The Estate Planning Fundamental Documents

There are 3 documents that every person over 18 years of age needs to have:

  1. An Advanced Healthcare Directive (sometimes called Living Will)
  2. A Durable Power of Attorney and
  3. A Will

The Advanced Healthcare Directive serves several purposes, and the first one is answering the question, “Who makes the decisions when you cannot make them” and who are you putting the burden on to make those decisions.

Spouses are not in the capacity to make healthcare decisions by default. You have to have the Advanced Healthcare Directive. And even if you have made one, if you do not have a copy with yourself, when needed, it’s worthless. That is why you, as a financial advisor, need to keep your clients’ medical directives records.

A power of attorney (POA) authorizes someone else to handle certain matters, such as finances or health care, on your behalf. If a power of attorney is durable, it remains in effect if you become incapacitated, such as due to illness or an accident.

Durable powers of attorney help you plan for medical emergencies and declines in mental functioning and can ensure that your finances are taken care of. Having these documents in place helps eliminate confusion and uncertainty when family members have to make tough medical decisions.

Springing durable power of attorney is a type of power of attorney that lasts when the principal is incapacitated and does not take effect immediately. A durable power of attorney allows the powers of the attorney to continue when the principal no longer has the judgment to make decisions for themselves, unlike others where incapacitation would end a power of attorney. A power of attorney is springing when it takes place at some time in the future after signing. Springing durable power of attorney combines both of these elements where someone wants a power of attorney to take effect at a specific time or after the principal becomes incapacitated. Simultaneously, the document creating a power of attorney ensures that once the power springs into effect, it will remain so when the person is incapacitated.

That is the main reason we always insist on creating a durable power of attorney when working on the estate plan with our clients.

A will is a legal document that states a testator’s wishes and instructions for managing and distributing their estate after death. But here, we have to mention the beneficiaries too. Micah and Rod are discussing a few examples where, because of “minor inconsistencies,” they, as professionals, have found themselves in situations where the law says something different than the spouses have wanted. Why? Because – assets transfer by title first, beneficiaries second, and probate third.

Action Items:

  1. Start today if you are not doing the Estate Planning Flow Chart or anything similar (a simple Google Doc showing the client’s assets and where those go).
  2. Do you have a checklist on how to review the Estate Planning documents? If not, you can use ours. Start using the Estate Planning Documents Review Checklist today too. Or even better, when you get the checklist, train your team and have them review the estate planning documents. You can always get involved in the process if they see a red flag. It is another set of eyes that can catch a mistake made within the documents.


Estate Planning Flow Chart
Estate Planning Documents Review Checklist