The Most Important Estate Planning Documents You Should Have
Key takeaways
Estate planning is an important part of financial wellness and moving money from one generation to the next.
Knowing what documents to have on hand is the first step in the process.
Consider getting these things in order sooner rather than later. (Your future self will thank you.)
Kelley S. Daugherty is an attorney in Sophisticated Planning Strategies at Northwestern Mutual.
You’ve worked hard to build the life you have, which includes the wealth you’ve accumulated. A well-crafted estate plan can help ensure that your wishes are honored and your assets are distributed correctly after you’re gone. This isn’t just a financial matter—having your ducks in a row can prevent unnecessary stress for your loved ones during an already difficult time.
The idea of estate planning can feel intimidating, but it’s a lot more straightforward than most people think. Having a trusted financial advisor in your corner can streamline the process and set the stage for a smooth transfer of wealth when the time comes. Here are the most important estate planning documents to prepare.
Before we get into the specifics, know that estate planning laws can vary from one state to the next. Working with professionals, like an estate planning attorney and a financial advisor, is the best way to know you’re making the right decisions. They can help you navigate state-specific legal concerns and create an estate plan that supports your unique financial situation*.
Will
A last will and testament lays out how you want your assets to be divided when you pass away. It may pass through probate, which is a court process that oversees the distribution of your estate. As part of your will, you can also choose a guardian to care for any minor children you leave behind.
Trust
A trust explains how you want your financial affairs to be handled. It’s a legal relationship between you and whoever you appoint as the trustee. This person will be tasked with making sure your assets are distributed according to your wishes. Compared to a will, a trust can allow for more flexibility in how and when that happens. Trusts are also kept private and don’t go through probate.
Financial power of attorney
Financial power of attorney is a legal document that allows someone else to make financial decisions on your behalf if you become unable to do so yourself. The person or people you appoint are obligated to act in your best interest or follow the interests you’ve communicated to them.
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Health care power of attorney
You can also appoint someone to make medical decisions on your behalf, which is important if you become incapacitated or unable to advocate for yourself. It goes hand in hand with your living will, which states your wishes around resuscitation and life support.
Beneficiary designations
Beneficiary forms at your financial institutions will trump whatever is listed in your will. So, it’s important that your beneficiaries are up to date on all your accounts. Review the beneficiaries, including secondary or contingent beneficiaries, you’ve designated on accounts like:
- Bank accounts
- Investment accounts
- Retirement accounts
- Life insurance policies
You’ll need to designate a custodian or trustee to manage the money for any minor children (under age 18). Later, they can take on the management of their inheritance at an age you specify.
Marital property agreement
This includes prenuptial agreements, which aren't just for divorce. Both are legal documents that explain each partner's rights and obligations regarding their joint property. (Prenuptial is signed before you're married; postnuptial is signed after you're married.) A marital property agreement can be an important estate planning tool for a happily married spouse who becomes widowed.
Authorization for final disposition
This legal document has to do with your funeral arrangements and if you prefer to be buried or cremated. It may not be a pleasant thing to think about, but it can reduce stress for your family and communicate your wishes and help ensure that you're put to rest in a way that feels right for you.
Important financial information
It's wise to keep an updated list of where you keep all your assets to help your executor or trustee access what they need. Finding a secure way to share information like your logins and passwords for online accounts can prevent roadblocks in accessing your assets.
Tax planning documents
Keeping your tax planning documents with your estate plan can help make sure plans you made to minimize the tax impact on your wealth transfer stay intact.
An estate tax may apply if you leave behind a large sum of money. In 2024, the federal estate tax exemption is $13.61 million for individuals and $27.22 million for married couples filing jointly.
Make planning a family affair.
Your advisor will get to know your family and can help you build a comprehensive financial plan. The plan will help protect all of you—and grow your wealth.
Let's get startedLists of digital assets
Put together a list of usernames and passwords for any accounts you want your loved ones to be able to access after you're gone, like your social media accounts.
Lists of physical assets
As part of your will or trust, you can also spell out specific belongings and who you'd like to have them when you're gone. You might make specific plans for:
- Real estate
- Vehicles
- Jewelry
- Art
- Collectables
- Family heirlooms
How to create estate planning documents
Estate planning is typically done with an estate planning attorney, who can help you articulate your wishes and recommend the most efficient way to have those carried out. It's also a good idea to involve your Northwestern Mutual financial advisor in the conversation, as they can make recommendations to help you leave a legacy you're proud of.
* This publication is not intended as legal or tax advice. Financial Representatives do not render legal or tax advice. Consult with a professional for legal or tax advice that is specific to your situation.
