February 27, 2020
Okay, I know you love your family.
Yet so many of you are absolutely failing at what I consider a very important expression of that love: You haven’t yet created your four Must Have Documents.
Without the Must Have Documents you are leaving your family in the lurch. As you age your family will have a hard time if they need to step in and handle your financial affairs and help you navigate your health care. The Must Have Documents are also the only way to make it as easy and fast as possible for your family to settle your financial affairs—and pass along any inheritances—once you pass.
That’s why I view the four Must Have Documents as an expression of love.
And I know you’re all about that.
Here’s why the Must Have Documents are so important:
Living Revocable Trust. Don’t be thrown by the word “trust.” This has nothing to do with how much money you have. A living revocable trust makes later-life transitions easier.
While you are alive you have total control of every asset you place in the trust, and the word “revocable” means you can make changes to your trust whenever you want. You will be the trustee (boss) of your trust, but you will also name someone to be your successor trustee. If in the event you one day can’t handle your affairs, an incapacity clause in your trust will make it easy for your successor trustee to step in and take care of things.
If you think you’re all set with a will, or you’ve made your financial accounts “payable on death” to someone else, you are missing a crucial point. Those documents are great, but only after you die. They have no use while you are alive. A living revocable trust is the document that helps your loved ones help you while you are very much alive.
Then when you die, your assets pass to your beneficiaries seamlessly; there is no need to go through probate court if there is a revocable living trust. If you only die with a will your family may be required to get the approval of a probate judge before disbursing your assets.
Financial Power of Attorney. Certain assets, such as your 401(k), IRAs and pensions don’t belong in your trust. And for other types of assets, such as bank accounts and regular brokerage accounts, sometimes the institution gets cranky about accepting trust documents.
In the event you ever need help managing those accounts while you are alive, a financial power of attorney is the official document that gives someone you appoint the authority to step in.
A durable power of attorney document is also going to smooth out having someone help you manage other accounts. Utility companies, credit card issuers, the management company for your lease, won’t share information with anyone not named on your account. With this document your appointed representative will be able to easily step in and help manage your affairs.
Power of Attorney for Health Care. This is the document that empowers someone you appoint to be your chief health-care advocate. It includes an Advance Directive, which is where you spell out what level of medical intervention you want, in the event you are ever unable to express your wishes yourself. Think of the advance directive as your instructions and your Durable Power of Attorney for Health Care as the manager who will follow those instructions. Don’t think you need to formalize this, because you have someone you trust to take care of things? Your medical care givers may not listen to that person. The Advance Directive and Durable Power of Attorney for Health Care signal to your doctors and care providers who has the authority to advocate for what you want.
A Will. A will is a complement to a trust. It is where you spell out who gets certain possessions: jewelry, china, a treasured collection. If you have minor children it is also where you spell out their guardian.
To not have your four Must Have Documents in place is like building a house without a roof. For all the love you have for your family, you are still leaving yourself and your family exposed.