Donít procrastinate: Make estate decisions nowBy Jason Alderman
People naturally procrastinate when faced with difficult decisions. Take planning for your own demise: Only 40 percent of people recently polled by Visa Inc. have an up-to-date will.
Although wills aren't mandatory, if you don't have one when you die, the state will wind up making decisions regarding your affairs. Similarly, if you haven't filed other key documents, someone else – not necessarily the person you wish – will make your financial and healthcare decisions should an accident or illness render you unable.
Not to dwell on the negative, but here are a few things that could go wrong if you don't make your wishes known:
- Court-supervised probate could hold up your estate and result in costly fees.
- Because the state usually awards assets to surviving spouses, children and other relatives, your friends and favored charitable institutions could be left out.
- With no will, the state decides guardianship for minor children whose parents have died.
- Your preferences for things like life-support procedures and burial instructions may not be followed exactly.
Here are a few key documents you should consider to prevent these kinds of scenarios:
A Will declares who should receive your assets, chooses an executor to handle your estate and names a guardian for your minor children, among other decisions.
With a Revocable Living Trust you create a trust to which ownership of your assets is transferred. As trustee, you control the trust; as beneficiary, you own its assets. After you die, assets are transferred to your "successor beneficiaries" (heirs) without having to go through probate. Many folks also create a "back-up" or "pour-over" will, which essentially "pours" any newly acquired or additional property you owned at death into their trust, to avoid probate.
A Financial Durable Power of Attorney specifies who has the legal authority to pay your bills, manage assets and conduct other financial matters if you become incapacitated.
A Healthcare Durable Power of Attorney assigns someone to make your medical decisions if you're unable. (Assign someone who would closely follow your wishes and can make tough decisions.)
A Living Will tells doctors and hospitals your wishes regarding which medical treatments and life-support procedures you do or don't want. Have your doctor put a copy in your medical file.
There are a few additional considerations for any of these documents:
- Sign, date and notarize them and file for safekeeping.
- Review documents periodically, especially if your family situation changes (marriage, divorce, new child, death of a beneficiary, etc.)
- Compare will or trust beneficiaries to those named in your insurance or retirement plans to eliminate conflicts.
- Before naming an executor or power of attorney, make sure they are up to the task.
- Name alternate beneficiaries and executors in case anyone dies before you.
Do-it-yourself kits like Quicken WillMaker Plus are available to create these documents, although if trusts, complex estates or large assets are involved, consider hiring an attorney specializing in estate law to draft or at least review your documents.
Spare your family from having to deal with these issues when you're gone by addressing them now.
This article is intended to provide general information and should not be considered tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how tax laws apply to your situation and about your individual financial situation.<< Back to Practical Money Matters
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