There are some basic financial arrangements that all individuals should consider making, no matter what their age or circumstances. But if you have a family, these basic documents become essential.
A will isn’t the only document you need in case of an unforeseen tragedy. To properly provide for your family, you also should have a power of attorney, a directive to physicians, and a financial inventory.
Will. As you know, a will lets you, rather than the state, control how your assets will be split among your heirs. More important, a will allows you to designate the guardian of your minor children. Properly written, it can even increase your heirs’ inheritance by including simple tax-saving strategies.
Power of Attorney. A power of attorney is a document that names another individual as your agent. If you were to become disabled or seriously ill, a power of attorney would allow your agent to pay your bills, deposit your checks, and make decisions on your behalf. You can decide whether your power of attorney becomes effective immediately or only upon the occurrence of a disabling illness or injury.
Directive to Physicians. A directive to physicians (also called living will, health care directive, or some similar name) tells your doctor whether to take extreme measures to keep you alive should you become terminally ill or permanently unconscious. In addition to assisting your doctors, your directive to physicians will lessen the burden on your family by clearly describing your desires with respect to this situation.
Financial Inventory. You need a financial inventory. You should prepare a list of your bank accounts, other assets, income sources, insurance policies, mortgages, credit cards, and funeral arrangements. In addition, you should include the name and phone number of your accountant, lawyer, doctor, and insurance agent.
Take the time before year-end to get your financial documents in order or to update the ones you already have.