Estate Planning Documents – The Most Important Ones to Have

The most important estate planning documents that everyone should have are:

Here’s a little description of what each one is:

Will – A document with written instructions directing how certain portions of your assets will be disposed at death.

Durable Power of Attorney (for financial matters) – A power of attorney is a written document that authorizes another person to act on your behalf. So if my husband is my power of attorney, he can make decisions on my behalf like invest my assets or pay for my expenses. However, if I become incapacitated, he no longer has that power. But with a durable power of attorney, he can still make decisions on my behalf even after incapacity.

Durable Power of Attorney (for health care/medical proxy) – A medical proxy is document authorizing another person to make health care decisions on your behalf when you are no longer able to understand or communicate your own desires regarding medical care.

Living Will – A living will is a document that allows you to state in advance what life-sustaining medical measures related to hydration, respiration, and nutrition should be taken by a health care provider if you are incapable of consenting to treatment.

This year, my husband and I focused on getting our life insurance in place. Now that that’s almost done, the next item on our financial to-do list is estate planning. We probably won’t tackle estate planning this year for two reasons:

  1. It can be pretty expensive – Getting your estate planning done can cost several thousand dollars. We spent a lot of money this year on the home remodel and we’re just starting to build up our emergency fund again so we’re not ready for another large expense yet.
  2. We’re hoping to have kids in the next few years and having kids is one of the triggers for updating your estate plan. It would be kind of a waste to pay a couple thousand dollars now to get it done and then have to redo it in a year or two once our first kid is born.

Getting Term Life Insurance – Step by Step

Once we found renters for our condo, the next item on our list of financial to-dos was getting life insurance.

Here are the steps we went through:

  1. Contacted a life insurance broker and told him what kind of policy we wanted to buy (30 year term with death benefits that were 10 to 12 times our income). We chose 30 years instead of 20 because we don’t have any kids yet but plan to within the next few years and we wanted the insurance to last until our kids were all out of college and all the mortgages were paid off.
  2. Our broker sent us some estimates from different insurance companies and we picked the company with the lowest annual premium.
  3. Once we made our decision, our broker sent us a series of questions to answer (full names, home address, Social Security numbers, etc.)
  4. He then prepared an application for us to sign with some additional questions for us to answer. We signed and returned the application back to him.
  5. Shortly after, a medical examiner called us to schedule an appointment for our medical exams. Your medical exam determines your health class and your health class determines your annual premium. The better your health class, the lower your premium. We scheduled the medical exam for a Saturday morning.
  6. About 10 days after the medical exam, our broker let us know that my application was approved and what health rating I was in. My husband’s application is still pending because they’re waiting on medical records from his doctors.
  7. After I was approved, our broker sent me the official policy to sign. I returned the signed documents along with a check for the first premium payment.
  8. The check was deposited and my life insurance policy is now active.