to the couple's planning, the surviving wife was able to access and assume ownership of assets that otherwise would not have been available immediately.
"It would have been a very different situation if they hadn't finalized their estate plan," said Rafal, founder and president of Bayntree Wealth Advisors. "In a time of grieving, it's one less thing to go through."
While estate planning is often associated with the wealthy, financial advisors say that most Americans can benefit from it.
"It's not just for the wealthy; it's for all of us," Rafal said. "And the earlier you start, the better."
The most basic part of estate planning is a will, which more than half of Americans die without, according to various data. Advisors caution that dying intestate (having no will) will result in a state court deciding who gets your assets and, if you have children, who will care for them.
This means that if you have an unmarried partner or a favorite charity but no will, your assets won't end up with them. Typically, the courts will pass on assets to your closest blood relatives, even if that wouldn't have been your first choice.
"Everyone should have a will," Rafal said. "It allows assets to go to beneficiaries you name. And if you have children who are minors, it names a guardian, which is extremely important."
Another often-overlooked element of estate planning is updating beneficiaries on financial assets such as individual retirement accounts, 401(k) plans and life insurance policies. Regular bank accounts, too, should have beneficiaries listed on a payable-on-death form, also known as a POD, which your bank can supply.
"As people go through different milestones in life, they need to change their beneficiaries," Rafal said, explaining, "If you had your parents listed and then you get married, those assets go to your parents. The beneficiary trumps any other estate planning you do."
Certified financial planner Aaron Graham had a client who, after a divorce, updated his will to exclude his ex-wife. But because the client's beneficiary designations were not updated, his ex-wife received his retirement account assets.
"Thankfully, the ex-wife was cooperative with the children of the deceased, but that's not always the case," said Graham, a financial advisor at Abacus Planning Group.
If no beneficiary is listed on those assets or the beneficiary has already passed away, the assets automatically go into probate. That's the process by which all of your debt is paid off and then the remaining assets are distributed to heirs.
Each state has its own laws governing how long creditors have to make a claim against the decedent's estate, but it typically is about six months to a year.
In the case of Rafal's client, for instance, if the wife had not been listed as a beneficiary on her husband's retirement and stock accounts, those assets would have first gone into probate and she would have had no claim to them until probate was completed.
Another part of estate planning involves what Rafal calls "lifetime management." That is, for starters, creating legal documents that give powers of attorney to specific people in your life if you are alive but incapacitated.
A medical power of attorney lets the chosen person make important health-care decisions if you cannot; a person with durable power of attorney will act as your agent if you become unable to tend to your finances.
Rafal said those people could be one and the same, but most often, people name two separate people.
"You might have someone who's not great with finances but you trust the person to make medical decisions for you, or vice versa," Rafal explained. "Durable power of attorney lets a person step in if you are unable to make decisions."
Tied to that is a living will. It states your wishes if you are on life support or have a terminal condition.
"Do you want to prolong [your] life at all costs, or do you have specific instructions on when and how you would like for life-saving measures to be implemented?" Graham said.
The idea is that it will be your wishes, not someone else's.
As far as taxes go when it comes to estate planning, chances are, you won't have to worry about the estate tax.
"It's important to remember that 99 percent of all people don't need to focus on the tax aspects of estate planning," said Pete Lang, president of Lang Capital. "For the vast majority of the population, there will be no gift or estate tax."
For 2016, the Internal Revenue Service will impose taxes on estates whose assets exceed $5.45 million. Roughly 0.02 percent of the population ends up paying the estate tax in any given year.
Estate planning also "helps protect against families fighting, or someone potentially contesting the wishes of the deceased," Rafal said. "We've had new clients come to us who didn't have proper planning, and their families have been torn apart."
Rafal said it's also important to make a list — handwritten or electronic — of all your assets and where they are.
"It makes it so much easier upon death or incapacity so your family isn't running around wondering what you have or don't have," he said.
— By Sarah O'Brien, special to CNBC.com