With all of this estate work this week, I can’t help but think about how preparing a will is yet another thing that I really need to do — sooner than later. I’ve mentioned this before, so I won’t ‘beat a dead horse’. With a husband and two small children, it is obvious that I need to put some thought into estate planning. However, I can’t help but wonder about the needs of a younger person without so many responsibilities. Does a 22-year old need a will? I pondered those questions today and I came up with three estate-related documents that every adult should have in their financial arsenal. These are: 1) a will, 2) a durable power of attorney and 3) an advance health care directive.
A will is a legal document where you lay out how you want your property divided and your children cared for. I suppose that if you have no children and not much more than the clothes on your back then this isn’t that big of a deal. However, as materialistic as our society is (in general) most adults have at least a few possessions of value. A will lets you be sure that those items get into the hands of the folks that you choose. Also, it makes sure that there is no fighting or confusion. In sum, a will just makes things easier all the way around. When someone dies who does not have a will, they are considered to have died ‘intestate’. In this case, the state will likely have the final say on how their property is divided. A friend or family member can ask the court for permission to administer the estate, but will typically need court approval before distributing any assets. Trust me, it’s a pain all the way around.
2: Durable Power of Attorney
A power of attorney allows you to appoint someone else to handle your affairs. This appointment can be general or specific to special situations and certain language can be added to the document to make it ‘durable’. This just means that the document will remain in effect or take effect if you become mentally incompetent. Just to be clear, mental incompetence encompasses more than just the psychological. A durable power of attorney is important to cover any situation when you may not be in the proper frame of mind to make financial decisions. From an estate planning perspective, this document is important because it allows you to transfer responsibility for your financial affairs to someone whom you trust will handle them according to your wishes. Without such a document in place, your assets may fall into disarray. For married people, these responsibilities typically are handled by the surviving spouse, but for single people, this document becomes even more important. While the durable power of attorney is primarily for managing your assets, this document is also coupled with the advance health care directive (my next point) to allow your appointee to execute your health care wishes.
3: Advance Health Care Directive
This is sometimes called a living will, but is very different from the type of document I mentioned earlier in this post. This document gives instructions specifying what actions should be taken for your health. Preparing such a document forces you to consider whether or not you want doctors to take extraordinary measures to prolong your life — especially if you are in a vegetative state. Do you want to be resuscitated? Do you want to live for an extended period of time with feeding tubes or a ventilator? These are extremely tough decisions, but if you take the time to consider them before you face a life-threatening illness, you may be able to ease the burden for your loved ones. My guess is that most people would find it easier to simply carry out the end-of-life wishes of a loved one than to have to make the decisions on their own.
Hopefully these brief definitions make it clear why these three documents are essential for every adult regardless of age, income or marital status. Without them, your loved ones might have to make many tough decisions and run the risk of not making them as you would have wanted. I know. I know. It’s morbid stuff that no one wants to think about, but it’s just part of being a grown-up I guess.