Preparing these documents will help make difficult decisions easier on yourself and your heirs.
Documents and directives have become a part of modern life. You might have documents proving you own your house, showing the terms of your mortgage and detailing the agreement for your credit card and your vehicle. You might have a prenuptial agreement, a divorce decree or an employment contract. The list goes on.
Once you retire – or even before you retire – you should think about documents that will serve you in your later years. These four documents may not be the only ones you need, but they are the basic ones that every person should prepare, for your own sake and for your heirs.
A will. This is a legal document that portrays your “wish list” about how the property you own should be distributed after your death. Your property includes money and investments as well as real estate and personal property such as a car, household goods, clothes and any other personal items. A will also names the person, or people, who will manage your estate after you die until your property is distributed. You can find forms for a will online, but you might want to hire a lawyer to ensure that your will conforms to both federal and state laws. Consulting a lawyer is especially important if there is any possibility that someone might contest your will. (Please note that a will is different than a trust in that a trust cannot be contested. This is why you should discuss what is best for you and your situation with an attorney to help you set up your “wish list” the way you want it). It might be trickier than it first appears to make sure your assets are properly distributed to a spouse, sibling, child, stepchild, grandchild or perhaps to a charity. Also, remember that if you have an investment account you can typically designate a direct beneficiary that goes outside your will.
Power of attorney. If you get injured or incapacitated for any reason, who’s going to pay your credit card bill, car payment or medical bills? You can give a power of attorney to a spouse, close friend or relative who can make financial decisions for you in case you can’t do it yourself, either on a temporary or permanent basis. You can find a power of attorney form online or your financial institution may provide one to you, but you can also go to a lawyer. (Keep in mind that there are several types of power of attorney. A lawyer can help you decide what type would best serve your needs). Typically, your power of attorney can not only make your payments and cash your checks, but also trade or cash out investments, buy or sell property in your name or make other financial decisions on your behalf. So while it’s important to name a power of attorney, make sure the person is someone you trust. You can also name more than one power of attorney, but be aware that it could also complicate things.
Health care directive. This document names a person who essentially serves as a power of attorney for your health care rather than your finances, although it could be the same person. The directive authorizes your loved one to withhold or withdraw medical care or medically supplied nutrition, to admit or discharge you from a medical facility and to hire or fire anyone responsible for your care. The health care directive can
also provide guidance to your loved one in the event you face an irreversible medical condition as to how much intervention you want. You can include information about whether to prolong life at any cost, supply palliative care only and whether you want to donate any organs or tissue for scientific purposes.
Information sheet. This is not an official document, but rather a record you keep for the benefit of your children or anyone else handling your estate. You should note any significant property you own and what to do with it. How else will your kids know that your old baseball card collection or your mother’s silver spoon collection is actually worth something or has important sentimental value? List any bank or investment accounts, including IRA and 401(k) accounts. You should note the name of the financial institution, the account numbers, the approximate balances and the name and phone number of your financial advisor if you have one. You should include information about any life insurance policies you may have including the name of the company and the policy number. And there’s no harm in sharing this information with your loved ones long before they need it. Like your will or your trust and other pertinent account information, this information sheet should also be kept up to date.
Working through this with my parents (along with my siblings) made us all realize how important these documents are – especially in this world we now live in. Even though we are not retired yet, my siblings and I all went through the process as well and set up these documents to help prepare us for the future. Please call (320-243-3100) or email me (firstname.lastname@example.org) if you have any questions or need some help during the preparation of your retirement plan journey.
Rick Wurst Wealth Advisor
MAG Wealth Management
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.”.