• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The College Investor

Student Loans, Investing, Building Wealth

  • About
  • Podcast
  • Research
  • Contact
  • Save For College
      • How To Start

      • How To Save For College
      • How To Pay For College
      • What Is the Average Cost of College?
      • What Is A 529 Plan and Where to Open One in Your State
      • How Much Should You Have In A 529 Plan By Age
      • How To Use A 529 Plan For Private Elementary And High School
      • What Are Qualified Expenses For A 529 Plan (And What Doesn’t Count)?
      • The Best Brokers To Open A 529 Plan
      • Tools + Accounts

      • 529 Plans: The Ultimate College Savings Plan
      • 529 Plan Contribution Limits
      • Prepaid Tuition Plans | What To Know
      • Understanding And Using 529A ABLE Accounts
      • Using A Roth IRA To Save And Pay For College
      • FAFSA Deadlines for Financial Aid
      • CollegeBacker Review
      • Upromise Review
      • UNest Review
      • Other Options

      • Student Loan And Financial Aid Programs By State
      • The Guide To Military And VA Education Benefits
      • How To Fill Out The FAFSA
      • How To Find College Scholarships
      • The Best College Scholarship Search Websites
      • How To Find Grants To Pay For College
      • Pell Grants: What They Are And How To Qualify
      • Understanding Federal Work-Study
      • How To Use A 529 Plan If Your Child Doesn’t Go To College
  • Student Loans
      • Borrowing

        • How Student Loans Work
        • How To Apply For A Student Loan
        • How To Find The Best Student Loans And Rates
        • Best Private Student Loans Of May 2022
        • Best Student Loans To Pay For Graduate School
        • Best Student Loans To Pay For Medical School
        • Parent Loans To Pay For College
        • No-Cosigner Student Loan Options
        • Guide To Income Sharing Agreements (ISAs)
        • Best International Student Loans
      • Get Out Of Debt

        • Best Places To Refinance Student Loans In May 2022
        • Best Student Loan Repayment Plans
        • Best Student Loan Refinancing Bonuses And Promotional Offers
        • Student Loan Forgiveness Programs (The Complete List)
        • The Full List Of Student Loan Forgiveness Programs By State
        • Public Service Loan Forgiveness (PSLF)
        • Top Student Loan Scams
        • Average Student Loan Monthly Payment
        • Average Student Loan Debt By Year
      • Reviews

        • Credible Review
        • Splash Review
        • Ascent Review
        • Citizens Bank Review
        • Commonbond Review
        • Earnest Review
        • ELFI Review
        • Laurel Road Review
        • LendKey Review
        • SoFi Review
  • Investing
      • How To Start

        • How To Start Investing in High School
        • How To Start Investing In College
        • How To Start Investing In Your Twenties For 22 – 29 Year Olds
        • How To Start Investing In Your 30s For 30 – 39 Year Olds
        • How To Start Investing With $100 Or Less
        • How To Give Kids The Gift Of Stock
        • What Is Dividend Growth Investing
        • IRA Rollover Chart
      • Tools + Accounts

        • Best Online Stock Brokers
        • The Best Traditional And Roth IRA Accounts
        • The Best Robo-Advisors
        • The Best Investing Apps
        • The Best Places to Trade Options
        • The Best Places To Open A Health Savings Account
        • The Best Solo 401k Providers
        • The Best Self-Directed IRA Providers
        • Best Cryptocurrency Exchanges
      • Reviews

        • Vanguard Review
        • Fidelity Review 2022: Still One Of The Best Online Brokers
        • M1 Finance Review
        • TD Ameritrade Review
        • Charles Schwab Review
        • Robinhood Review
        • Webull Review
        • Betterment Review
        • Wealthfront Review
  • Earn More Money
      • Extra Income

        • 15 Best Side Hustles You Can Start Earning With Now
        • Side Hustle Ideas: 50+ Ways To Make Money Fast
        • 100+ Real And Honest Ways To Make Money In College
        • 80 Ways To Make Money From Home (In Your Pajamas)
        • 5 Quick Money Making Ideas (That Take Less Than 1 Hour)
        • 10 Interesting Ways You Can Make Money Driving
        • High-Paying Side Gigs That Earn $1,000 or More Per Month
        • The 10 Best Money-Making Apps
        • Paid Surveys: Earn Money For Giving Your Opinion Online
        • 10 Crazy Ways To Make $10,000 You’ve Never Heard Of
      • Build Wealth

