Category: Estate Planning

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Estate Planning Taxes

529 ABLE Accounts and Veteran Eligibility: Big Changes for 2026

A woman sitting with a soldier reviewing 529 ABLE paperwork

I’ve been asked by disabled veterans many times whether they qualify for an ABLE account, formally known as a 529 ABLE plan. Until now, my answer has often been no; not because their disabilities weren’t real or significant, but because the rules required that the qualifying disability begin before age 26. That restriction excluded many servicemembers whose disabilities occurred later in life. Beginning in 2026, that changes in a meaningful way thanks to the ABLE Age Adjustment Act.

What Is an ABLE Account?

The original Achieving a Better Life Experience (ABLE) Act was designed to allow individuals with disabilities to save money without putting essential benefits at risk. ABLE accounts are modeled after 529 college savings plans and offer tax-free growth and tax-free withdrawals when funds are used for qualified disability expenses. Just as importantly, properly structured ABLE savings generally do not count against means-tested programs such as Supplemental Security Income (SSI) and Medicaid. For individuals who rely on these benefits, saving too much in the wrong type of account can unintentionally jeopardize critical support, making ABLE accounts a valuable planning tool.

How ABLE Accounts Work

The account is owned by the disabled individual, though a parent, guardian, or agent under a power of attorney may assist with management. Contributions are made with after-tax dollars, the account grows tax-free, and withdrawals remain tax-free when used appropriately.

What Counts as a Qualified Disability Expense?

What makes ABLE accounts especially powerful is the broad definition of “qualified disability expenses.” These expenses extend well beyond medical care and can include housing, transportation, education, assistive technology, personal support services, and other costs that support health, independence, and quality of life. For disabled veterans, this flexibility matters. Many service-connected needs don’t fit neatly into traditional benefit categories, yet they are essential to day-to-day stability and dignity.

The Historical Limitation That Affected Veterans

Historically, ABLE accounts came with a significant limitation that excluded many veterans: the disability had to begin before age 26. For servicemembers injured during later enlistments, deployments, or training, or whose conditions developed or were diagnosed years after service, this requirement was a nonstarter.

The 2026 Rule Change: Age Limit Increases to 46

Beginning in 2026, the age-of-onset requirement increases from 26 to 46. This is a substantial and long-overdue shift for veterans. Many service-connected disabilities occur well after age 26, particularly for those who served into their 30s or 40s. Under the new rule, a much larger group of disabled veterans may qualify for an ABLE account for the first time.

Who Qualifies for an ABLE Account?

In addition to the age requirement, the individual must meet the Social Security definition of disability. Veterans automatically qualify if they are already receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). Those not receiving these benefits may still qualify through self-certification, attesting under penalty of perjury that they have a medically determinable physical or mental impairment that results in marked and severe functional limitations, has lasted (or is expected to last) at least 12 months or result in death, and began before the applicable age limit.

Why ABLE Accounts Matter for Veterans

For veterans who become newly eligible, an ABLE account can serve as a financial safety valve. It allows savings to exceed the typical $2,000 SSI asset limit without immediately losing benefits, provided balances remain within ABLE-specific thresholds. While SSI cash benefits may be suspended once an ABLE balance exceeds $100,000, Medicaid eligibility typically continues, and overall account limits are often much higher depending on the state. When coordinated thoughtfully, this flexibility can be especially powerful alongside VA disability benefits, which are not means-tested.

Repurposing 529 Education Savings

Another advantage that has become increasingly relevant is the ability, in certain circumstances, to move funds from a traditional 529 college savings plan into an ABLE account. For families who originally saved for education but later faced a disability diagnosis, whether for a veteran or a dependent, this provision allows education savings to be repurposed for disability-related needs without triggering taxes or penalties, subject to annual and lifetime limits.

ABLE Accounts as Part of a Broader Plan

From a planning perspective, ABLE accounts are not a cure-all. They do not replace the need for careful coordination with VA benefits, special needs trusts, or long-term care planning. However, they can complement those strategies by providing accessible, flexible funds for everyday expenses that support independence and quality of life.

A New Opportunity for Disabled Veterans

Now that we are in 2026, ABLE accounts deserve renewed attention, especially for disabled veterans who were previously excluded by outdated eligibility rules. If you or someone you love is a veteran living with a service-connected disability that began later in life, this change may open the door to new planning opportunities. Used thoughtfully, an ABLE account can provide more than tax advantages. It can offer peace of mind, autonomy, and financial breathing room; things every veteran deserves.

Curious about the changes to ABLE and looking for help?  A MFAA financial advisor can help.

 

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Estate Planning Financial Planning Insurance

He Was 96: The Financial Lessons His Life (and Death) Taught Us

Two elderly people looking at each other in a black and white picture drawn in pencil.

He Was 96: The Financial Lessons His Life (and Death) Taught Us

My oldest client died last night. He was 96. 

I received this news from his wife within four hours of his passing. It might seem odd that she got ahold of me so quickly, but I am her trusted financial advisor. I knew what she was thinking about. She was the survivor beneficiary and now, more than half of her monthly income will go away now, and she is 17 years his junior with (hopefully) many years remaining. She offers all of us important lessons in understanding financial planning decision points and taking appropriate actions at the right time.

He was an Air Force pilot and earned a military pension for his 20 years of service. His SBP was assigned to his first wife in their divorce. His 50% of the military pension will no longer be income for his surviving spouse of 50+ years.

He became a schoolteacher, met his new wife, and both earned a lifetime teacher’s pension. However, this retirement was in an era where very little financial education was provided by employers in making survivorship elections. There was no ChatGPT to guide you on your way. So, no survivor election was made, and this inflation-adjusted pension income will also end.

And then there is Social Security. The surviving spouse keeps the higher of the two benefits. Their benefits were fairly equal, but it’s a 50% income reduction in that category as well.

All totaled, her new monthly income will be roughly 35% of what it was before her husband passed. No one wants to find themselves in this situation late in retirement. Let’s look at what may have seemed like small decision points that could have led to improved financial outcomes.

Making Survivor Benefit Plan Decisions Together

When service members retire from the military, one of the most consequential, and often misunderstood,  financial decisions is the Survivor Benefit Plan (SBP) election. The SBP provides up to 55% of the pension payment as ongoing income to a surviving spouse if the retiree passes away first, effectively serving as a lifetime inflation-adjusted annuity for the survivor.  

However, the SBP election must be made at the time of retirement, and it becomes irrevocable in most cases. Too often, the decision is made quickly or without meaningful discussion between spouses. In the case of my clients, the SBP was assigned to a prior spouse as part of a divorce decree, a common but often overlooked detail that can have lifelong consequences.

When a new spouse comes into the picture later in life, that person may be left without access to any survivor benefits. Unless deliberate steps are taken during open enrollment periods or upon remarriage, the coverage cannot be transferred.

Both spouses must be active participants in the SBP decision, and a service member needs to review that decision after major life changes such as divorce or remarriage. A small percentage of income given up during retirement for SBP premiums can provide decades of income security for the surviving spouse.  While “the numbers” might suggest acquiring life insurance as a substitute, there are some spouses who are more comfortable with that “check of the month club”.  This is a tradeoff that deserves detailed analysis and joint agreement.

Optimizing Social Security Claiming Strategies for Couples

Social Security remains one of the most under-optimized components of retirement planning, particularly for married couples. Many retirees view it as a simple “start as soon as you can” benefit. But the timing and coordination between two spouses can significantly impact the lifetime and survivor benefits.

When one spouse passes away, the surviving spouse keeps the higher of the two benefits. That means the larger benefit becomes a “joint and survivor” payment — it continues for as long as either spouse lives. Therefore, it often makes sense for the higher earner to delay claiming benefits until age 70, maximizing the survivor benefit.

In the case of my clients, both had similar benefit amounts and claimed early, a decision that seemed harmless at the time. But now, the surviving spouse faces a permanent 50% reduction in household Social Security income on the already much smaller lifetime benefits.

When one spouse is significantly younger, as in this case by 17 years, the long-term implications of early claiming can be profound. A couple may live comfortably in their 70s, only to have the younger spouse face financial hardship for 20 or more years after the first death.  

The best strategy is often collaborative: delay benefits for the higher earner while allowing the lower earner to claim earlier, creating a balance of near-term income and long-term protection. Your financial planner can model multiple claiming scenarios, not just for the retirees’ lifetimes but also for the survivor’s projected longevity.  Factors such as taxes, Medicare premiums, and portfolio withdrawals also help determine how Social Security fits within the broader income plan.

