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Odds are, there's an important document or two that you know you should have, but you just haven't gotten around to getting it yet. It might be your will, or a living will. See how many of the following 10 must-have documents are in your possession, and take action on the ones you haven't yet set up.
Living will and health-care proxy
These are two different forms, but they serve similar purposes. A living will expresses your preferences for treatments, should you be unable to make such decisions on your own. If you'd rather not be kept alive by extraordinary means for more than a month, for example, you can make those wishes known. Same goes if you want your life prolonged by any means available, for as long as possible, no matter what your condition. A health-care proxy form gives someone else the power to make health-care decisions for you if you become incapacitated. Many hospitals provide these forms free of charge.
Unless you want the state you live in deciding what happens to your estate, it's important to have a will. If your situation is fairly straightforward, you might be able to create one quickly and inexpensively with software such as Quicken's WillMaker Plus. However, it's often smarter to consult a professional about your situation to ensure that all of your wishes are addressed, and that your will meets with your state's laws. A lawyer can easily prepare a will for you, often for just a few hundred dollars.
Durable power of attorney
With this form, you authorize someone you trust to make financial and legal decisions for you if you become incapacitated. Taking this step can be critical, even if you're just unconscious temporarily (say for a few weeks) because of a post-surgery complication. You may need someone to close on a home you're selling, or deal with a credit card company. The paperwork involved is minimal, and the possible payoff for having this document in place is enormous.
It's not just the rich who need estate plans. Estate planning is a matter of figuring out how to structure and arrange your assets so that you pass on as much as possible to your heirs, on your own terms.
Home or renter's insurance
You probably know that you need homeowner's insurance if you own your own home. But you may not realize that you can -- and should -- get insurance even if you rent. If your apartment is flooded, for example, your landlord isn't likely to reimburse you for damaged books and musical instruments. Even if you have insurance for your home, don't be complacent. Check up on it every year or two. Is the amount you're covered for still reasonable? If materials costs have soared, it may cost a lot more than you and your insurer originally expected to rebuild your home. If you've made major improvements to the home, you may want to increase the amount of your coverage.
I include brokerage statements here, because I believe most Americans should be invested in the stock market to some degree. You needn't have all your net worth tied up in stocks, but compared to most other alternatives, stocks have proven to be a good way to build long-term wealth.
These days, with many Americans using credit cards more than ever, it's critical to maintain a good credit history. Sometimes, though, credit reports contain errors -- and that's when it's within your power to get them fixed. If you fail to make sure your credit report is accurate, you may lose out on the best available interest rate on a mortgage or a car loan, and you can be out thousands of extra dollars as a result. Poor credit is even hurting those who apply for jobs.
A financial manifesto for couples
If you're in a committed relationship, you need to talk turkey with your loved one. Too many couples avoid having financial heart-to-hearts and end up in financial or interpersonal trouble.
Too many people are closing their eyes, crossing their fingers, and hoping for the best regarding their retirement. Take heart: Most of us still have a fighting chance to build a happy retirement -- if we plan and take action now.
A list of things you want to do in life
This last item may seem corny, but fail to pay attention to what you'd really like to do in life, and you may find yourself one day on your deathbed, full of regrets. This list is a lot more fun to compile than a collection of hymns for your funeral, or how you might like your obituary to read. Think about accomplishments you'd like to check off.
Hopefully, this will help you start thinking about preparing for the unexpected. You may not need all of the documents we've discussed here, but having a few of them handy is bound to help you sleep better at night.
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