        • 35 Passive Income Ideas You Can Use to Build Real Wealth
        • 3 Ways To Make $50,000 Per Year Without Working With Passive Income
        • How To Become A Real Estate Investor With Just $500
        • 15 Best Online Business Ideas
        • How to Create Streams of Passive Income on a Limited Budget
        • Residual Income: 7 Super Smart Ways to Build It
        • The Most Common Multiple Income Streams
        • How To Become A Real Estate Mogul With Only $10,000
      • Reviews

        • Fundrise Review
        • RealtyMogul Review
        • FarmTogether Review
        • AcreTrader Review
        • Swagbucks Review
        • Survey Junkie Review
        • TopCashback Review
        • DoorDash Review
  • Personal Finance
      • Banking

        • Best High Yield Savings Accounts Of May 2022
        • Best Money Market Accounts Of May 2022
        • 10 Best Free Checking Accounts In May 2022
        • The Best Bank CD Rates Of May 2022
        • 10 Best Business Checking Accounts In May 2022
        • The Best Online Banks Of May 2022
        • 5 Best Credit Unions Nationwide of May 2022
        • Best College Student Checking Accounts In May 2022
      • Insurance

        • Best Life Insurance Companies
        • Renters Insurance
        • Car Insurance
        • Pet Insurance
        • Umbrella Insurance
        • Disability Insurance
        • Tuition Insurance
        • Travel Insurance
      • Credit Tools

        • Best Budgeting Apps
        • Cash Advance Apps
        • How To Get A Free Credit Score Report
        • The Best Credit Monitoring Services
        • Debt Settlement: Inside The Secret World
        • Credit Repair Explained: Should You Pay For Help?
        • Best Personal Loan Companies And Lenders
        • Online Loan Companies To Borrow From Home
      • Tax

        • Best Tax Software
        • Free Tax Software
        • IRS Tax Refund Calendar
        • Common IRS Questions and Errors
        • Federal Tax Brackets
        • Capital Gains Tax Brackets
        • 401k Contribution Limits
        • IRA Contribution Limits
        • HSA Contribution Limits
  • Forum
  • Search
Home » Investing » The Essential Estate Planning Documents: What You Need and Why

The Essential Estate Planning Documents: What You Need and Why

Updated: December 9, 2021 By Hannah Rounds

Tweet
Share9
Share
Pin47
Email

At The College Investor, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners. This doesn’t influence our evaluations or reviews. Our opinions are our own. Learn more here.Advertiser Disclosure

There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We're proud of our content and guidance, and the information we provide is objective, independent, and free.

But we do have to make money to pay our team and keep this website running! Our partners compensate us. TheCollegeInvestor.com has an advertising relationship with some or all of the offers included on this page, which may impact how, where, and in what order products and services may appear. The College Investor does not include all companies or offers available in the marketplace. And our partners can never pay us to guarantee favorable reviews (or even pay for a review of their product to begin with).

For more information and a complete list of our advertising partners, please check out our full Advertising Disclosure. TheCollegeInvestor.com strives to keep its information accurate and up to date. The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products and services are presented without warranty.

will

We all hope terrible situations will never hurt us or our loved ones. But making practical plans for your eventual death will make your passing easier. That’s true whether you die unexpectedly at a young age or you live to be 140 years old.

Here are the six key estate planning documents that most people will eventually need. You might think all you need is a will, but once you understand how everything works, you'll see why you need all these documents and how they work together to ensure your family's needs and your final wishes are met.

If you don’t have a robust estate plan, keep reading to find out what you need.

Table of Contents
A Will
Living Will 
Medical Power of Attorney 
Financial Power of Attorney
Life Insurance
A Digital Will: Access to Your Digital Life
What Resources Can Help You?

A Will

A will is basically a statement of who gets what property when you die. If you owe money when you die, your assets will be used to pay off your debts, and the remainder will go to your beneficiaries — the people (or charities) you select in your will.

For parents, your will also gives information about who you want to care for your children or fur-babies if you die.

A will (or a last will and testament) is your most important estate planning document, and every adult needs one. Even if you have a negative net worth (meaning you owe more than you have in assets), a will is useful. The document will outline who should receive your personal effects (jewelry, musical instruments, and personal items). And in a few years, when you have more assets, everything will be taken care of appropriately.

Instead, a basic will that you sign in front of two friends is sufficient. Want to get a will on a budget? My husband and I had a will drafted for free using campus legal services when he was in school.

I also received a heavily discounted will from a lawyer using my company’s legal services. At the time, I asked both lawyers about law template services like those offered by LegalZoom, and neither seemed impressed by the services.

That said, in my non-professional and non-legally credentialed opinion, you don’t need a will drafted by a lawyer until you own property, have children, or have substantial assets. Use a free template online, or buy one from LegalZoom or a similar service.

