Five Key Estate Planning Documents

Documents everyone needs plus optionalinsurance trust.

This article will outline and serve as an introduction for the most essential part of the financial planning process, the explanation and illustration of the estate planning forms you need. Use the following information to keep in mind the framework of where the discussions will take you.

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What Are the Five Documents You Definitely Need?

There are five key estate planning documents. Almost everyone, no matter how young or old, no matter how rich or poor, requires these five documents. The last document (the life insurance trust) is not needed by everyone, but it is a sound technique for a substantial number of people and should at least be evaluated by most.

Durable Power of Attorney

A proper durable power of attorney is used to assure that, in the event of your illness or disability, someone can take care of financial matters for you.

Living Will and Health Care Proxy

A living will and medical health care proxy is used so that, in the event of a medical emergency, you will have established a line of authority to address the medical decisions you want carried out.


A will is used to appoint an executor (the person to manage your estate), and to exercise your right to assure that property will be distributed the way you wish. You can also use a will to name a guardian for any minor children you may have. If you don't have a will, the intestacy laws of your state (the laws that determine what happens when you don't have a will) will determine who the executor of your estate will be and how your property will be distributed.

Emergency Financial Information

A listing of emergency financial information must be readily available. If key personal financial information is not provided to the people you or your family will rely on in an emergency, even the best documents may be of little use.

Letter of Instruction

There are often a host of personal issues that your agents, executors, trustees, and others need to know. A personal letter can provide valuable guidance, avoid fights, and help assure your wishes are carried out.

Insurance Trust

You may also need an insurance trust. This can help you to avoid a fortune in estate tax, protect the assets in the trust from your heirs' creditors or your heirs' divorce, and assure proper management of insurance proceeds for those you seek to benefit. If you think an insurance trust may be appropriate for you, consult an estate planning specialist. An insurance trust is far too complex to handle on your own.

Summary Everyone needs the five key estate planning documents, including you. If you have unusual circumstances, a larger estate, other serious concerns, or if you need an insurance trust, consult an attorney specializing in estate planning.

ESTATE PLANNING STEP-BY-STEP by Martin M. Shenkman, CPA, M.B.A., J.D. Copyright ) 1997 by Martin M. Shenkman. Published by arrangement with Barron's Educational Series, Inc.
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