End-of-Life Planning: A Complete Guide

Table of contents

• What is end-of-life planning?
• End-of-life document checklist
• End-of-life planning checklist
• What are advance directives?
• What is a living will?
• What is a medical power of attorney?
• What is a trust?
• Trusts vs. wills
• Living will vs. advance directive
• End-of-life planning FAQs
• Summary of Money’s guide to end-of-life planning

What is end-of-life planning?

End-of-life planning entails organizing your affairs and documenting your medical treatment and financial decisions. An end-of-life plan may include estate planning documents such as a will and trust and medical decision documents like advance healthcare directives.

 

Why is end-of-life planning important?

End-of-life planning allows you to put your wishes in writing to ensure they’re followed. If there ever comes a time when you cannot communicate what you want, having an end-of-life plan can limit confusion and conflict among your loved ones.

The end of a person’s life can be a challenging time for family and close friends. On top of dealing with the emotional stress of a loss, family members may face tough decisions. Proper end-of-life planning documents can alleviate some of your loved ones’ burdens while giving you peace of mind knowing your requests will be honored.

 

End-of-life document checklist

Your end-of-life plan can vary based on your needs, but it’s typically comprised of the following estate planning documents:

• Will: Your will — or last will and testament — designates the beneficiaries who will inherit your assets upon your death. You can also use a will to name guardians for your minor children and pets.

• Financial power of attorney: A financial power of attorney (POA) gives an individual the authority to make financial decisions on your behalf if you cannot. They may make decisions about your taxes, financial accounts, property and more.

• Living trust: A trust also lets you designate beneficiaries for your assets. However, unlike a will, it can go into effect while you are alive or after you die. There are many different types of trusts, some of which satisfy specialized needs or goals.

• Letter of instruction: You can include a letter of instruction in your estate plan to provide your loved ones with more specific directions or additional information. This could consist of important contacts, accounts and passwords, the location of key documents like deeds and titles, and information about pensions, credit cards, retirement accounts and life insurance policies.

It may also include advance care planning documents such as:

• Living will: Unlike a will, which specifies how your assets will be distributed after your death, a living will outlines your medical care preferences should you become unable to communicate them yourself. This can include your choices regarding medication, life-sustaining treatment, procedures and more.

• Medical power of attorney: A medical power of attorney designates an individual to make medical decisions on your behalf if you cannot.

End-of-life planning checklist

Use the following step-by-step checklist to create an end-of-life plan.

 

1. Think about your values

Many end-of-life planning decisions will come down to what matters most to you and how you want to live your final days. Keeping your values in mind — family, autonomy, charity, etc. — can help you make decisions about your legacy and medical care.

2. Discuss your decisions with your family

Preparing for the end of your life can be emotionally challenging for both you and your family. Discussing your plan with family members, answering their questions and asking for their input can ensure they understand and respect your choices.

3. Consult your doctor and attorney

Consider consulting professionals throughout the planning process. An attorney can help you draft important documents and ensure they’re legally binding. Even if you choose not to hire one to create your plan, you can still meet with them for advice.

Your doctor can also play an essential role in creating an advance healthcare directive. Discussing your current health state and the medical decisions you may face in the future can help you define your preferences for specific scenarios based on your medical history and prognosis.

4. Prepare your estate planning documents

Estate planning documents help you plan for asset distribution after you die. This can ensure your property goes to the right people and your family is cared for. Experts often recommend starting the planning process in your 30s, but it can be earlier if you have children.

It could be helpful to follow an estate planning checklist. At the bare minimum, you should create a will, but some people also benefit from trusts. We explain more about the differences between the two later on.

Start by creating a list of your assets (including real estate, personal property, financial assets, etc.) and liabilities. You can use an online will maker if you have a simple estate. Otherwise, you may have to work with an attorney.

You should also consider other financial planning tools, including life insurance. Survivorship life insurance, for example, could help you provide your loved ones with a larger, tax-free inheritance.

5. Prepare advance directives

Simply put, advance directives create a plan for your future medical care. These documents allow you to control the treatment you receive in the future, even if you cannot make those decisions in person.

You can create advance directives on your own using templates for your state from government or third-party websites. However, check your state’s laws to determine if the documents need to be witnessed and notarized. We go into more detail about how to create them below.

7. Choose funeral and burial arrangements

Take some time to think about your wishes for a funeral and burial service. There are many different options to choose from. Specifying what you want ahead of time can relieve your family of the burden of having to make those decisions in your stead.

Consider the following funeral arrangement options:

• Full-service traditional funeral and burial
• Direct burial without a funeral service
• Full-service cremation and funeral service
• Direct cremation without a funeral service
• Memorial service
• Celebration of life

You may also choose how you want to be buried, such as one of the following options:

• In-ground burial
• Above-ground burial, such as in a mausoleum
• Burial at sea
• Green burial (an environmentally friendly option)

8. Consider writing your obituary

Writing your obituary lets you control how you’re honored. It’s also another thing you can do to limit the stress your family will likely experience after you die. If you’d rather have someone else write it, discuss it with your family and tell them what information you want them to include.