As you’re building your will, be sure to make a list of all your assets (don’t forget digital assets such as domain names and websites), your debts, and who you want to administer your will. Be sure to sign the will in front of witnesses to make it legal.

This should be a physical document, although storing a digital copy could be useful.

Living Will 

A living will is a document that explains your wishes pertaining to your medical care. Most people include information about whether they want to be kept alive by machines if there is no chance at getting better. You may want to include information about pain management and organ donation too.

Anyone that adheres to specific beliefs that influence their medical decisions should specify these in their living will.

This should be a physical document, although storing a digital copy could be useful.

Medical Power of Attorney 

A medical power of attorney is a document that authorizes a person (usually a spouse, a parent, an adult child, or a close friend) to make medical decisions on your behalf. This document is also known as an advance health care directive. 

The medical power of attorney is different from a living will. It is meant to cover you for scenarios you cannot predict. Your agent (the person you appoint to make decisions for you) does not have any power until you are no longer capable of making decisions yourself.

Medical power of attorney becomes increasingly important if you’re facing cognitive impairments such as Alzheimer’s or dementia.

Although many people think of a medical power of attorney as a document for older people, the document is just as important for young people. If you are unmarried and you want an unmarried partner, a friend, or a sibling to be your agent, draw up a document. Otherwise, a parent may become your agent.

This should be a physical document, although storing a digital copy could be useful.

Financial Power of Attorney

A financial power of attorney is the right for a person you appoint to make financial decisions on your behalf. A financial power of attorney is generally drafted so that it goes into effect for either a limited period of time or only when you become incapacitated.

A limited financial power of attorney may be appropriate if you want someone to continue paying your bills while you are deployed overseas for a military operation. This person should be able to access your bank account, and pay bills on your behalf. But you must be careful with this. A person with access to your account will have the power to steal from you, so you must trust them.

A “springing” financial power of attorney goes into effect when you become mentally or physically incapacitated.

This should be a physical document, although storing a digital copy could be useful.

Note: Many financial institutions have their own forms that you need to fill out in addition to a financial power of attorney. Not to say it can't be done with just a POA, but having the appropriate forms filled out at your bank and investment firm can be very helpful.

Life Insurance

Not everyone needs life insurance, but if you’ve got life insurance, it’s important for your beneficiaries to be able to access the documents. Depending on where you have a policy, getting policy documents may be easy by downloading them online, or you may have to jump through a lot of hoops to access them.

If you cannot easily access the policy documents online, I recommend saving your documents in a fireproof safe, and informing someone (hopefully a spouse or other beneficiary of the proceeds) about the policy.

Also, be sure to consider your amount of insurance every time you have a major life event. Getting married, buying a house, getting a massive raise, and having kids may lead you to want more insurance.

Check out this list of where to get the best term life insurance.

A Digital Will: Access to Your Digital Life

One of the less considered parts of estate planning is what will happen to your digital life when you die. If you own digital property (such as a website) that generates income for you, consider whether you want a spouse or loved one to take it over in the event of your death. If there’s no obvious succession plan, establish a relationship with a digital broker who may want to buy the site from you.

Aside from monetary property, you’ll need your heirs to have access to your digital life including passwords for financial institutions, social media passwords, online storage accounts (such as Dropbox, cloud-based storage for photos, etc.), and web-based property (think digital movies and books).

Keeping these things organized is not easy for me, so I’ve established two LastPass accounts. The first account is a work-based account. For this account, a colleague is designated as my emergency contact. If I become ill or die, that colleague can access the account.

My other LastPass account is a personal account which contains all my personal passwords, information about life insurance, and more. My husband is my designated emergency contact. I also helped him set up a similar password manager for his accounts.

What Resources Can Help You?

If you have substantial assets, and you’re starting to think about distributing them in an effective way, it makes sense to meet with a financial planner, an accountant, and an estate planning attorney. These professionals can make a bespoke plan that will make sure your assets are distributed according to your wishes.

Of course, not everyone needs a bespoke plan. If you’re a parent with a few assets and a life insurance policy, you may want a lawyer to help you draft a will. A professional can give you the peace of mind that everything is as it should be.

In my experience, the discounted legal services offered through my company have been more than sufficient to meet this need. If you can’t find free or discounted legal services, use the American Bar Association’s lawyer finder to find a licensed attorney in your state.

You can also look at using new tools like Trust and Will, which is an online service that can help prepare your documents. Check out Trust and Will here.

The last resource I recommend is called the In Case of Emergency (ICE) Binder. This binder is a tool specifically designed to help parents make practical plans for emergency situations. The binder is incredibly practical, and it includes sections on everything from how to use insurance money to what your child’s schedule and preferences are.

