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Estate Planning

The 3 Estate Planning Documents Everyone Should Have

The best thing you can do for your future self and your loved ones is prepare for the worst. Create your estate plan with these three essential documents.

Articles by Fred Egler, CFP®

By Fred Egler, CFP®
Certified Financial Planner, Betterment  |  Published: May 7, 2019

Estate plans provide a roadmap for important decisions regarding your health and assets.

The most important documents to have are a financial power of attorney, an advanced health care directive, and a will.

Add beneficiaries to all your investment accounts and bank accounts.

We all have an estate, even if we’ve never thought about it. Each of our estates includes our financial assets, bank accounts, life insurance, pensions, real estate, cars, personal belongings, and even debts. Estate planning means putting a plan in place for how the physical and financial assets we described above will be transferred after either your death or a serious illness.

It is crucial for everyone to prepare an estate plan, no matter what the value of your estate is. It will help others follow your wishes when it comes to protecting your family, loved ones, and assets—in case you’re unable to do so.

Don’t know where to start? All you need for a basic estate plan are three essential documents.

1. Financial Power of Attorney

A durable financial power of attorney document (POA) allows you to designate someone to handle your finances if you are unable to do so. The person you choose is considered to be your designated agent. If you don’t designate an agent, it may be difficult for someone—even your spouse—to do things on your behalf, such as pay bills, file taxes, or cash checks.

Your agent’s signature will be required for every decision, so before choosing an agent, consider their schedule and where they live.

Betterment can take direction from your agent if you have an approved POA on file with us. Note that we are not able to create a POA document for you—this is something your legal counsel can help you with. Your POA must clearly reflect that you allow your agent a sufficiently broad scope of capabilities, such that they are able to fully interact with the account. The POA must undergo an approval process with our estates team before it’s considered to be valid. For more information, please email estates@betterment.com.

2. Advanced Health Care Directive

An advanced health care directive allows you to designate someone to make medical decisions on your behalf. Again, this person is known as your agent and they can make decisions such as choosing a doctor, accessing medical records, and putting you on life support.

Your agent’s signature will be required for every decision, so before choosing an agent, consider their schedule and where they live. Make sure your doctors have a copy of your advanced health care directive on file. Some entities may even require additional documentation or have specific procedures when dealing with agents. Make sure to check ahead of time to avoid putting your agents in a difficult position.

3. Last Will and Testament

Your will is the document that determines who will inherit any of your assets if there is no joint ownership, or beneficiaries are not file at an institution. If you named beneficiaries for most of your assets, this document will mostly be reserved for your personal belongings.

However, a will can help with other important decisions, such as naming a guardian to look after your children. You’ll also choose an executor in your will, which is the person who is charged with ensuring your wishes are carried out.

Protect What’s Important

An estate plan is an important step to help ensure that you and your assets are protected. We highly recommend speaking with an estate planning professional or an attorney to help you implement your estate plan.

Once your estate plan is set up, you’ll want to review it every two years at least, or whenever there is a major life event such as marriage, divorce, or death—especially among your beneficiaries. Additionally, if there are any significant changes to estate planning laws, you’ll want to review your plan again.

Betterment does not currently offer estate planning services. We do, however, encourage you to add beneficiaries to your Betterment account, which you can do in your account without any paperwork.

Our Experts Can Help You Plan

Our team of CERTIFIED FINANCIAL PLANNER™ professionals are ready to speak with you about planning for the next stage in your life. We offer five unique advice packages that help you review your current financial situation. Our Financial Checkup or Marriage Planning packages provide a perfect opportunity to discuss basic estate planning recommendations.

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