1. Will
This is the main document for your estate. In your will you describe how you would like your estate to pass to the people you name as your heirs. You also name the people you want to serve in the following roles:
Personal Representative (also known as Executor and Executrix): This is who will carry out the decisions you make in your will and distribute your estate. Ideally the personal representative should live nearby, be detailed, patient and have organizational skills.
Guardian of Minor Children - If you have minor children, this is who you want to take care of them in the event of your passing.
In naming heirs in your will, most people will name their children to receive their estate in equal shares. If you do not have children, then you can name other family members or close friends to receive shares of your estate. The will is also where you would name any charities you wish to receive shares of your estate.
2. Durable Power of Attorney
This document grants power to another individual to make financial decisions for you if you become unable to make decisions for yourself while you are living. Once you pass away, then the will governs your financial matters (your estate). An example of this could be your involvement in a car accident in which you are in a coma for several weeks. The person you name as your Durable Power of Attorney would step in and pay your bills and make other financial decisions as needed. This person does not make any health care decisions - that is handled by the Health Care Power of Attorney.
For the role of Durable Power of Attorney, ideally you want to choose someone with financial knowledge and/or money management skills. This person should also be able to devote the time needed to this role. It can take a significant amount of time for someone to step into another's financial life and figure things out to make sure all bills are paid and financial matters are maintained.
You should also name a contingent and 2nd contingent Durable Power of Attorney. The person named as contingent takes over if the primary person you name is unable or unwilling to fulfill the role. The 2nd contingent person named is a "back-up to the back-up" or takes on the role if the 1st and 2nd person you name are not able to fulfill the role.
3. Health Care Power of Attorney
This document is similar to the Durable Power of Attorney, but instead names the person who you want to make health care decisions for you if you are unable to make them. Again, using the car accident example from above, this person would step in and make health care decisions including medical treatment plans.
For the role of Health Care Power of Attorney, you want to name someone who knows you very well and would be able to decide (to the best of their ability) what kind of medical treatments you would desire or decline.
As mentioned for the Durable Power of Attorney, it is a good idea to name a contingent and 2nd contingent Health Care Power of Attorney for the same reasons.
4. Advance Care Directive (Living Will)
This is the document where you spell out in detail what health care treatments you do or do not want to have. You can articulate how far you want doctors to go in seeking to extend your life. For example, you can state that you do not want any artificial means of life support such as a feeding tube or a ventilator. This document is meant to give the Durable Health Care Power of Attorney guidance and definitive proof that their decisions are in line with your wishes.
5. Letter of Intent (Memorandum)
This document is generally referenced in most wills. It gives you the chance to specifically state to whom you would like to give certain personal items. For example, you could state you want your daughter to have your grandmother's wedding ring, or you would like your collection of tools to go to your son. You can be as detailed as you wish and name as many things as you want with this document. It is meant to be attached to your will.
6. Beneficiary Change Forms
Any financial asset you have where you are asked to name a beneficiary is an asset that your will does not direct. Assets such as life insurance, annuities, and retirement plans such as 401k, 403b and IRA accounts will ask you to name a beneficiary. These assets pass to beneficiaries regardless of what your will states. For example, you could name your children to receive your estate, but indicate you want your IRA to go to a charity. The fact that you named your children to receive your estate will not change the fact that you named a charity to receive your IRA.
Because these types of assets are not governed by your will, it is very important that you are diligent in making sure your beneficiary designations are up to date and reflect your wishes. A great time to update all accounts where you must name a beneficiary is when you update your will so that you can coordinate everything.
7. Trust - Only in certain situations
A trust is a special document that establishes a separate entity for ownership of some or all of your assets. You remain in control of the assets and can use them for your needs, but the ownership is with the trust. Trusts can be setup for a variety of reasons to accomplish various goals. Most people don't need a trust, but still choose to do them to help their estate transfer more smoothly at their death. The main need for a trust is to avoid possible Federal Estate Taxes. Historically, this was a bigger issue for many people, but recent legislation has made it such that the majority of people do not have a concern about their estate needing to pay Federal Estate Tax.
Other reasons to use a trust would be for privacy or if you own real estate in another state. Seek additional counsel if you think you might have an interest in establishing a trust.
*Please note that Jay Dunnuck is not an attorney and any recommendations written in this post are for example use only. Please consult with an estate planning attorney for the documents needed for your unique situation.