4 Estate Planning Documents You Need in Addition to a Will

Most of us realize that we need a will, but there are additional estate planning documents you should also have in place. We’ll talk about four of the most common documents that make dealing with this process much simpler for the people you trust to handle your affairs when you’re gone.

Follow along with the Financially Simple podcast:

Podcast Time Index for “Other Key Estate Planning Documents”

• 01:11 – Other Key Documents
• 01:48 – A Living Trust
• 04:39 – Power of Attorney
• 08:29 – A Living Will or Advance Directive
• 10:02 – Further Information and A Statement of Desires
• 13:56 – Wrap Up

Additional Estate Planning Documents to Consider

1. Living Trust

The Living Trust is a revocable document, which means that you can change it. These are typically set up to avoid probate for most assets. Now, the Last Will and Testament do control some assets and, therefore, you’ll likely have to do some probate. When my dad passed away, we were able to get the estate down to less than $25,000, so Mom just had to deal with a “simple probate” (a shortened process). If you have real estate or significant assets, you’ll probably have to deal with the full probate.

What a Living Trust does is, it creates a legally separate entity that can hold property. So, let’s say that I have the “Justin Goodbread Living Trust”, I would hold title to all of my assets that I wanted to be denoted in the trust as the Justin Goodbread Living Trust assets. My real estate and personal accounts would be titled underneath Justin Goodbread Living Trust. The trust dictates how the property is to be managed, who is the trustee, and what happens to the trust upon your death. For most assets, a Living Trust will take the place of a Last Will and Testament. That doesn’t mean that you shouldn’t have a will – you need both. They work together as parts of your planning.

2. Power of Attorney

The second document is the Power of Attorney, and it’s sometimes made up of two different documents. This happens from time to time because of state-specific laws. The first is called a Healthcare Power of Attorney. What that means is that I am going to denote someone that I trust to make decisions for me about my healthcare if I am unable to do so. Currently, mine is set up so that, if something happens to me, my wife springs into place to make decisions for me. That’s pretty common. But what happens if my wife and I are BOTH hit by that proverbial log truck and we’re both unable to make decisions. I have to have someone that knows me and knows my wishes to make these tough decisions for me. Now, what if something happens to my wife, that person, and me? You want to have another person. Just like in your Last Will and Testament, you want your Power of Attorney to be three people deep. Typically, under your Healthcare Power of Attorney, you want someone who can separate the emotions from reality.

There is also the Financial or Durable Power of Attorney depending on what state you’re in. Basically, that means that you denote someone who can make financial decisions for you when you can’t. My wife is my immediate Financial Power of Attorney, which means that she can make financial decisions for me even when I can make decisions. I’ve been away before and needed something signed at the bank and she went and signed my name with POA and it’s just as if I signed it. Also, you want to name three people to handle your finances in case you can’t make decisions.

RELATED READING: Required Elements of a Last Will And Testament

3. Living Will or Advance Directive

The third document is the Living Will or Advance Medical Directive. This is a statement that you sign regarding your decisions as to whether you want to have life-prolonging medical procedures if you are terminally ill or seriously injured. I have been in situations where I’ve seen the family “pull the plug,” and I’ve seen situations where the family didn’t have to make that decision because of a Living Will. For this document, I suggest you talk to your doctor to get some perspective on what’s right for you. You’ll need to choose a person to carry this out.

4. Statement of Desires

This last document is not a legally binding document. It is called a Statement of Desires. It will give the executor or your family some last-minute guidance. Your executor, trustee, beneficiary, or whoever is involved is going to need to know where to find your financial accounts, passwords, credit cards, insurance policy, debts. Often, I am named in these documents to say, “Contact my business and financial planner,  Justin Goodbread.”

Many times, I’ve had the honor of working with executors. I’ve helped them deal with many things, like sitting in on burial arrangements. Walking in with the executor that’s emotionally distraught because of a tragedy and being able to say “Here’s what he or she would’ve wanted” is an honor I love because I love my clients. There is nothing more reassuring for the person that you’ve left behind to have everything they need in one location. It’s not required, but it is so needed. So, take some time to write down everything about your financial life, where your passwords are, everything the person dealing with all of this will need to make your passing easier.

When my uncle found out that he had terminal cancer he told me that he trusted me and wanted me to take care of his wife. I went to the funeral home with him while he was still alive, and we planned his funeral and took care of everything we could. When he passed, his wife was able to navigate his passing much easier because of his Statement of Desires.

The Bottom Line

Remember, these estate planning documents aren’t really for you. They’re for your loved ones that you’ll leave behind, and there is no greater “I love you” than to say “I took care of everything” from the grave. This stuff is emotional and it’s tough. If you have questions about how this information relates to you and your family’s monetary future please speak to your financial advisor or reach out to us.

Be sure to not miss our next articles this series – Personal Finance for the Business Owner.