Financial Fundamentals – Estate Essentials

Steve Lear |

By Kyle Berg, CFP®, BFA™

When we have an initial conversation with a prospective client, we almost always ask about estate planning. Reason being — you can learn a lot about what really matters to someone from their end-of-life desires. But more often than not, the people we talk to do not have estate plans, or even any of the basic documents that make up an estate plan. Even as a Financial Planner, I too am guilty of this. I mean, let’s be honest, it is not always easy to think about what life would look like, even just from a financial standpoint, without your partner.

- In this edition of the Financial Fundamentals series, I will share the various documents that make up an estate plan — wills, trusts, financial powers of attorney, and healthcare directives — and the importance of each.


A will is a legal document that provides direction on where you want your assets and property to go when you die. Wills are typically put together by an attorney, although there are some boiler-plate wills that you can find online, which do not require an attorney to draft.

For families with minor children, a will is critical for designating a guardian. Without a will, it is up to the courts to decide who should care for any minor children. And in some cases, this could go against the parents’ wishes.

One important thing about wills, which many people don’t understand, is that account beneficiaries trump wills. So, if you have beneficiaries listed on your accounts, your assets will go directly to those beneficiaries, bypassing your will entirely. In other words, you could spend a significant amount of effort and money creating an elaborate will that will play out all of your wishes, but if it is not properly executed on your account beneficiary forms, it won’t matter. This is why it is important that once you complete your will, you make sure you revisit, and if necessary update, your beneficiary elections.


A common question we are asked is, “Do I need a trust?” Sure, having a trust sounds fancy, but in many cases, if you have a simple estate plan, a trust may not be necessary. One reason a trust is almost always recommended is if you have young minor children. A trust can be a powerful tool for providing direction and protecting assets to ensure a minor heir is taken care of. Another reason a trust might make sense for you is if you own property in another state. In that case, a trust may help your heirs avoid probate in the state in which property is owned. More detailed information on trusts can be found in Financial Planner, Steven Schoenberger’s whitepaper discussing trust language

Financial Power of Attorney

A financial power of attorney is a legal document that gives someone besides yourself the power to make financial decisions on your behalf. There are state-specific financial power of attorney forms that can be completed without an attorney, but these documents are typically completed with an attorney as part of the estate planning process.

While the idea of giving someone the power to conduct business on your behalf may be alarming, that is what makes it so important for you to select someone you trust. In the event that you were to become incapacitated, having this document allows someone to conduct financial business on your behalf.

One thing that is important to understand about a financial power of attorney is that this is a document that only works while you are living. Once you have passed on, this document is voided and the executor of your estate now has the legal power to conduct business.

Healthcare Directive

A healthcare directive, also known as a living will, is a legal document that provides medical direction if you are no longer able to make decisions for yourself. There are state-specific health directive forms, or this document can be drafted by an attorney. Healthcare directives can be hard to think about, due to the circumstances that would bring it into effect. Some of the decisions that may be included in a healthcare directive are do-not-resuscitate (DNR), discontinuing life support, as well as how you would like your body handled after death. It is helpful to provide your healthcare provider a copy of this document.

Each of these documents is important for its own specific place in an estate plan. Our recommendation is to ensure that you have at least a will, financial power of attorney, and healthcare directive. Once these documents are created, it’s important to save them in a safe and accessible location (if you worked with an attorney, your attorney’s office will keep a copy), and share their existence and location with your loved ones and the appropriate professionals. Finally, I cannot overstate the importance of updating your account beneficiary designations — without this all your estate planning effort could be wasted. So, while Affiance Financial is not in the business of creating legal estate planning documents, we do understand their important place within a robust financial plan. And, we have working relationships with several estate planning attorneys who we will work with to help ensure your estate plan is complete.


Please remember there can be no assurance that the content made reference to directly or indirectly in this article will be suitable for your individual situation, or prove successful. Moreover, you should not assume that any discussion or information contained in this article serves as the receipt of, or as a substitute for, personalized advice from Affiance Financial. Please remember to contact Affiance Financial if there are any changes in your personal/financial situation or investment objectives. Affiance Financial is not an attorney and no portion of this content should be interpreted as legal advice.