The 4 estate planning documents everyone needs

There’s more than just wills and trusts.

Elissa

Elissa Suh

Published July 24, 2019

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KEY TAKEAWAYS

  • Estate planning isn’t limited to bequeathing assets

  • A proper estate plan also considers what happens if you become incapacitated or incompetent

Estate planning isn’t just about who gets your property and belongings when you die. Although a will or trust is integral to the distribution of your assets, there are a few more documents you should consider having as part of your estate plan. For one thing, neither a will nor trust covers in-depth what happens in the event that you become incapaciated or unable to make decisions on your own. You’ll need a living will and durable power of attorney form for that. You’ll also want a letter of instruction to pass along your values and sentiments.

You can get both of these documents by downloading the Policygenius app and starting your estate plan. The Plus package includes both a will and a trust for $280.

Other documents — a list of beneficiaries or funeral and burial instructions perhaps — are less essential because the information they contain can be woven into other ones.

In this article:

Last will and testament

A will is a legal document that describes who gets your assets and property. It’s usually the first thing that comes to mind regarding estate planning. You can use the will to bequeath assets to your chosen beneficiaries and also to designate guardianship for any minor children. You can even lay out a plan for giving away your unnamed assets, as a whole, with a residuary clause. When you die, your estate will go through to a probate court, and the executor you appoint in your will (also called a “personal representative” in some states) will be responsible for distributing the assets and overseeing the probate process.

You can read about wills in-depth here, and you can start your will with the Policygenius app.

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Trust

As part of estate planning you may have chosen to transfer your assets into a trust. A trust is a separate entity that holds your property and valuables, which can be distributed according to the terms of the trust document that you create. It’s still a good idea to write a will, even if you have already opted for a trust. You can use the will as a backup measure where any assets you previously forgot to move into your trust will “pour over” into the trust. Some people even use a will to create a trust, called a testamentary trust.

You can read about trusts here.

Letter of instruction

The letter of instruction is an easily digestible summary or Sparknotes version of your last will and testament. Written in plain English, this document should include an explicit statement that it has no legal standing so that it can’t conflict with the will, itself. It can be an important part of estate planning since it typically includes the testator’s personal sentiments and hopes and dreams for their heirs. For this reason it’s also sometimes called an ethical will.

You can read about the letter of instruction here.

Living will

Don’t get confused: a living will does not have to do with the distribution of assets. People use a living will, also known as an advance medical directive, to provide instructions regarding their end-of-life care. It can detail the types of treatments you approve of and whether or not you want to be taken off of life support if you’re terminally ill.

In the document (or in a separate document known as a “health care proxy”) you can name a health care agent, or the person who will be in charge of making health care decisions on your behalf based on the preferences you outlined in the document. (Some states might include a portion allowing you to appoint a health care agent in the durable power of attorney form. Check with an estate-planning attorney to make sure you’re covered on all bases.)

The living will can be changed at any time and no longer has significance after the creator of the document dies.

Read more about what goes into a living will here.

Durable power of attorney (POA)

The durable power of attorney gives someone you trust control of your legal and financial affairs if you become incapacitated.

Some responsibilities you can grant the power of attorney include the ability to:

You can fill out a simple durable power of attorney form on your own and sign it with the formalities required by your state, or have an estate planning lawyer draft the terms for you. This might be useful if you want to give your attorney-in-fact additional powers — like the ability to fund and modify a revocable trust or change your life insurance beneficiaries — or if you want to limit your attorney-in-fact more than the standard form allows.

Read more about power of attorney here.

Other forms you should have

There are a few other documents that certain people may need:

  • Trust document
  • Designation of guardians (You can appoint guardians for minor children in the will but you may also need to fill out a separate form)
  • Life insurance policies
  • Contact information for an estate planning attorney, financial planner, or tax accountant

Remember to keep everything together in a safe place that is easily accessible. (Locking it up in a safety deposit box might make it harder to access later.) You might also be able to leave the documents in the care of your estate-planning attorney.

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Personal Finance Editor

Elissa Suh

Personal Finance Editor

Elissa is a personal finance editor at Policygenius in New York City. She writes about estate planning, mortgages, and occasionally health insurance. In the past she has written about film and music.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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