We’ve written quite a few blogs on estate planning. What haven’t we covered? The basics! 

When we recommend that you complete your estate plan, it’s about a lot more than just your will. A will has long been a cornerstone of this set of paperwork. However, just as a 401(k) is not a financial plan, a will is not an estate plan. 

If you haven’t seen our full-length estate planning task (in that case, congratulations on having an updated estate plan!), it reads …

As an Ongoing Services client, FPFoCo will assist you with …

• Creating crucial estate planning documents, including health care power of attorney, financial power of attorney, and will. 
• Reviewing your estate documents with you to ensure they still align with your desired wishes.
• Reviewing and updating beneficiaries accordingly.

It seems like a lot, and it’s critically important. So how do you actually complete all of those things? Let’s go back to estate planning basics. Here, we’ll dive into the details of this important set of legal documents, including what each is, what it does, and why it’s important.

It’s also crucial to point out that no one working at FPFoCo is an attorney. Even when we help you with creating your estate planning documents, we are always collaborating with and relying on a licensed, qualified attorney (whether that’s virtually or in person). The information we’re providing here is generic and educational. It is not legal advice. 

With that said, let’s get into it!

Will vs. Estate Planning

Let’s start with how a will is different from estate planning. It’s simple: A will dictates where it goes when you go. But it’s not the end-all-be-all of estate planning. That’s because your beneficiary designations supersede your will. 

Let’s say you’ve clearly stated in your will that your 401(k) goes to your nephew Joey. Is the beneficiary designation on your 401(k) Joey’s dad, Kendall? If it is, your 401(k) is going to Kendall when you pass. Since it’s his and nobody else’s, he might not share any of it with Joey. This is just one example of how important true and full estate planning is!

What Documents Are Needed for Estate Planning?

When it comes to your estate planning paperwork, there are three key documents. 

Last Will and Testament

What it is

A will is legal document that comes into play when you pass away.

What it does

Your will dictates where your financial and real assets go when you go. 

Why it’s important

As you already read, this document provides instructions on where your money and things go when you go. If you don’t have one, the state in which you die makes most of these decisions for you. 

Medical or Health Care Powers of Attorney and Living Will

What it is

Your health care powers of attorney is a legal document that allows someone else to make healthcare decisions on your behalf when you’re incapacitated. Your living will provides an outline of how you would handle those decisions.

What it does

The health care powers of attorney identifies who can make those health care decisions for you. It’s usually accompanied by another document called a living will. The living will portion provides them with guidelines on how you would’ve handled the choices yourself. This can include under which circumstances you may or may not want artificial nutrition and hydration, along with other life-sustaining procedures, and for how long. 

Why it’s important

Without health care powers of attorney, your next of kin makes health care decisions for you. They may or may not know you — and what you would’ve wanted. Your living will can also relieve some of the stress of an already difficult health and life situation for those who you want to care for you. 

Financial Powers of Attorney

What it is

Your financial powers of attorney is a legal document that allows someone else to make financial decisions on your behalf when you’re incapacitated.

What it does

It identifies who can make those financial decisions for you. It also includes when they can do just that: Right away or only when you’re incapacitated — and what the terms of incapacitation are. 

Why it’s important

It’s simpler and generally broader than health care powers of attorney. From filing your tax returns to making credit card payments and more, it allows your agent or agents to make financial decisions on your behalf.

Wrapping Up Your Basic Estate Plan

Documents done? You’re not! You’ve still got to review your beneficiary designations to ensure that they align with — and don’t work against — the estate plan you spent all of that time drafting. 

Beneficiary Designations

What they are

Beneficiary designations are account-level details on your life insurance as well as investment and bank accounts.

What they do

They identify who receives your financial assets when you pass away.

Why they’re important

Rather than passing through your will, these supersede it. They override the instructions in that all-important legal document, so it’s incredibly important that your beneficiary designations match your intentions. 

Ready to start, review, or rework your estate plan? October is estate planning month here at FPFoCo! Schedule your consultation with us today. We’ll meet you where you’re at, whether it’s …

• Simply reviewing your current beneficiary designations
• Discussing where you might want your financial and personal items to go
• Going over estate documents that you’re thinking about updating
• Meeting with you and your estate attorney to review details or for financial support
• Updating your beneficiaries to match your fresh estate documents
• Reviewing everything to ensure it matches your intentions
• Or anything else!