Documents You Need to Manage Life’s Events

September 2016

Life can be unpredictable and trying to manage both the expected and the unexpected can be difficult. Planning ahead, however, can help you and your family cope with the unexpected, while also managing the expected. Every adult, no matter their age, should make the effort to plan. By having the following documents in order, you can ensure that your wishes are carried out and help avoid family confusion or conflict.

Managing Health Care

Without warning, an accident or illness can devastate any one. Thinking ahead about your wishes for health care and who you would like to make decisions for you if you are incapacitated is important. The following legal documents help ensure that your wishes are carried out:

  • Power-of-Attorney for Health Care. In this document you name a person (who may be a family member, friend, or other agent) to make health care decisions for you if you are incapacitated and not able to express your own wishes. Before creating the document, make sure that you discuss your wishes with the person you would like to have as your power-of-attorney to ensure they accept and understand their role and your wishes. You may also wish to name a back-up agent in case the first person is unable to serve. State laws have slightly different requirements; find your state’s form by entering your state’s name and "form for power-of-attorney for health care" in your search engine. The document becomes valid when you sign it in the presence of the required witnesses. You don’t need an attorney or planning professional to prepare the document, but in some cases such help may be useful. Provide your agent(s) a copy of the document.
  • Medical Information Release (HIPAA Release Form). Federal regulations to ensure the privacy of personal medical information can make it difficult for even a close family member to get information. Having a properly executed medical information release form on hand allows you to name individuals you’d like to be able to get information if you are unable to share. Such individuals are typically a spouse or partner, parents, children or siblings.
  • Living Will or Advance Directive. This document is designed to highlight the type of treatment you would or would not like to have in various circumstances. For example, you can give directions about the circumstances in which you would or would not like to be resuscitated. It is crucial that you make sure your health care agent(s) has a copy.

Planning Documents You Need to Manage Life's Events

  • Health Care: Power-of-Attorney for Health Care, Medical Information Release, Living Will or Advance Directive
  • Financial Affairs: Durable Power-of-Attorney for Finances
  • Estate Planning: Will, Trusts

Managing Financial Affairs

Whether we like to admit it or not, life happens and there are situations that can and do occur that prohibit individuals from making appropriate decisions and/or managing their matters themselves. It is important that you designate a trustworthy person who can quickly step in to manage your financial affairs in the event this occurs. Having such support can be helpful for the short-term (for example, if an accident puts you in the hospital for a short period of time) or the long-term (for example, if growing older results in difficulty managing).

  • Durable Power-of-Attorney for Finances. This document is a simple, inexpensive way to designate a trustworthy person to manage your financial affairs if you are not able to do so, temporarily or long-term. The power-of-attorney can be as limited or broad as you desire. For example, you may limit your agent to just signing your accounts to pay bills, mortgages, taxes, and the like. Or, you may give your agent power to manage all your financial affairs, including managing investments and property. Often spouses hold this broad power for each other. Older adults may find security and support in providing this broad power to one of their children. You may change or revoke your power-of-attorney at will. You can find power-of-attorney forms and instructions appropriate for your state online on your state government’s website.

    Tip: Managing Someone Else’s Money. If you hold the financial power-of-attorney for a family member or friend, find out more about your responsibilities in the guides prepared by the federal Consumer Financial Protection Bureau (CFPB).
  • Adding a trustworthy child to bank and credit accounts. In addition to executing a durable power-of-attorney, some older adults find it helpful to add the child or friend who is their agent as a signatory to certain bank and/or credit accounts. For example, many older adults who are living independently find added security in knowing that a trusted individual is also checking monthly statements for errors or discrepancies and is able to step in immediately to pay a bill or buy groceries in an emergency.

Estate Planning

What will happen to your assets at the end of your life? Death is not an ideal topic for many people, which often leads to neglect of planning. Planning is important, however, and taking some simple steps can ensure that you control what happens to your assets. Even if you are single and just starting a career, you may have more assets than you realize. If you don’t decide what happens to your personal property, life insurance, and retirement account, then state law will determine who gets your assets.

  • Will. A will describes how you want your assets distributed and names an "executor," the person who will administer your estate. If you have minor children, a will can also name guardians for those children. Although you can create a will by yourself using an online form, it is a good idea to consult an estate attorney or planning professional so that you meet the requirements for your state.
  • Trusts. If your assets have a large monetary value and you wish to control matters related to inheritance and estate taxes, some type of trust may be appropriate. Discussing and deciding about trust options with an attorney or estate planning professional is a must.
  • Letter of Instruction. Although this is not technically a legal document, you can use a letter of instruction with your will (and trusts) to share your wishes for such things as your memorial service and place of burial. Such a letter could also leave instructions for where to find important documents or address other concerns outside your will.
  • Keeping Beneficiary Information Updated. Assets such as life insurance, retirement accounts, and annuities all have beneficiaries. Upon your death, these assets go to whoever is named the beneficiary regardless of any other statement you may have made about them (as in a will). Therefore, it is important to regularly review and update the beneficiaries so that these assets are distributed as you desire.

Organizing Your Planning Documents and Important Information

If you prepare all these planning documents but don’t share the information with those you have named your agents and your family, you could create confusion for these people. It is important to have these planning documents in one place and to share copies with your agents and family. In addition, it is recommended that you gather information and place it in one place (such as a binder or file drawer). Such information should include all of your financial accounts, retirement accounts, insurance policies, home mortgages or deeds, auto titles, warranties and the like. Make a list of online accounts and their access information (user names, passwords). Keep this information in a secure place. You may also wish to make a backup copy of all the information and store it in a separate, secure place. Tell your agent or family where this information is stored and how to access it.

Communication Is the Final Key to Success

Preparing the appropriate planning documents and compiling information about all your personal and financial affairs is crucial. But your efforts could fall short of your goal unless you communicate your wishes with the family members and/or friends that you wish to act for you. Having a conversation about such personal matters isn’t usually easy, but it is essential to success and peace of mind.

For More Information

The Financial Planning for Life Events webpages from the Financial Planning Association have many articles.

What Are Advance Directives? and other planning information is available from Caringinfo.org

Prepare to Care: A Planning Guide for Families from AARP offers information and checklists to help plan for caring for a family member.

Remar’s Report: Do You Have These Important Planning Documents in Order?

Remar’s Report: Do You Know Where Your Financial and Important Papers Are?

 

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