Planning · February 10, 2022

5 Essential Estate Planning Documents

Everyone, regardless of age or worth, needs a plan to direct the management of their person and assets in the event of incapacity or death. This article discusses those documents that serve as the foundation for your plan. Understanding what these documents do will help you before you determine how to have them created.


A will is a very basic, yet very important component of a person's estate plan. The passing of a loved one is a trying time for a family, especially when assets are involved. Having a will relieves the tension among your survivors who might be overwhelmed and left to battle over your possessions.

A will provides a set of instructions to be carried out upon your death. Usually, people leave instructions pertaining to:

  • Finances
  • Funeral arrangements
  • Distribution of assets
  • Creation of a trust
  • Designation of a guardian for minor children or dependents
  • Charitable donations
  • Choice of executor (person/entity who will administer your estate by paying final expenses, handling taxes and distributing your assets)

A will is not effective until admitted to a probate court. Therefore, you will need other documents to provide for management of you and your assets if you become incapacitated. When a will is created in connection with a revocable trust, discussed below, it's usually referred to as a pour-over will. A pour-over will doesn't usually contain separate distribution provisions, but rather collects any remaining assets and directs them into the trust to follow the trust's directions.

Revocable trust

A revocable trust is also referred to as a living trust and is commonly included in a basic estate plan. Because it's revocable, you can change it, revoke it and entirely restate it at any time while you're mentally competent. A revocable trust plus a pour-over will is a preferred way to structure your estate plan because to the extent you have retitled your assets into your revocable trust, they will:

  • Follow the dispositive plan in the trust
  • Avoid the time-consuming and expensive court-supervised probate process
  • Remain private to the individuals not included within the plan

Lastly, the successor trustee you've selected can manage your assets in the event you're unable or unwilling to do so.

The revocable trust continues after your passing and can last for many generations to come, if you choose. As the grantor, you'd create the trust and transfer assets to it. The beneficiaries you select, generally yourself and your loved ones, would receive income and principal per your directions. A trustee—yourself, spouse and other successor of your choosing—manages the trust assets, files taxes and follows the trust's directions.

Durable power of attorney

A durable power of attorney, or DPOA, is a document in which you give a trusted person the power to make important financial or medical decisions on your behalf in case you're unable. Unlike a traditional power of attorney, which terminates if you become incapacitated, a DPOA is durable. This means it stays in effect for a lifetime or until cancelled by you, even if you become incapacitated. You must create a DPOA when you're mentally competent.

Most states only require that you be 18 years or older and mentally competent to create a DPOA. DPOAs terminate under different circumstances depending on the law of the state where you live. If you have questions about when a DPOA terminates, speak to legal counsel licensed in your state.

You don’t need a lawyer to create a DPOA and may use the state statutory form. However, depending on your specific circumstances, you may want to consider creating a DPOA with specific direction and detail, partly to protect you and your agent from inadvertent tax impacts from the DPOA and to permit further estate planning.

You should give considerable thought to choosing an agent, as well as all the fiduciary roles such as executor and trustee. The agent would have the ability to stand in your legal stead and conduct transactions on your behalf. Be sure to choose someone who is financially mature and trustworthy. It's for this reason that many people choose a corporation to act as trustee, executor and in limited circumstances as agent under a power of attorney. In some states, the rules governing power of attorney have changed. Be sure to talk to your attorney to determine if you should execute a new DPOA under the new laws.

Health care power of attorney

A health care power of attorney, or HCPOA, is a specific type of durable power of attorney in which you appoint a person to make important medical decisions on your behalf should you become incapacitated.

Difficult medical decisions can be emotionally exhausting for a family, so having a person legally designated to make these decisions can alleviate some of the burden. Having an HCPOA in conjunction with a living will is an easier way than a court-appointed guardian to give someone control over how you want your health decisions handled.

Consider the following scenarios:

  • You and your spouse are involved in a serious accident in which you're both incapacitated
  • You're a single parent with minor children and are estranged from other family members
  • You'd prefer that one parent rather than the other make medical decisions for you
  • You're unmarried or engaged and would prefer your partner to make important medical decisions rather than members of your family
  • You'd like two or more people to make decisions jointly

Without an HCPOA, your family will have to follow a legal process that may not reflect your wishes. Your choice for health care agent need not be financially savvy, but rather should be someone close to you both geographically and emotionally, and who has the mental stability to carry out your desires.

Living will

When combined with an HCPOA, a living will is also known as a health care directive or advance directive. The living will portion details your preferences regarding life support should you become terminally ill, unable to communicate or permanently unconscious. Specific medical treatment that you can address in a living will includes but is not limited to:

  • Tube feeding
  • Dialysis
  • Artificial hydration
  • Pain medication
  • Blood transfusions
  • Additional or continued care, such as chemotherapy
  • Organ donation

If you become ill to the point where you can't communicate your desires, doctors may be legally obligated to administer treatment or perform procedures that you'd have otherwise declined. Doctors may call upon your spouse or children to make medical decisions for you, which is a significant burden to place on a family member. A living will eases that burden by giving both your doctors and your family direction as to how you want to be treated.

A living will must be created and signed while you're still mentally competent. Generally, it's wise to create a living will in conjunction with an HCPOA so when you empower someone to make medical decisions you also give them some guidance as to what medical decisions you'd want made.

There's more to consider

The five documents discussed in this article serve as the foundation for an estate plan. You'll also need to review your beneficiary designations (usually created for qualified plans, IRAs, financial accounts, life insurance and annuities), as well as the titling of your accounts to make sure everything works well together.

For instance, Payable On Death, joint ownership and rights of survivorship could conflict with directions you may have provided in your will or trust.

To get started with the estate planning process, reach out to your attorney. Your designated legal expert can help you put the proper documentation in place so you can leave the legacy you want. You can also reach out to your trusted First Citizens partner to learn more about how these items can further enhance your financial plan.


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