Using Life Insurance or Annuities to Protect the Surviving Spouse

For many couples, particularly those with single-life pensions, there is a significant risk that income will disappear at the first death. When survivorship options were not elected, or not available, life insurance and annuities can serve as powerful tools to fill that gap.

Life insurance is often overlooked as couples approach retirement, yet it can be one of the most efficient ways to replace lost income. A well-structured insurance plan maintained into retirement, can provide tax-free funds to supplement income or establish a personal “survivor benefit” when pensions cease. Even modest policies can make a meaningful difference in preserving financial independence for the surviving spouse.

For retirees who are beyond the point of insurability or who prefer guaranteed lifetime income, annuities can offer similar protection. These instruments create a contractual income stream that continues for both spouses, or for a predetermined number of years, ensuring that the survivor’s essential needs are met.

The Broader Lesson: Plan Together, Decide Intentionally

The passing of a spouse is an emotional event that becomes exponentially harder when financial uncertainty is added to the grief. What stands out in my client’s story is not just the financial loss but the accumulation of small, missed opportunities, each one seemingly minor at the time, but together resulting in a 65% drop in household income.

Financial planning is, at its core, about anticipating transitions. Life, health, and relationships evolve, and the plans we make in our 40s or 50s must be revisited regularly to ensure they still serve us in our 70s, 80s, and beyond. Whether it’s reviewing pension elections, updating beneficiary designations, or exploring insurance and annuity options, every couple should treat these as shared decisions.

The key takeaway is simple but vital: every financial decision has a survivor dimension. The question to ask at every major juncture is, “If I’m not here, what happens to the person I love?” The answer should guide not only the math of retirement but also the heart of it.

Closing Reflection

My client lived a long, full life; one marked by service, dedication, and love for his wife. But his story reminds us that financial planning is not just about growing wealth; it’s about ensuring stability for those who remain. The surviving spouse now faces the challenge of living on one-third of her prior income, a difficult reality that could have been softened with just a few different decisions decades ago.

This serves as a timeless reminder: the best financial plans are made together, with both lifetimes in mind.

If this article spoke to you, the advisors at MFAA are here to help.  All MFAA advisors are fee-only and will not sell you a product.  Instead, they will help you understand how the decisions you make today can affect your financial future.  They’ll also help you make a financial plan to make more informed decisions.  Find an MFAA advisor here and reach out today!

Categories
Estate Planning

How to Trust: Considerations for Revocable Living Trusts

Considerations for Revocable Living Trusts

How to Trust: Considerations for Revocable Living Trusts

 

Lots of things are verbs these days. Adult used to be a noun, but now Adulting is a thing, so it’s a verb. For many of us, transitioning from a Last Will and Testament (Will) to a Revocable Living Trust (Trust) also turns Trust into a verb.  So, let’s talk about the considerations for revocable living trusts.

Okay, the grammar police can hit the cancel panic button; I know Trust is already both a noun and a verb, but hang with me here. Many families will conclude that a Will alone is insufficient for estate planning. A time may come when a Trust, such as a Revocable Living Trust, is the best way to care for your family. 

Just as our kids need to learn to be adults to be successful with estate planning, you may need to learn to Trust. 

Estate Planning Ground Ops

Estate planning is not just for wealthy robber barons, with top hats, monocles, cigars and a steady flow of wealth extracted from their fellow citizens. If you take no action on your estate plan, your estate plan is to let the probate court decide what happens with your money, your stuff, and your kids. This is called the No Plan Estate Plan.

Most of us have gone to see the JAG to get a Will, a Living Will (also called an Advanced Directive), a Healthcare Power of Attorney, and maybe a Financial Power of Attorney (PoA). It’s considered good form to have these in place before soaring off to turn enemies into a fine pink mist.

The Living Will gives your surrogate instructions about things like life-prolonging care, and a Health Care PoA allows a surrogate to make healthcare decisions when you’re incapacitated. 

We’ll focus on the Will. A Will is a legal document that tells the probate court how you want your assets to flow, who should be the guardian of your children and other details like who should take care of your final affairs. 

A Will does not necessarily need to be fancy or expensive; it just needs to exist and comply with state laws, which usually implies that it’s appropriately witnessed, signed, and notarized. 

The upside of using a Will as the primary estate planning document is that:

  • A court shouldn’t have to make decisions that you should make.
  • Your heirs and loved ones shouldn’t have to make tough decisions that they may not want to make.
  • There is an orderly close out of your affairs.

