Why these documents matter
Estate planning organizes who will make financial or medical decisions for you if you can’t, and who will receive your property after you die. Without these documents, state law often fills the gaps through probate or guardianship processes that can be slow, public, and costly. For practical guidance, the Consumer Financial Protection Bureau offers a clear overview of basic estate planning steps (Consumer Financial Protection Bureau).
In my practice as a financial planner, I see that the most common trouble spots are outdated beneficiary designations and missing powers of attorney. Those two gaps cause more family stress and administrative delay than any other omission.
Core estate planning documents and what each does
Below are the documents I recommend nearly every adult consider. State rules vary, so confirm requirements with an estate planning attorney in your state.
1) Last will and testament (your will)
- Purpose: Directs how probate assets are distributed, names an executor (personal representative), and can nominate guardians for minor children.
- Notes: A will controls only property that passes through probate. Assets with beneficiary designations or owned jointly usually bypass the will. See our deeper guide on Wills vs. Trusts: Which Do You Need?.
2) Durable power of attorney (financial POA)
- Purpose: Authorizes a trusted person (agent) to handle financial matters if you become incapacitated. A durable POA remains effective after incapacity; a non-durable POA does not.
- Key tips: Choose an agent who is reliable, organized, and can work with your financial institutions. Limit scope if needed (e.g., for specific accounts or transactions).
3) Advance healthcare directive (healthcare proxy / living will)
- Purpose: Names a healthcare agent to make medical decisions for you if you cannot, and records your treatment preferences (life-sustaining care, resuscitation, etc.).
- Why it matters: Hospitals and providers will often need written authorization to follow a surrogate’s instructions. AARP and state health resources provide model forms and explanations.
4) HIPAA authorization
- Purpose: Permits healthcare providers to share your medical information with the people you designate. This is separate from a healthcare proxy and is often required by hospitals and insurers.
5) Revocable living trust (when appropriate)
- Purpose: Holds assets during life and directs transfer to beneficiaries at death without probate for assets titled in the trust’s name.
- When to use: Common for those who own property in multiple states, wish to avoid probate, or want privacy. Trusts require active funding—retitling assets into the trust—which many overlook. For charitable bequests or complex distributions, see our guide on How to Structure a Charitable Bequest in Your Will.
6) Beneficiary designations and transfer-on-death registrations
- Purpose: Retirement accounts, life insurance, payable-on-death (POD) bank accounts, and some investment accounts transfer by beneficiary designation, which overrides instructions in a will.
- Best practice: Review these after major life events (marriage, divorce, births, deaths). Keep a separate, up-to-date list and check account forms periodically.
7) Digital asset directive and password/asset inventory
- Purpose: Directs access to digital accounts (email, social media, cryptocurrency, cloud storage) and passwords. Include instructions for online financial accounts.
8) Guardianship designation for minors and special needs planning
- Purpose: Designates who will care for minor children and who will manage assets for beneficiaries with disabilities (special needs trust).
- Tip: Name both a guardian (care) and a conservator/trustee (money management) to avoid conflicts.
9) Funeral, burial, or disposition instructions
- Purpose: States preferences and any paid plans for burial, cremation, or other final arrangements. This reduces family guesswork during grief.
10) Letter of intent and personal inventory
- Purpose: Not legally binding but helpful. A letter of intent explains your values, personal wishes, and details not in legal documents; a personal inventory lists accounts, assets, and contact information for professionals (attorney, accountant, financial advisor).
Selecting agents, executors, and trustees
Choose people you trust who are willing and capable. Consider alternates in case your first choice is unavailable. For trustees and executors, assess administrative skills and temperament—not just emotional closeness. If managing investments or complex assets is required, consider naming a corporate trustee or co-trustee with professional experience.
In my experience, naming a geographically local agent is helpful: they can quickly access documents and meet with institutions. Also document any compensation you expect the agent to receive and whether they must post bond (state rules vary).
Common mistakes and how to avoid them
- Relying solely on online templates without local legal review. State laws for witnessing, notarization, and specific clause language vary. Consult an estate planning attorney.
- Forgetting to retitle assets into a trust. An unfunded trust is ineffective for probate avoidance.
- Outdated beneficiary forms. Beneficiary designations trump wills for funded accounts.
- Not having a HIPAA release. Families have been blocked from medical information without it.
- Choosing an agent without discussing responsibilities. Ensure they know where documents and passwords are stored.
When to review and update your plan
Review your estate plan every 3–5 years and after major life events: marriage, divorce, birth/adoption, death of a beneficiary, significant changes in assets, move to another state, or changes in tax law. Also update if an agent, executor, or trustee is no longer able or willing to serve.
Storage and accessibility
- Keep original signed documents in a secure location: a fireproof safe, safe-deposit box, or with your attorney. Provide certified copies to agents when needed.
- Share an executory checklist and contact list with trusted family or professionals. Avoid putting sensitive password lists in unsecured digital notes; use a reputable password manager and provide emergency access instructions.
Costs and finding help
- Basic wills and POAs can be affordable; trusts and specialized planning cost more. Fee structures vary: flat-fee for simple documents, hourly for complex matters, or asset-based fees for trust administration.
- Work with an estate planning attorney licensed in your state for legal documents. A CFP® or financial planner can help coordinate the financial side. For consumer-facing guidance, the Consumer Financial Protection Bureau maintains plain-language resources on estate planning (Consumer Financial Protection Bureau).
Practical checklist (quick)
- Create or update a will
- Execute a durable financial POA
- Sign an advance healthcare directive and HIPAA release
- Review and update beneficiary designations
- Consider a living trust if you want to avoid probate
- Prepare a digital asset inventory
- Name guardians for minor children and consider special needs planning
- Store originals securely and give trusted people access information
FAQs (short answers)
- Do I need a will if I have a trust? Often yes. Many people use a ‘‘pour-over’’ will to catch assets not retitled into a trust. See Wills vs. Trusts: Which Do You Need?.
- Will beneficiary designations override my will? Yes—retirement accounts and life insurance pay directly to named beneficiaries, bypassing the will.
- How often should I update my plan? After major life events and every few years.
Resources and authoritative guidance
- Internal Revenue Service (estate tax basics): https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
- Consumer Financial Protection Bureau – estate planning basics: https://www.consumerfinance.gov/consumer-tools/estate-planning/
- AARP on advance directives and healthcare decisions: https://www.aarp.org/caregiving/health/info-2019/advance-directive.html
Professional disclaimer: This article is educational and does not constitute legal advice. Laws vary by state and can change; consult a licensed estate planning attorney and your financial advisor to create or modify documents that meet your personal and legal needs.
If you’d like, I can help you build a personalized checklist or sample document list tailored to your family situation and state.