 

What are advance directives?

As mentioned, advance directives — living wills and medical power of attorney documents — help you plan for your future while you still can.

 

Your family, healthcare providers and other professionals will refer to these documents to make medical decisions for you if you cannot do so at the time. This could happen if you are in a coma, under anesthesia, had a stroke, suffered injuries, have a medical condition that diminishes your ability to communicate or make decisions (such as dementia) and more.

Some may choose to create a living will and medical power of attorney as part of their advance care planning, while others may prefer only the latter document.

 

What is a living will?

A living will is the type of advance directive that documents your wishes for future medical treatment. You can specify which treatment options you want and don’t want to receive if you experience an injury or debilitating illness, including decisions around medication, life support, resuscitation and more.

 

While a living will can help ensure your wishes are followed, this document isn’t legally binding in all states. If you live in a state that doesn’t recognize living wills, a doctor may not be required to follow it, but you can still create one to help guide your family’s decisions.

It’s important to note that living wills differ from last wills and testaments. A will provides instructions for distributing your property after you die, while a living will is reserved for your healthcare wishes.

 

How to make a living will

Here are some of the steps involved in creating a living will.

1. Decide what you want regarding medical treatment: The most challenging step is deciding what kind of treatment you want later in life. While it’s a profoundly personal decision, your doctor could help you identify the choices you’ll likely face based on your current health conditions.
2. Discuss your decisions with your family: While it’s difficult to talk about the possibility of you ever needing life-sustaining treatment, it’s important to have that conversation with your family. This will help them understand your values and limit their confusion about future care decisions.
3. Complete a living will form: Some states offer free downloadable living will (or personal directive) forms on their official websites. Many third-party websites also offer free templates. Review your state’s laws; some require living wills to be witnessed and notarized.
4. Store your living will safely: Once you complete your documents, store the original copy in a safe place at home. If you feel comfortable doing so, you can distribute copies to your doctors and closest family members. Consider scanning and storing it digitally as well.
5. Review and update your living will as needed: Modify your document if your health changes or you change your mind about treatment. Periodically review your choices to ensure they align with your current wishes.

What is a medical power of attorney?

The other advance healthcare directive is a medical power of attorney (POA), also called a durable power of attorney for healthcare or healthcare power of attorney. This document names a person — your agent, health care proxy or attorney-in-fact — who will make medical decisions on your behalf if you cannot.

 

Your agent may make decisions about surgeries, treatment or medication. They may also decide what facilities you’ll be treated at and by what doctors. They may also choose the facility if you require long-term care in a nursing home or assisted living facility.

If you don’t establish a medical power of attorney, your medical decisions may be made by a court-appointed guardian or family members. This could lead to confusion and decisions that don’t reflect your desires.

 

How to get a medical power of attorney

The following steps can help you create a medical power of attorney.

1. Decide who your agent will be: Your agent will be authorized to make vital decisions on your behalf. Choose someone you trust and who understands your values and respects your wishes.
2. Choose alternate agents: You can choose one or more people to be your secondary agents if your primary agent isn’t available or willing to make decisions.
3. Discuss the decision with your agents: Your agents must be willing to make your medical decisions if you cannot. It’s important to discuss this responsibility. You can tell them about your medical wishes to help guide their choices. If you don’t tell them what you want, your agent will decide based on what they think is in your best interest.
4. Talk to your family: While the conversations can be uncomfortable, discussing your medical power of attorney decisions with your family (beyond just your agent) can help them understand your values and limit confusion.
5. Fill out a medical power of attorney form: Many states offer medical power of attorney forms you can download from their websites. Other third-party websites also provide templates. Check your state laws, as some states require medical power of attorney documents to be signed by witnesses and notarized.
6. Store your document safely: Once your document is complete, store the original in a safe place at home. Consider scanning it and keeping a digital copy. You should also distribute copies to your agents and doctor.
7. Update your document as needed: If you ever change your mind, you can revoke your medical power of attorney. This requires a revocation form that may need to be witnessed and notarized. Review your document frequently to make sure it’s always up-to-date.

What is a trust?

A trust is a legal document that outlines how you want your assets managed or distributed during your lifetime if you become incapacitated or after you die.

 

When you create a trust, you become the “trustor” or “grantor” and designate a trustee to manage your property and assets. There are many benefits to creating a trust, including minimizing estate taxes and avoiding probate.

 

Types of trusts

The various types of trusts differ based on their functions and purposes. However, all trusts fall into the two categories of revocable or irrevocable. Your estate attorney can help you decide which is best for you.