The downsides of a Will include the likely need for probate court, attorney’s fees, the public nature of probate court (e.g., lack of privacy), and the delays in probate depending on the jurisdiction. 

The language in a Will is also generally less specific than what is included in trust documents. This can be problematic when trying to create particular outcomes for heirs such as young children. More on this later.

Perhaps the biggest problem with an estate plan based on a Will is that probate will be necessary in any jurisdiction where you own assets.  If you’ve collected properties at each duty station, you could be set up for probate and its costs and delays in many states. This is likely to have a chunky five-figure cost at a minimum.

Trust 101

There are many kinds of Trust documents. We will focus on a Revocable Living Trust here.  You can think of a Trust as a Will on steroids.

A Revocable Living Trust will convey your intent for your assets, but it does not have the downsides of probate costs, time delays, multiple jurisdictions, and public access.

A Revocable Living Trust is a shadow or avatar of you while you’re alive.  It does not have a separate tax ID number, tax filing requirement, or ongoing required maintenance. Much like an LLC, it is an entity that you use to manage your assets.  You can unwind a Revocable Living Trust and move assets into and out of it as desired. It doesn’t bear on your ability to sell a property that you’ve titled to it. 

Some families will have a single Trust for both spouses but it can be common to have a separate Trust for each spouse and own property half in each Trust. This is an area where an experienced attorney’s advice is crucial.  

A Revocable Living Trust does not really protect your assets like an LLC or liability insurance.  It’s more about streamlining what happens after you pass away or become incapacitated. 

Unfortunately, military JAG offices will not prepare a Revocable Living Trust for you. You must pay to have that done elsewhere. 

Additionally, Trusts are state-specific and must be supported by a pour-over Will. You’ll generally find that initiating a Trust includes a new Will, Living Will, Healthcare Power of Attorney, and Financial Power of Attorney.  These documents should all dovetail together to achieve your intent.

If your estate plans are based on a Will, you punt the significant costs of estate planning until after you pass away. When you use a Trust-based estate plan the cost is generally upfront while you’re still alive. However, it is often much less expensive over a lifetime to use a Trust rather than a Will.

You can find online services to help you establish a Trust for as little as a few hundred dollars. Using a local attorney will probably range from a few thousand to $10,000 or more if you have a very complex set of estate planning needs or live in a costly area.

How to Trust

Once you decide that you might need to use a Trust for your estate plans, you have to start Trusting— behaving like a person or family that has a Trust.

Step one – begin with the end in mind. A Trust-based estate plan aims to smooth things out for your heirs and have a little bit of control from beyond the grave. 

This looks like deciding at what age your kids should inherit your assets. If you have young children, six-figure retirement accounts, seven-figure life insurance, and one or more properties, leaving these assets all at once to an 18-year-old who just reached the age of majority could be much more of a curse than a blessing.  

Authors note:  I’m quite certain that I would have done things that rhyme with Mamborghini and Mas Vegas Ragefest upon receipt of six-plus figures of wealth at age 18.

A common technique is to stipulate that kids receive what they need through college, a tranche of “getting started” or “twenties” money after college, and the rest between age 25 and age 35.  

If you’re thinking about holding the money in trust much past age 35, consider reading the book Die with Zero by Bill Perkins. He makes a great case that the peak utility of inherited money is before 35.  Holding the funds might limit your ability to positively impact your heirs before their lifetime financial story is pretty much etched in stone.

Other end states that you will want to think through before establishing a Trust include: 

  • Which heirs should receive indivisible property such as heirlooms? 
  • Who will be your trustee(s) and successor trustee(s)? 
  • Should any discretion be withheld from the trustee(s)? 
  • When should your kids start to control the Trust, if ever?  
  • Is the goal to be equal to heirs, or perhaps equitable?

Every family is different. Thinking through the ramifications of these decisions with an experienced, licensed estate attorney can prevent costs, headaches, and heartaches down the road.

!!!CAUTION!!!

Only Attorneys can practice law.  That doesn’t mean you can’t generate your own legal documents and estate plans, and it doesn’t mean you can’t get planning advice from a financial planner. Still, the interpretation of law and preparation of documents for another person is strictly in the AOR of licensed attorneys.

Step two – choose an attorney or online service.

