Basic Estate Planning Documents [What You Need and Why]

October 12, 2020

Estate planning encompasses the distribution of your assets upon your incapacitation and/or your death. And, to effectuate that plan, it’s important to have the basic estate planning documents in place.

These documents are important for almost everyone—not just the “wealthy.” If you have any assets at all, and you care about what happens to them during your incapacitation or death, then it’s crucial for you to have estate documents that reflect your wishes.

Here, I’ve outlined and provided information about the basic estate planning documents everyone should have.

What are the basic documents used in estate planning?

Estate planning documents are the method by which you effectuate your estate plan. Estate planning documents allow you to plan for the future of your body, your financial affairs and your heirs during your incapacitation and your lifetime.

Typically, estate planning documents include:

  • A will;
  • A healthcare directive;
  • A living will (sometimes this is part of the healthcare directive); and
  • A power of attorney.

Some people will also have trusts as part of their estate planning, but trusts aren’t included in a typical estate planning package.


A will is a document that provides for the disposition of your assets, and sometimes the guardianship for minor children, upon your death. Assets can be specific items, money, investments, real estate, intellectual property, or anything else owned by you.

Upon your death, your executor will publish, or file, your will with the probate court in your county.  Filing your will starts the probate process that alerts creditors to your passing and allows your executor to pay your last bills and distribute probate assets (assets the probate court is in charge of distributing).  The will tells the probate court how you want your probate assets to be distributed.

To compare, some assets, like insurance proceeds, retirement accounts, accounts owned jointly with survivorship or accounts with Pay on Death (POD) provisions are not distributed by your will, and therefore are not probate assets. Those assets pass outside of probate and are dictated by the specific beneficiary designations assigned to the specific account.

If someone doesn’t have a will, the state has laws that determine who gets your assets. Typically, these laws divide your assets up amongst your blood relatives.  Every state has a different formula. Most people would rather decide who gets their assets instead of letting the government decide, so a will becomes very important.

Healthcare Directive

A healthcare directive specifies what actions should be taken for your medical care if you are unable to make those decisions based on injury or illness. The healthcare directive can also name someone, called a proxy, to make decisions on your behalf for items not covered in the healthcare directive.

Living Will

A living will is similar to the healthcare directive in that it outlines actions for your medical care, but it is different in that it specifically focuses on life-sustaining and end-of-life measures. It can also have a proxy listed who can act on your behalf if you are unable. Oftentimes, these two documents are combined into one document.

Power of Attorney

Generally, a power of attorney gives someone else the right to step into your shoes and pay your bills, collect your assets, purchase property or do anything else you would do with your finances. A power of attorney can either be springing or sprung.

Springing Power of Attorney

A springing power of attorney becomes effective upon some sort of event.  Typically, that event is incapacitation.

The problem with waiting for the power of attorney to become effective is the time it can take to become effective.  Deeming someone incompetent can take time and a lot of documentation. During the waiting period, if you are unable to tend to your affairs, your bills could go unpaid, which may create a hardship.

Sprung Power of Attorney

A sprung power of attorney is one that is effective as soon as it is signed. Your sprung power of attorney would not have to wait to act until a qualifying event.

While some people don’t like giving another person that power immediately, the argument can be made that if you don’t trust someone to act in your best interest while you are cognizant and can find out, you probably shouldn’t trust them to act on your behalf if you are not cognizant and truly need the help.

Appropriate Beneficiary Designations

Assets such as life insurance and retirement accounts have beneficiary designations which are often completed upon the opening of an account or purchase of a policy. Make sure your designations reflect your current wishes as these designations will trump your will.

If you have a life circumstance change – death, divorce, remarriage, etc. check your beneficiaries.

Do You Have the Basic Estate Planning Documents in Place?

Each estate plan will be personal and unique, as each family presents its own unique set of dynamics and needs. To ensure your plan suits your needs, talk openly and candidly with your team—estate planning attorney, financial planner and CPA—about your assets, goals and wishes.

For assistance from Warren Averett Asset Management, connect with your advisor directly, or ask a member of our team to reach out to you.