Documents to Die For

In a recent post, we took a look at getting organized financially.  Not everybody’s idea of fun, but after it is done life seems a little less chaotic.  This time we’ll work on something even less pleasant, but just as important- estate planning documents.

The term “estate planning” has the connotation that it’s only for people with lots of money and lots of stuff.  In reality, we all have an estate to plan for, big or small.  When we work through the estate planning process, we are simply making arrangements for what happens to us and our stuff when we die, and also as part of that, what happens to us while we’re still alive but incapacitated.  The more we have spelled out ahead of time, the easier it will be on our loved ones.   Let’s look at some common documents we should have in order.

The Critical Elements

A will package, which typically includes the will, powers of attorney, and medical directives, is the most critical of your estate planning documents, and the number one item I nag my clients about.  Please, if you have minor children and do not have a will naming a guardian for them, call an attorney right away to take care of that.  You may think that 1) nothing will happen to you or your spouse or 2) the grandparents/aunts/uncles/friends won’t fight over your kids, but you really don’t know.  Even if everyone understands who is supposed to take care of your children, without a document naming a guardian, the court will decide.  In the end the court may name the person you wanted, but why take the chance and why go through all the stress of the process when it could be prevented?

Over the years I’ve heard it said that if you die without a will, the state will take all of your possessions.  While that is not true, state law will determine who gets your possessions.  In Pennsylvania, for instance, in the case of a married person who dies without a will (intestate), with no surviving children but with parents who are still alive, you may expect that his spouse would inherit everything. However, according to Pennsylvania’s intestacy law, his spouse would get the first $30,000 and half of the balance.  The other half would go to his parents (note that we are talking about the part of the inheritance that would have passed through a will and not the part that is left via a beneficiary designation, such as a retirement account, or through property titled with rights of survivorship).  Suffice it to say that the laws are complicated and it is in the best interest of you and your family to consult an attorney and have your will drafted professionally.  This is not a do-it-yourself project.

Along with your will, you will also want to draft powers of attorney.  A durable power of attorney will allow an agent you name to handle your financial matters in the event you become incapacitated, and a medical power of attorney allows your agent to make medical decisions on your behalf if you are unable.  These can be different people, and you’ll want to consider the emotional impact of making these decisions when choosing your agents.

You will also need a living will, or medical directives.  This is a document that spells out what medical treatments you may want or not want in various situations.  You will need to think through some difficult decisions, like whether you want a feeding tube, or how long to be left on life support.  Communicating these decisions to your agent and loved ones is important too, so they understand why you made the choices you did and can be strong in the (hopefully unlikely) event they will need to stand by those choices.  Resources on the website Caring Info can help you think through the issues.

Beyond the Official

Aside from directing the disposition of your physical assets, there may be intangible things you would like to leave behind.  One way to do that is by drafting an ethical will.  An ethical will can be a letter, a video, a book even- simply something that communicates to your loved ones the values you wish to leave as your legacy.  It can be a beautiful gift of love to your family, as well as a way to teach them to be good stewards of the wealth (big or small) you are leaving behind.  Check out this site for info on ethical wills.

After consulting your attorney, you may also want to create a side letter of instruction for your various keepsakes and possessions.  A side letter will allow you to change or add items and intended beneficiaries without revising your entire will.  One of the most difficult business-type tasks to take care of once a loved one is gone is going through their “stuff” and deciding what to do with it and who gets it.  While we know rationally that our loved one is gone, and the stuff is just, well, stuff, there can be a lot of sentimental value attached and emotions regarding the loss bubbling under the surface.  That can lead to arguments and division- the last thing our loved one would want.  A letter with specifics and communication ahead of time can hopefully derail some of that.

The Final Details

Once you’re gone, given their emotional state, your loved ones will appreciate detailed information on how to handle your immediate arrangements.  Leave a letter of instruction with those closest to you with particulars such as:

  • Who to notify- which relatives, friends, or co-workers will want to know
  • Funeral preferences- what kind of service, casket, officiant, music, or donation requests
  • What would you like your obituary to say?
  • Is there anything you do NOT want to have as part of your arrangements?

Planning these out ahead of time is a loving gift to leave your family.

Nuts and Bolts

Finally, going back to financial organization (which probably doesn’t seem so bad now in comparison), the better organized you are in life, the easier things will be for your loved ones.  In a safe place, keep a master list of what you own and who you owe, your login information including security questions, locations of important documents like your will, trusts, birth certificate, marriage certificate, and military discharge papers; information on pension survivor benefit information and life insurance policies; location of deeds and car titles; copies of tax returns; and contacts for your attorney, tax preparer, financial planner or other professionals- and be sure to tell those who will be responsible where the list is, or give them a copy.

Estate planning is arguably the most uncomfortable topic in financial planning; it takes a lot of time, discussion, and can be unpleasant to think about.  Given its importance though, I encourage you to fight the natural urge to procrastinate and get it done.  The relief you feel will be worth it.


photo by: Ken_Mayer

, , , , , , , , , , , , , , , , , , , , , , ,

No comments yet.

Leave a Reply

DISCLAIMER: This web site is for informational purposes only and does not constitute a complete description of our investment services or performance. This web site is in no way a solicitation or offer to sell securities or investment advisory services except, where applicable, in states where we are registered or where an exemption or exclusion from such registration exists. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY 'LINKED' WEB SITE.

Part 2A & B of Form ADV: Firm Brochure