Online services are not bad, especially for families with low complexity, time poverty, and a willingness to work with an attorney down the road for updates or do-overs.  Most online services are offered through financial professionals rather than directly to consumers, but you can find direct options as well.  

If your needs aren’t complex, an online service will have you fill out some questionnaires, review drafts, pay your fee and either print or receive your documents via mail.  Some services will provide great organizational tools like tabbing out the documents with color-coded “sign here” flags to aid the signing process. 

When you have your documents in hand, you’ll need to:

  • Review them (ounce of prevention vs. a pound of cure…)
  • Arrange a notary and witnesses
  • Follow the (hopefully) provided directions for the order of signing, witnessing, and notarizing.
  • Commence with “the fun part”… (more below)

Working with an in-person local attorney has a lot of advantages with only two real disadvantages.  A local attorney will be both licensed and experienced in your state.  The attorney will provide plenty of Q&A time and education about your estate plans and documents.  Even if it’s not a “white glove,” you can expect hand-holding.  Estate attorney offices are usually experts at retitling real estate property and often include this as part of their fees. 

The two disadvantages of working with a local attorney are the upfront costs and the time commitment. If you’re time-starved such that getting to the JAG office for freebies takes lunar rocket-level prescheduling, it won’t be any easier to create time for a couple of trips to the attorney’s office.  You can do an online estate plan in your bunny slippers.  You’ll probably want to get more gussied up for your trip to the attorney’s office. 

Unfortunately, a local attorney can’t do much for you about “the fun part.”

The “Fun” Part of Trusting

To be clear, by “fun,” I mean absolutely not fun. Substitute painful and tedious for “fun”. Once you have signed Trust documents, you have fancy paper.  But you wanted an estate plan and not fancy paper, so you’ll need to deal with the “last mile” problem.  

Whether you get your Trust and other estate documents from an online service or local attorney, you must now begin adjusting beneficiary designations and account/property titles to make your Trust effective.  

!!!WARNING!!!

Beneficiary designations and property/account titles supersede your Trust, your Will, and state laws.  You might want your Trust to hold your assets after you die, but magical thinking alone won’t make it so. 

!!!CAUTION!!!

When designating beneficiaries on accounts or insurance policies, you should have the option for both Primary and Contingent Beneficiaries.  You’ll also have the option to designate “Per Capita” or “Stirpes” (rhymes with burpees). 

Primary Beneficiaries are usually spouses or other humans than we want to get our assets. Contingent Beneficiaries are the “next in line” persons that should get our assets if the Primary Beneficiary has passed away. With a Trust, it’s common to designate a spouse as the Primary Beneficiary of an account/policy and the Trust as the Contingent Beneficiary.  

Per Capita, meaning “by the head” means that if a beneficiary is no longer living, that beneficiary’s children fleet up a generation.  

Per Stirpes, meaning “by the root” means that if a beneficiary is no longer living, that beneficiary’s heirs equally divide their parent’s share. 

Imagine that Mom and Dad had two children (son and a daughter) who each had two children. Dad died several years ago, as did the son. Now mom just passed away. The estate plan called for assets to be split equally between the son and daughter. 

If Per Capita, the Son’s two children each get a third as does the daughter. The grandchildren fleeted up a generation and effectively diluted the amount that the older generation receives. 

If Per Stirpes, the Son’s two children each get a quarter and the daughter gets half. The grandchildren don’t fleet up and the daughter is not financially affected in the estate plan by her brother’s death. 

Per Stirpes is probably more common, but chair-flying how estate plans will play out is a crucial part of “beginning with the end in mind.”

Here are the most common actions families may need to take after signing their Trust:

  1. Re-title real estate in the name of the Trust. The attorney or online service may handle this for you.  Or you can DIY down at the courthouse or county clerk’s office.  Failing to re-title real estate invites probate… potentially in many states. 
  2. Open new taxable brokerage account(s) in the name of the Trust. Transfer investments out of your prior joint or individual brokerage accounts to your Trust account(s). 
    1. It may also be possible to add the Trust as a beneficiary to a taxable account, but it’s going to add work for your heirs after you pass away. 
  3. List all retirement accounts (TSP, 401(k), IRA, etc.) and update the beneficiaries on each account. The most common practice is to name a spouse as the Primary Beneficiary and the Trust as the Contingent Beneficiary. 

!!!WARNING!!!

