Four Documents Everyone Needs

Have you ever considered what would happen if you died suddenly? It is not a subject at the top of most people’s mind. But it is a real possibility. Car accidents alone kill more than 3,000 people every day.

Because you don’t spend much time thinking about death, preparing for it may not have occurred to you. However, regardless of your financial situation, there are four documents that everyone should have.

Everyone needs a will, an advance healthcare directive, a durable healthcare power of attorney and a durable financial power of attorney. Preparing basic versions of these documents is easy and doesn’t cost much.

A will is a document that records what should be done with your savings and other belongings, also known as your assets, if you die. It can take any form, but to be valid it must be witnessed by two disinterested people. A disinterested person is anyone who won’t benefit from the will.

If you haven’t left instructions for how to deal with your assets, the state where you live will make the decisions for you. Each state has a set of rules for how to distribute them. Regardless of what you might want, or have told your family and friends, the state will follow their rules.

In some states, the rules may be far from what you would want. For example, in many states, your surviving spouse might have to split your assets with your parents and siblings, if you haven’t left a will indicating otherwise. If you have children, and both you and your spouse have died, the state will appoint a guardian according to their rules, and that might not be who you intended.

You can write your will without any help, but for good on-line templates consider Rocket Lawyer, Legal Zoom or another on-line resource. A will you create yourself, using one of these sites, will likely cost less than $100. This may be all you need if you don’t have much in the way of assets and have no children. If your situation is more complex, it is worth speaking with an attorney.

Keep in mind, your will will not govern what happens to your retirement accounts and insurance policies. They are controlled completely by the beneficiary designation on the account. What your will says makes no difference. Make sure you maintain the beneficiary designations with an update whenever you have a life change.

An advance healthcare directive, also known as a living will or a medical directive, documents your wishes regarding the types of care you want to receive. This may include how far you want medical personnel to go to keep you alive, the type of pain medications you wish to receive, and whether you prefer to spend your last days at home or in a hospital.

An advance healthcare directive is done on a state regulated form. You can download your state’s form from Caringinfo.org for free. However if you use one of the on-line legals sites, one should be provided for you with your will.

A medical power of attorney gives a person you name authority to make health care decisions for you in line with your wishes. A financial power of attorney gives a person you trust authorization to pay your bills, and otherwise manage your affairs while you are incapacitated. These are separate documents, and you can name different people for each. These documents are also available for free through the links above.

In addition to these legal documents, record your on-line accounts with your usernames and passwords, and save them in a safe place, such as a safe deposit box. This is so the person who has your financial power of attorney knows what accounts you have and can easily access them.

Make sure that anyone who will be responsible for handling any of your affairs knows where all your important documents are located. You should walk them through your wishes, so they will know what to expect if the need arises.

No one wants to think about death. However, if you take some time to do it now, you will save your family from agonizing over what you would want if the worst happens. Preparing a basic version of these four important documents will ease the burden on your loved ones, and it is easy and inexpensive. Make it a priority.

Image courtesy of dan at FreeDigitalPhotos.net

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