Death Preparedness Part 2
In my last blog, Death Preparedness Part 1, I focused on advance directives. Today I will address the other three types of paperwork to consider. Here is the list again from my last blog:
Paperwork-protecting your own wishes and making life a lot easier for your heirs
Advance directive- discussed in part one of my blog
Durable Power of Attorney for Finances
Will
Revocable Living Trust
Much of this information is from the book: “A Beginner’s Guide to the End” by BJ Miller, MD and Shoshana Berger. I am grateful for how thorough they are in this book!
A Durable Power of Attorney for Finances allows someone to manage your financial affairs if you become incapacitated. They are able to sign checks, sign financial documents and pay your bills. This person has power over your finances while you are alive but unable to take care of finances yourself. Let’s say you have a serious accident, end up in the hospital and are temporarily unable to attend to your finances. Who will pay your bills when you can’t? If you have joint checking accounts, then the other person on your account will have access. But if not, it could be a major issue. Obviously you want to choose someone you trust since they will have access to all of your financial information. After you die, this document will no longer be in effect. After death, your will designates who you choose as a personal representative or executor and they then have responsibility of managing your finances and estate.
A Will is a legal document that gives instructions on how to transfer your assets and property to whoever you designate after your death. Some of you might think that you don’t need a will if you don’t own property or do not have children. But if you die with no will, it is much more difficult for your family to figure out what to do with your stuff and how you would want your body dealt with after death. Do you want to be an organ donor? Would you prefer burial or cremation or green burial? Who knows? You don’t have a will so whoever is left behind has to just use their best guess. What if you have kids and have not designated a guardian for them? It can get pretty complicated and messy. Sometimes even a legal nightmare!
Wills are not a one and done document either. They should be reviewed every year if possible to update as needed. What if you designated a certain family member to be your executor, but then they developed a serious illness or they died. Or you bought a new home or sold a home. All that should be updated in your will. And each state has different laws, so when I moved to a different state, I had to update my will to be in compliance with that state’s laws. There are some do it yourself sort of wills out there on the internet and if you have a pretty uncomplicated estate, that may be one way to go. But you want to make sure your will is valid and does what you want it to do. Generally it is best to have a lawyer help you with all of these documents to make sure they are legally valid.
A Revocable Living Trust is a legal document that you place your assets into. While you are alive, the assets belong to you. If you do decide to create a trust, it is super important to “fund” the trust so your assets are owned by the trust. After you die, the successor trustee, who you named in the document, transfers assets to your beneficiaries. This type of document is best done by a lawyer because it is more complicated and used for more complicated estates. An alternative to a trust, if your estate is not too large or complicated, is to have your assets transferred on death to a specific beneficiary. So if you own a house, you can have a lawyer draw up a form that says to transfer the deed of the house directly to your heirs at the time of your death. That way you avoid probate for those assets. I have beneficiaries listed for all of my bank accounts and any other asset of significance. Any IRA’s or investment accounts and life insurance policies also have beneficiaries listed so they pass directly without going through probate.
What is probate anyway? If there is no trust, or the trust is not funded, or if property is owned by you personally with no beneficiaries, or no will, then those assets are called Probate assets. This then requires your heirs to go to probate court to settle your estate. In some states, probate can be a long drawn out process and cost your family time and money to try to get your estate settled. I chose the TOD (transfer on death) route to make settling my estate as easy as possible for my family. You might choose to go the route of setting up a trust. But the most important thing is to have a will and beneficiaries designated to protect your family from unnecessary suffering.
Disclaimer: This blog is not intended to be used as legal advice and is for educational purposes only. Each person’s situation is different and would benefit from legal consultation.
Another idea that I found super helpful in the Beginner’s Guide to the End, is the recommendation to create a “When I Die Folder”. This puts all your important information and documents in one place so at the time of your death your family can easily find everything they need. Here is the list from their book:
When I Die Folder:
Advance directive-signed and notarized if necessary
Lawyer and accountant information
Birth Certificate
Will and living trust
Durable power of attorney for finance
Life insurance policy plus agent’s name and contact information
Military service documents
Bank account plus any safe-deposit box information
investment information
Real estate documents and deeds
Debtor information-credit cards, loans, membership dues
Copy of driver’s license and Social Security card or number
Marriage or divorce certificate
.Location and combination of any safes and combination in your home
.Tax information
Passwords for phone, computer, email, social media accounts (consider an online password manager to collect all, share master password with someone you trust and designate emergency contacts within the program who are allowed to gain access
Letters to loved ones
Funeral and burial plot documents and funeral insurance
Instructions for your funeral and final disposition
Helpful home details: location of car keys, gate codes, hide-s-key location, garage door opener
Another resource I came across is a notebook called Peace of Mind Planner published by Peter Pauper Press Inc and available on Amazon. It has pages for you to fill in with all your personal information and where to find important documents after your death.
Whew! That was a lot of information! I hope you found it helpful and if you or a family member do not have your paperwork in order, I encourage you to talk about it and decide to get it done. It is a gift from you to those you love to have your estate papers in order.
My next blog will cover what happens after death. There are more choices now than there used to be and there are even more than one choice for cremation. If you haven’t heard of aqua cremation, then stay tuned and learn all about it!
Resources:
www.Gyst.com online service to get affairs in order
www.everplans.com secure digital archive to store important documents
www.willing.com for creating an online will, created by lawyers, fees apply
www.naela.org the National Academy of Elder Law attorneys
Photo Credit Tyler Nix @jtylernix