Hannah Rounds
Hannah Rounds

Hannah is a wife, mom, and described personal finance geek. She excels with spreadsheets (and puns)! She regularly explores in-depth financial topics and enjoys looking at the latest tools and trends with money.

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.
Comment Policy: We invite readers to respond with questions or comments. Comments may be held for moderation and are subject to approval. Comments are solely the opinions of their authors'. The responses in the comments below are not provided or commissioned by any advertiser. Responses have not been reviewed, approved or otherwise endorsed by any company. It is not anyone's responsibility to ensure all posts and/or questions are answered.
Subscribe
Connect with
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
Notify of
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
2 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

Primary Sidebar

Robert Farrington

Hi! My Name is

America's Millennial Money Expert

Welcome to The College Investor. We're here to help you escape student loan debt so you can start investing and building wealth for the future

Our expert guides, reviews, and more are designed to help you achieve your financial goals.

Want to learn more? See what's in my wallet.

As Featured In

Social Media

Popular Posts

Side Hustling

Side Hustle Ideas: 50+ Ways To Make Money Fast

Best Side Hustles

15 Best Side Hustles You Can Start Earning With Now

Make Money From Home

80 Ways To Make Money From Home (In Your Pajamas)

Crazy Ways To Make $10,000

10 Crazy Ways To Make $10,000 You’ve Never Heard Of

Make $50,000 Per Year

3 Ways To Make $50,000 Per Year Without Working With Passive Income

Student Loan Scams

Top Student Loan Scams

Net Worth of Millennials

The Average Net Worth Of Millennials By Age

Ways To Get Student Loan Forgiveness

Student Loan Forgiveness Programs (The Complete List)

Passive Income Ideas

35 Passive Income Ideas You Can Use to Build Real Wealth

529 Plan By Age

How Much Should You Have In A 529 Plan By Age

Ultimate Guides

529 Plan Guide

529 Plans: The Ultimate Guide To College Savings Plans

Student Loans and Financial Aid By State

Student Loan And Financial Aid Programs By State

Student Loan Advice

The Definitive Guide To Student Loan Debt: Everything To Know About Your Loans

Student Loan Forgiveness By State

The Full List Of Student Loan Forgiveness Programs By State

newretirement

How to Start Saving Now: The College Graduate’s Guide to Saving for Retirement

Latest Research

Institutional Merit Grants

Who Gets Institutional Merit Grants At Private Colleges?

Resume Student Loan Payments

Survey: Even With Higher Expenses, Most Student Loan Borrowers Are Ready To Resume Payments

Support From Parents Survey

64% Of Millennials Receive Support From Their Parents

undermatching at selective colleges

Undermatching: Why Do Smart Low-Income Students Not Enroll In Selective Colleges?

How Much Americans Pay To File Their Taxes

How Much Americans Pay To File Their Taxes

Footer

Banking

  • 10 Best Free Checking Accounts In May 2022
  • The Best Online Banks Of May 2022
  • The Best Bank CD Rates Of May 2022
  • Best Money Market Accounts Of May 2022
  • Best High Yield Savings Accounts Of May 2022
  • Best High-Yield Checking Accounts Of May 2022
  • The Best Bank Bonus Offers
  • The Best Business Checking Accounts

Investing

  • Best Online Stock Brokers In 2022 (According To Readers)
  • Best Brokerage and Investing Bonus Offers In May 2022
  • The Best Places To Open An HSA (Health Savings Account)
  • 5 Best Investing Apps With Free Stock Trading
  • How To Buy Stocks Online For Free
  • The Best Robo-Advisors Of 2022
  • The Best Self-Directed IRA Providers
  • The Best Traditional And Roth IRA Accounts Of 2022
  • Comparing The Most Popular Solo 401k Options
  • Top 3 Automatic Investment Apps Of 2022

Student Loans

  • Best Places To Refinance Student Loans In May 2022
  • Best Private Student Loans Of May 2022
  • How To Find The Best Student Loans And Rates
  • Best Student Loan Refinancing Bonuses And Promotional Offers

Insurance

  • The Top 10 Online Life Insurance Companies
  • The Ultimate Guide To Renters Insurance – Everything You Need To Know
  • The Cheapest Car Insurance For College Students

Connect

  • Contact Us
  • Advertise
  • Press & Media

About

  • About
  • Our Team
  • Podcast
  • Editorial Guidelines
  • How We Make Money
  • Archives

Social

Copyright © 2022 · The College Investor · Privacy Policy ·Terms of Service · DO NOT Sell My Personal Information

wpDiscuz