OK, we really didn't want to bring it up before, but the statisticians just told us there is a 100% chance you're going to die. We're sure of it.
Barring Armageddon or the total collapse of society (we're willing to concede that these require no financial plan), life will go on after you. And some sad soul -- likely one of your favorite people -- will be stuck wrapping up your affairs. To make it worse, along the road to this certain end point, there's a good chance you'll be at least temporarily incapable of managing your financial affairs. (We're relentless, aren't we?)
Wait! There is good news!
It doesn't take much to put a few safeguards in place so you don't have to worry about this stuff and you can get on skipping through life with that smile we love so much.
Here's all you have to do:
- Complete four important documents
- Pick your heirs and write their names in the appropriate blanks
- Let important people know where your stuff is
Here are the most important documents:
Your will (last will and testament)
What is it: Your will details exactly what happens to your property (and potentially your minor dependents) when you die.
Where to get it: We recommend you see an attorney. It won't cost you much and you'll get it done quickly and correctly. If you opt for pre-printed, fill-in-the-blanks forms and software, be sure they are up-to-date and conform to the laws of your state.
Living will (advance medical directive)
What is it: This says you want the right to die a natural death, free of all costly, extraordinary efforts to keep you alive when your life can only be sustained by artificial means.
Where to get it: This document is available free at virtually every hospital in the nation.
Durable power of attorney AND medical power of attorney (healthcare proxy)
What is it: These documents allow the person that you select to make decisions on your behalf -- financial and legal in the first case, medical in the second case -- when you are incapacitated.
Where to get it: We suggest you see an attorney for these, too.
Ain't this fun?
So maybe contemplating these issues isn't as fun as envisioning your ideal retirement, but you know what they say: When life gives you lemons, lawyers will find a way to get 40% of all lemonade proceeds. Anyway, here's more info on these sunny topics.
Health and medical care
Your loved ones should know your wishes for health and medical care. Discuss the use of life support systems when there is no reasonable expectation of recovery, and your wishes for organ donation. Remember, prior to age 50 it's far more likely that you will be mentally or physically incapacitated than that you will die.
Obtaining the legal documents we've listed will permit your loved ones to act on your behalf without a court order, saving thousands in attorney expenses, court fees, and a lot of time -- far more than the small cost of drafting these documents now. Use an attorney to draft your powers of attorney and use your state's approved format for the living will/advance medical directive, which is available at most hospitals.
Your loved ones should also know your funeral arrangement desires. Knowing your wishes in advance will ensure that they are not be pressured into high-cost services because they're making decisions during a time of grief or through a misguided sense of respect for the deceased. If you have made advance funeral arrangements, make sure your loved ones know with whom and where the pertinent documents may be found.
Last will and testament and/or living or testamentary trusts
Review these documents to make sure they clearly express your wishes and intent. If you have personal property not included in these documents, specify through an addendum or codicil (a fancy word meaning "postscript") how these personal effects are to be distributed. If these documents have not been developed yet or if a lawyer hasn't reviewed them in more than five years, get thee to an attorney! It's worth the price to get peace-of-mind to know that your wishes are accurately communicated in the necessary legal Swahili. If you have minor children, specify who their guardian should be in the event both parents are deceased.
Be aware that a failure to execute this document prior to your death will almost certainly cause your family needless expense, grief, and time as they struggle through the probate process of your state. In addition, the state will almost certainly dictate a distribution of your assets that does not fit with your desires. So please don't put this off.
You can get a living will and a healthcare power of attorney by visiting your local hospital or downloading the forms from the Partnership for Caring (http://www.partnershipforcaring.org) or the Northwest Justice Project (http://www.nwjustice.org).