Because of the SECURE Act, it may not be a good idea to name a Trust as a retirement account beneficiary. Depending on the language of the Trust, it’s possible that the Trust could cause the pre-tax part (e.g., Traditional accounts) to both be taxed at the Trust rates (40% federal over about $15K) and require that the retirement account is emptied 5 years after the owner dies. This can be a massive tip to the tax man.  Wargaming this issue with an attorney and financial planner can help you make the best choices. If retirement accounts aren’t a large part of your estate, leaving them directly to beneficiaries can be a good choice.

  1. List all insurance policies, including SGLI, FSGLI, and the abominably-named “Death Gratuity” and all group policies provided by your employer.  Update the beneficiaries based on your intent.  Again, common practice is to name the spouse as the Primary and the Trust as the Contingent Beneficiary. 
  2. Bank accounts are generally a pain, but they’re also a probate risk.  Contact your bank to add a Transfer on Death designation with the name of the Trust as the recipient.  Transfer of Death is basically a beneficiary designation for your bank account(s). Alternatively, you can open bank accounts in the name of your Trust and transfer your cash to the Trust account.

***NOTE***

Transferring assets from your individual or joint accounts is usually not a taxable event. Talk to your financial planner before committing. 

  1. Cats & Dogs.  Remember that savings bonds, Series I Bonds, and other accounts you may have collected probably also have beneficiary options.  Don’t forget those. 
  2. Business Interests. If you have an LLC or shares of a corporation or partnership, you’ll likely want those in your Trust.  This is probably not DIY territory. 
  3. Things with wheels and propellers.  Every state is different in how it handles motorized things upon death.  Frequently, probate isn’t required and it’s not common to title a vehicle to a Trust. Talk to your attorney to be sure. 
  4. College accounts and UTMA/UMGA accounts. Each brokerage is going to have different rules and forms here.  Some may allow a Trust to own a 529 account or UTMA, others may not.  Research options to make an informed decision about re-titling or using successor ownership (common with 529 plans). 

Remember, fun = painful and tedious. 

Cleared to Rejoin

If you own real property, have young children, want more control from beyond the grave, or have concerns that can’t be properly handled with a Will-based estate plan, it may be time to both Adult and Trust. A Revocable Living Trust helps avoid probate, mitigate total estate plan costs, maintain privacy, and smooth out the transition of your assets to your heirs. 

But if you’re going to Trust, you need to get ready for the “fun” part (which if you skimmed to the end is not actually fun). Make sure to follow through on the last mile.  Appropriately title your property and update your beneficiaries to make your Trust effective!

Fight’s On!

Categories
Estate Planning Financial Planning

5 Estate Plan Documents Everyone Needs

Estate planning document - Last Will and Testament

Five Estate Plan Documents Everyone Needs 

As a financial advisor, I often talk with clients about their need for an estate plan. Far too often, clients reach out for advice because a family member has become seriously ill or passed away without any documents in place.  Caring.com ran a survey this year and found that only 33% of Americans have a will or living trust. In 2019 the US had 54.1 million people over the age of 65. That means that about 36.3 million people over the age of 65 don’t have a will, powers of attorney, or trusts. And that means many of our parents and grandparents don’t have their documents in place.

The problem is many people don’t think of themselves as wealthy. They don’t think of themselves as having an estate. As a financial planner, I have found many people underestimate the monetary value of their lives. I can’t tell you how many times I have heard the following sentence:

“I don’t have anything. I don’t need a will.”

But you do. We all do.

The Need For An Estate Plan

It’s hard to truly understand what estate planning is about until we lose someone close to us. And even then, we may find ourselves on the sidelines, with information filtered through extended family members and rarely responsible for making decisions. Complex tax law, health care law, and state probate laws, combined with family dynamics leave estate planning shrouded in mystery.  Talking about estate planning also plays into our natural aversion to talking about life, end of life, and death. The technical jargon and legalese make it that much harder to have tough conversations with loved ones. And they are tough conversations. Estate planning covers everything from how much money we have, to how we engage or don’t engage with various family members. Like most areas of personal finance, it is about so much more than money.

We typically talk about this highly emotional topic in non-specific ways using complicated and specialized language. It’s no wonder that so many people don’t have any legal documents in place. Below is a list of the five primary documents that make up your “estate plan.” There are some documents that help you while you are alive and some documents that help your family after you pass away. This is not a comprehensive list. Your unique situation may require additional documents. It is best to consult with an attorney to get help drafting your documents. If you are active-duty military or a Veteran, you may be able to get help through the base Legal Office. Many law schools will also provide estate planning clinics where members of the public can get their documents drafted for free.

