Whether old or young, with a lot of money or a little to leave behind, there are things you could do now to make it easier on your family in case you die or are too ill or injured to speak for yourself.
You should follow these steps to financially prepare:
Name medical and financial power of attorney
Estate attorneys recommend that all adults have the following in place: An advanced health care directive includes a living will that states your wishes for medical care and a durable health care power of attorney. This names someone to make decisions if you cannot. A financial power of attorney assigns someone to handle your financial affairs. The document could be written to apply broadly or kick in if you are incapacitated.
Make a will
It is a must for parents of minors. In a will you can name a guardian for your children. Without the will, the state will choose. States have preferences for who can be appointed and those may not match yours. Setting up a trust for your children is also important because children cannot directly inherit money or property until they are adults. A trust will hold property and money for them. It is also a document that states how the assets should be managed and used. An adult you appoint as trustee will carry out the instructions. If both parents die and there is not a trust, the court will appoint someone to manage the assets.
Purchase life insurance
You will need life insurance if your death would be a financial blow to someone. Many parents need coverage to replace income or pay for services they provide for the family. You will also need life insurance if you have debts that would fall on someone else.
Term life insurance is very sufficient for most people. You purchase coverage to last as long as your loved ones will depend on you financially, such as ten to thirty years. Ideally by the term’s end you no longer need the coverage. Your kids are independent and you have enough savings to support a spouse.
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Save up for a funeral
Put your last wishes in writing and share them with your loved ones. We advise that set money aside in a savings account and naming a payable on death beneficiary. This is someone you trust to carry out the funeral arrangements. Other ways to make sure a funeral is funded are to purchase a small whole life insurance policy or prepay for a funeral.
Store organized records and speak to your loved ones
Keep important documents in a safe at home or safe deposit box. You should make sure your trusted loved ones know where to find everything and have access.
Make sure to update your estate plan
We advise clients to review their beneficiary designations, their wills and titling of property every five years and after major life changes.
Do you have a question about financially preparing for your death? Click here to contact the experts at Hunsberger Dunn LLP today!