To make things much easier and less stressful for the people you value the most, there are steps you should take to best prepare your financial affairs for end of life. What legal documents should you have and why? Which professional advisors should you have and why? What other considerations should you make?
Legal Documents
Wills
- A legal document that designates what happens to your property after you die, names guardians for minor children and names your Personal Representative (executor).
- Without a will, state law will dictate how your estate is to be distributed, which may be contrary to how you want your assets to be transferred.
- Keep the original in a secure place, like a safe deposit box. Your attorney should have a copy as should the person you have designated as your Personal Representative.
Durable Power of Attorney
- Delegates authority to an individual to act, while you are alive, on your behalf regarding legal and financial affairs.
Health Care Proxy
- Delegates authority to make medical decisions for you in the event you are incapacitated and unable to make these decisions on your own behalf.
Medical Directive/Living Will
- Documents your medical care wishes in case you are unable to speak for yourself due to a medical incident. It typically covers what measures you want or do not want taken to keep you alive.
Trusts
- Trusts minimize your estate tax exposure, avoid probate court and cover other final wishes. An estate attorney can advise you on whether a trust should be part of your estate plan.
Professional Advisors
Estate/Elder Law Attorney
- These documents should be prepared by an attorney and we strongly recommend that you see an experienced estate law specialist.
Accountant
- Even if you currently prepare your own tax returns, consider selecting a tax professional who will take over tax work. Having someone lined up will be very helpful to your spouse or partner.
Financial/Trust Advisor & Broker
- You should have a credentialed, experienced investment advisor working on your behalf (or at the ready) to take on responsibility of managing your invest assets when needed
Insurance Agent/Advisor
- Review your insurance coverages every two years, particularly any life insurance policies you may own. Is your life insurance coverage still needed? Are the beneficiaries still the ones you want to have?
Friends and Family (Pros & Cons)
Power of attorney, health-care proxy and medical directives
- It is ideal to name mature and trusted family members
- Caution against naming friends. It can put them in an awkward position relative to your family members.
- Professionals such as attorneys, bankers and accountants most likely will decline being named in these documents for professional liability reasons.
Personal Representative
- A Personal Representative will take the financial responsibility for settling your financial affairs, which can be a real burden.
- Consider hiring a professional (attorney or bank trust department). They have appropriate insurance to protect the estate’s heirs.
- Dual naming of a professional plus family member may be a good choice. Legal processes are followed while still addressing family situations.