 

Here’s more information about some of the most common kinds of trusts you can establish.

 

Revocable trust

As the trustor, you can change or revoke the trust after you create and sign it. After you die, the trust becomes irrevocable and cannot be changed.

 

Irrevocable trust

Alternatively, you can set up an irrevocable trust, which cannot be changed unless you receive approval from your beneficiaries or a judge in court.

 

Living trust

A living trust — also called an inter vivos trust — is one you create during your lifetime. It can be either revocable or irrevocable.

 

Testamentary trust

A trust that’s created after you die is called a testamentary trust. When you make your will, you include instructions about setting up the trust. You can alter the terms of a testamentary trust in your will before you die, but they cannot be changed after you die.

 

Charitable trust

A charitable trust is a split-interest trust that divides your assets between a charity and a non-charitable beneficiary or beneficiaries (such as family members).

 

There are two main types of charitable trusts.

• Charitable remainder trust (CRT): Your non-charitable beneficiaries have an interest in the trust for an initial fixed time. After that period, the remainder of the trust goes to a charity or multiple charities of your choice.

• Charitable lead trust (CLT): This is the opposite of a CRT. The charity has an interest in the trust for the initial period, and then the remainder goes to your other beneficiaries.

Special needs trust

If you have children or dependents with disabilities, you can set up a special needs trust (SNT), sometimes called a supplemental needs trust. This type of irrevocable trust gives your child an inheritance without disqualifying them for government benefits.

 

Spendthrift trust and asset protection trust

A spendthrift trust can protect your assets by limiting your beneficiaries’ access to the assets held in the trust. The trustee will manage and distribute the assets to your beneficiaries over time. This also protects the funds from creditors because they cannot pursue the assets in the trust.

 

If you want similar protections for yourself, you can set up an asset protection trust.

 

AB trust

An AB trust is also called a marital bypass or credit shelter trust. Married couples can create an AB trust to limit taxes. Two trusts are created when the first spouse dies, splitting the couple’s assets. The first trust contains assets that don’t exceed the federal tax exemption limit. The rest of the assets go into a second trust.

 

Qualified terminable interest property trust

A qualified terminable interest property trust (QTIP trust) is another option for married couples. It’s similar to an AB trust but imposes more restrictions on the surviving spouse.

 

With this option, you don’t need to leave all your assets to your spouse. For example, you can still provide your spouse with income and give the rest to your children. A QTIP trust can also have tax advantages, as the surviving spouse may claim the marital deduction for assets transferred to the trust.

 

Totten trust

A totten trust is a bank account you open and designate to a beneficiary. Unlike other trusts, a totten trust can only hold cash. You can deposit or withdraw money as you would with any other bank account.

After you die, the bank account — also called a payable-on-death account — is transferred to your beneficiary.

 

Trusts vs. wills

Trusts and wills are two documents that specify how you want your assets managed after you die. While they both allow you to choose what happens to your property, there are some key differences between them.

 

Living will vs. advance directive

A living will is a type of advance directive. While the term advance directive refers to the more comprehensive plan for your future medical care, a living will focuses specifically on the medical treatments or interventions you wish to receive (or not).

 

End-of-life planning FAQs

 

How do I make a living will without a lawyer?

While a lawyer can help you create a living will and advise you on your decisions, you don’t need to hire one. You can make a living will on your own by using a template you find online. However, check the laws in your state — some require the document to be witnessed and notarized to be valid.

 

What is end-of-life care?

End-of-life care is a form of palliative care. The circumstances can vary, but it’s usually administered in the last few months or days of someone’s life and aims to help the person be as comfortable as possible. Hospice, for example, falls under end-of-life care.

What is better: a will or a trust?

Everyone should have a will, but only some need to set up a trust. You can have both if that makes sense for you. A will goes into effect after you die, while a trust can go into effect during your lifetime or after you die.

Whether you need a trust depends on your assets and goals. A trust may be suitable if you have significant assets or want to be more specific about how they’re managed. Consult an attorney if you need help deciding.

Who makes medical decisions if there is no power of attorney?

Suppose you don’t have a medical power of attorney and cannot communicate your wishes to your doctor. In that case, the court may appoint a guardian to make medical decisions on your behalf. That authority could also fall on your spouse or other family members.

Summary of Money’s guide to end-of-life planning

End-of-life planning involves creating documents that specify your preferences for your final stages of life. They can include instructions regarding how you want your estate to be managed and the medical treatment you wish to receive.

There may come a time when you can’t communicate your wishes. Having these specifications in writing can ensure your wishes are followed and that decision-making doesn’t fall entirely on your loved ones.

You can consult an attorney for help, but consider including the following documents in your end-of-life plan:

• Will
• Trust
• Financial power of attorney
• Letter of instruction
• Living will
• Medical power of attorney