Four Documents That Protect You While You Are Alive

Think about all the things you manage over the course of a month. For example, I run a business.  I pay personal and business bills. I purchase groceries and I make sure all the little things that keep our life running happen. Now imagine, I walk outside and because it is Spokane in the winter, I slip and fall and hit my head. I can’t make any decisions. Who can make all the necessary things happen? Who can manage the money and make financial decisions for me?

If you are like my husband and me, somewhere during your active-duty years, there was a deployment. You may have gathered with all the other military families getting deployed and drafted, signed, and notarized powers of attorney for each other.

You’re good to go. Right?

Maybe.

Depending on your state, and depending on the power of attorney, maybe those documents had you covered and maybe they didn’t. However, most financial power of attorney documents are only in effect  while you can make decisions for yourself. In the example above, since I just slipped on the ice, I can’t. In Washington, that general power attorney doesn’t help my husband one bit. We needed a durable power of attorney. A durable power of attorney will be in effect when you can’t make decisions for yourself. A durable power of attorney will allow your personal representative to make decisions for you when you aren’t able to make decisions for yourself. When it comes to being unable to care for yourself or passing away, you need someone who can legally manage your financial life.

Document #1: Durable Power of Attorney

I will keep using my fall on the ice as an example. Who do I want to make decisions for my health care? In my case, I want my husband. The last thing I want is to add additional stress and worry to his burden at that moment. I don’t want him to have to fight with the hospital or anyone about my care. I want him to have everything he needs to help me.  The health care power of attorney allows him to make decisions for me without having to argue, fight, or justify why he can. We also have kids over the age of 18. They are adults. No more parental rights. Young adult children need to have a health care power of attorney as well. Imagine fighting to be able to help your kids in an emergency. The thought of it makes my heart race.

Document #2: A Healthcare Power of Attorney

Do you have strong feelings about how you would want to be cared for in a medical emergency? You need a way to communicate and document those feelings and preferences for your care. A living will, sometimes called an advance directive, tells your personal representative how you want to be cared for in certain circumstances. The Healthcare Power of Attorney grants your trusted person the power to make decisions for you. The living will tell your trusted person and the world what you want. Having this document ensures that your trusted person and your health care providers know your wishes. Living wills help family members make difficult decisions with greater peace of mind knowing they are choosing what you wanted.

Document #3: A living will

HIPAA authorizations complete the list of documents that help you while you are still alive. With the Healthcare Power of Attorney, you picked a trusted person to make decisions for you. With the living will, you told them your wishes. HIPAA authorizations grant your trusted person access to all the information they need to help you and make health care decisions for you.

Document #4: HIPAA authorizations

As military families, we often live in multiple states throughout our lives. Spouses may have different states of residency. We may own homes in multiple states. I cannot stress the importance of understanding the probate, estate, and inheritance laws in your state of residency. State laws vary tremendously. If you own property in multiple states work with an attorney who is licensed to practice in your state of residency. It is wise to consult with a CPA who can help you understand how your state of residency may tax the property you own in other states.

Documents that help your loved ones after you pass away

Everyone needs a will. If you don’t have a will, your state has a plan for you. You don’t want it. Your will does more than just direct your assets to your beneficiaries. Your will helps your beneficiaries save time, money, and frustration after you pass away. Wills are often paired with various trust documents. Even when you have a trust, you still need a will. A will communicates your wishes after you pass away. A will is a gift that you give to your loved ones.

Document #5: Last Will and Testament

These 5 documents make up your “estate planning” documents. Think of them as your legal planning documents for life and death. Having these documents helps you and your beneficiaries. Estate planning works across generations. For most adults, we will end up talking to our parents and our kids about estate planning, wills, and powers of attorney. Having these documents in order helps you and it helps them.

Losing someone you love hurts. Engaging with the medical system, insurance companies, hospice, and the funeral home can be difficult. It’s harder when you don’t have any legal authority. It’s harder in countless unforeseen ways when you must navigate it all without a complete estate plan and the five key documents.  MFAA advisors are knowledgeable about estate planning and can help you establish your plan and required documents.  Check out their profiles here.