Because financial journeys are best traveled with friends
Essential Estate Planning Documents

Essential Estate Planning Documents

… from the Perspective of a Financial Planner (I am not an attorney!)

Estate planning can get complicated, and sometimes people put it off exactly for that reason.  Who wants to be digging into dusty legal documents when there are other, more pleasant things to do (like washing your socks)? I’m here to break it down, so hopefully, it’s a little less painful, more accessible, and even actionable.  (After all, your socks are still calling…)

What do I really need?

First: get clear on what you are trying to accomplish.  Some documents relate to what happens if you are unable to make decisions or express your wishes (incapacitated).  Different documents relate to what happens when you are no longer living (deceased).  Keeping these 2 situations separate in your mind is the first step in sorting through what documents you want and need.

If you have complicated family logistics (blended/divorced/estranged family members) or a complex financial situation (including but not limited to naming trusts) – you probably should seek the advice of experienced legal counsel (i.e., an estate planning attorney).  Sometimes, though, your affairs seem to be pretty simple.  If that’s the case, what “bare-bones” documents do you really need?

If you become incapacitated: 3 Documents You Need

  1. Durable / Financial Power of Attorney (POA)
    • Here’s the document that relates to financial decisions.  This document authorizes the person you name (usually called your “agent”) to handle financial matters on your behalf.  It does NOT involve medical decisions.  (That’s a different document, listed below.)
    • You can set up a financial power of attorney so that it becomes active only if you are incapacitated, or you can create it so that it is immediately effective (for example, if you are often out of town, to give your spouse the power to sign financial documents on your behalf).  You also list the specific types of transactions you want your POA to have the authority to transact (you can make it limited or broad). 
    • Heads up: if you are married, your spouse does have some authority over jointly owned property, but many institutions may refuse to deal with one spouse without a valid POA from the other.  When in doubt, getting a POA in place can make life less stressful for your partner. 
  2. Living Will / Health Care Declaration / Advance Directive
    • This document lays out your wishes for medical and end-of-life care, should you be unable to communicate those wishes.  You can spell out exactly what you do or do not want (for example, ventilators or feeding tubes). 
    • In some states, this can include a “do not resuscitate” or DNR order.  These are sometimes being replaced by a “physicians orders for life-sustaining treatment” or POLST form.  Form names and how they are used vary by state.  Here’s a helpful resource for more information about your state.
    • Depending on your state, this document may also allow you to name the person you select to make medical decisions for you.  In other states, this is done in a separate document, discussed next.
  3. Medical or Health Care Power of Attorney
    • This document names the person who you want to make medical decisions for you, should you be unable to do so.  Note that this is only for healthcare related decisions.  It does not involve finances.  Depending on where you live, this person may be called your “agent,” “attorney-in-fact,” “health care proxy,” “health care surrogate,” or something similar.  Don’t let the terminology confuse you.  You are naming the person who you trust to make medical decisions for you.  You are not laying out what exactly you want done (or not done).  That is accomplished in the Living Will / Advance Directive document (see above).
    • For more in-depth information, see this article on health care documents.
    • All 3 of these documents can be obtained in several ways: by contacting an estate planning attorney (who can answer questions and advise you); by hiring a paralegal (who won’t be qualified to give advice, but can draw up documents on your behalf); or by going the DIY route and using online templates for your state or via a website like LegalZoom

After you are deceased: 3 Documents You Need

  1. Beneficiary Forms
    • For financial stuff like retirement accounts, pensions, and life insurance, you may recall filling out a beneficiary form when you signed up.  The company holding your assets is going to go by what’s on the beneficiary form, NOT what’s on any of your other estate planning documents.  So, it’s really important that these forms are up to date.  (You may want to check out our recent article on types of beneficiaries.)  If you’re unsure, locate a recent statement and contact the company holding your account.  Ask who they have listed as your named beneficiaries. 
  2. Transfer on Death Designations
    • An efficient and relatively easy way to make sure your beneficiary has access to your “real property” (like bank accounts and even real estate like your home) is to use a “TOD”designation.  This document allows you to maintain control over the property while you are alive, but makes it easy for your loved one to gain access after you are gone.  For bank accounts, this could be important if they will need to pay for any remaining expenses (medical bills, mortgage or other monthly obligations, taxes).  For property like a house, this can be especially helpful in avoiding potentially expensive and burdensome probate court.  Not having this designation in place means your beneficiary may have to go through hoops before they have legal authority to do anything regarding the property. 
    • To add a TOD designation to a bank account, contact your bank.  To add a TOD deed to your home, check out this helpful article
  3. Last Will & Testament
    • This directs where the physical stuff goes (jewelry, car, personal possessions).  Sentimental items should go here if there’s someone specific (or an organization or charity) you would like to have your teacup collection after you are gone.  If you don’t have a will, your “stuff” will be distributed according to your state’s intestacy laws – which may or may not mean your stuff will go where you want it to go.
    • You can also use a will to name a guardian to care for your minor children.  This is essential if you have children under age 18. 
    • Finally, a will also names your executor, which is the person with authority to make sure the terms of your will are carried out. 
    • Basic wills can be created using online programs (examples are Willing, LegalZoom, or Nolo’s Online Will); special software (examples are Quicken WillMaker); or free forms on your own – but you need to be aware of the requirements in your home state.  (Here’s a resource for my fellow Texans.)

For Both Situations / Other Stuff You Should Have:

  1. List of accounts / contacts
    • This is so your loved ones know what you have where and who to contact about it.  SO IMPORTANT!  We have one you can use here.
    • You can also use your annual balance sheet can be a guide to what accounts you have (although a balance sheet doesn’t usually contain contact information). 
  2. Digital assets / password vault
    • Relatively new to the list of estate planning essentials, but vital in our digital age.  This is basically a hub for all of your passwords/logins.  Personally, I find this super-useful for keeping track of the many sign-ons I have to manage as a digital human.  I also find peace of mind knowing (no matter how many times I use the “forgot my password” link) my spouse can access this information if something were to happen to me.  (This is because I chose to give him access; you are in control of how this works.) 
    • There are many providers for this type of service; Dashlane or Lastpass are just two examples.   

Now What?

Phew! That was a lot, I know.  If you are just getting started, I suggest you take each of these items one at a time, steadily working through the list.  For example, take one morning to check your beneficiary forms.  Then, on a different day, take an afternoon to consider and set up TOD designations.  Don’t try to do it all at once.  As they say, “yard by yard, the work is hard, but inch by inch, it’s a cinch!”  Getting these important documents in place takes a little work, but the peace of mind and confidence you will feel afterward are well worth it.

Questions?  Call me!  I may not have the answer, but I am happy to share my experience with you. 


This article is meant for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author and have not been evaluated by an attorney for accuracy, completeness, or changes in the law.