Recently, a man stepping off a curb near my office was struck and killed by a passing bus. Only 49, he clearly had many productive years ahead. Reading about it reminded me how quickly unexpected accidents can turn your family upside down, and how vitally important proper planning is.
No matter what your age, you should have already drafted a will and other key documents that outline how you'd like your financial and health matters to be handled if you die, become disabled or fall seriously ill. If you haven't, move that to the top of your must-do list.
Even if you already have such documents in place, however, it's important to review them periodically, particularly if your financial or family situation changes -- say you get married or divorced, have a baby, a beneficiary dies, etc.
Among the things that could go wrong if you haven't made your current wishes known:
Will. A will declares who should receive your assets, indicates an executor to handle your estate and names a guardian for your minor children, among other decisions.
Revocable living trust. A revocable living trust creates a trust to which ownership of your assets is transferred. As trustee, you control the trust and as beneficiary, you own its assets. After you die, assets are transferred to your successor beneficiaries (your 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 they owned at death into their trust, in order to avoid probate on those newer assets.
Financial durable power of attorney. This document specifies who has legal authority to pay your bills, manage your assets and conduct other financial matters if you become incapacitated.
Healthcare durable power of attorney. This document assigns someone to make your medical decisions if you're unable to do so for yourself. Be sure to pick someone who would closely follow your wishes and can make tough decisions.
Living will. A living will instructs doctors and hospitals 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:
Free or low-cost legal assistance is often available for lower-income people. A few helpful sites include:
This article is intended to provide general information and should not be considered legal, 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 you and about your individual financial situation. You should also consult a lawyer to determine how estate, probate and/or other laws may apply to your specific circumstances.
To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney
Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney