11 Mar 6 Estate Planning Documents You Need
If you were in a coma or heaven forbid were killed you don’t want family worrying or worse, fighting about what you want or who should do what. You’ll want your loved ones to be with each other during a difficult time and make it easier for them by having systems in place to make hard decisions for you and your estate.
There are six estate-planning documents you need to have before something happens to you.
Death or incapacitation, aren’t the easiest topics to discuss, but it’s a reality for all of us. Everyone needs to prepare for it, well unless you’re Wolverine. He gets a pass on preparing his estate planning documents because nothing can kill him. For those of us who haven’t had our bones fused with Adamantium (yes, I had to Google that), it’s something we need to prepare for.
Don’t put off getting these documents in place, get the ball rolling ASAP. Start by putting them on your to do list:
Letter of Instruction. This is the cheapest and easiest estate-planning document to create. This paper lets your heirs know your last wishes or anything else you feel important to relay. Do you want to be buried in a particular outfit or is there an outfit you wouldn’t want to be caught dead in. What would you like your funeral service to be like? Do you have any thoughts on your obituary? Do you want flowers at your funeral? These are all things you can let your family know in a letter of instruction.
Catch-All Letter. This isn’t an official name, but it’s what I like to call a document to let family know where and what the heck everything is, especially if you’re the one doing most of the family’s finances. This letter can include bank info, safety deposit box key location, the whereabouts of life insurance, where you hid the money in the house, list of friends to contact, email and bank passwords, and don’t forget your Itunes password because Apple won’t give it to you unless you take them to court.
Beneficiary Designation. Setting up who will be the beneficiary of your accounts is as easy as filling out a form. It’s to your benefit to ensure you have selected the person you would like to receive the funds. The accounts can be your IRA or life insurance for example. It happens all the time—someone dies, and they never updated their life insurance. Now their ex-wife that they hated is the beneficiary of their policy. To avoid this, make sure you have updated all your accounts, then include a list of all the accounts to your catch-all letter.
Powers of attorney. A power of attorney gives the person you select to act on your behalf. To prepare your estate if anything happens to you, a durable financial and medical power of attorney should be created. Durable means that it will stay in place when you are incapacitated or unable to make decisions for yourself. For example, if you had Alzheimer’s or were in a coma, these documents give your trusted person the ability to decide the best assisted living facility and to be able to allocate money to pay for your care. *An important note to remember. Make sure your medical power of attorney has a provision for HIPPA authorization to access your medical files.
Last Will and Testament. You need the will to make it clear what you would like to happen with your possessions when you are gone. This makes it easier on family. Not only that, in a will you decide your executor. This will be the person who will handle all of your wishes they way you want. Do you have a favorite piece of jewelry you want to be passed down to a niece or friend? What do you wish to happen to your pets after your death? A will do with your assets and possessions as you have laid out. For anyone with children, the most important aspect of your will is that you decide who will become the guardian of your kids in the event of your death.
Living Will/Advanced Medical Directive. This is a big one. Your living will or also known as Advanced Medical Directive is a must-have estate planning document. In it, you detail what medical care you do and do not want to receive in the event you’re at the end of life or permanently unconscious. Do you want to be on life support? If not, this is the document to speak your mind on medical care.
The first three documents listed above are free. To update your beneficiary designations you’ll have to reach out to the institution you have the account with, but it’s still free. For powers of attorney and a will, you’ll need an attorney to create but don’t let that be an excuse not to get it done. If you don’t have an attorney or are looking to keep your costs low, try LegalZoom. They create estate-planning documents for a portion of what it would cost you to sit face to face with a lawyer. When is comes to a living will, you can do it yourself, but it may be easier to use the services at LegalZoom. They’ll do it for around $40.
By creating your estate planning documents now you’ll be able to let your family know your preferences. Don’t forget to discuss your plans with family—avoiding the subject doesn’t make it go away, it just makes it more stressful.