Make a will before it's too late

You'd never want to compound your loved ones' misery should you become seriously ill or die, but that's exactly what might happen if you haven't adequately planned for your future care and the distribution of your possessions.

Fewer than half of Americans have drafted a will, and fewer still possess a living will or durable powers of attorney for health care and finances. Do you think you haven't enough money to worry about a will or other end-of-life documents? Think again. Even those with very modest assets need to plan in advance or risk leaving their family and friends with a legal nightmare to sort out.

Here are several documents to consider, depending on your age, health, financial situation and family status:

A will. This document states how your assets should be distributed after death. Without a valid will, everything usually goes to your surviving spouse, children or other relatives, while friends, charities or other organizations will get nothing. Basically, the state will decide, despite your preferences.

Do-it-yourself will kits are available, though if trusts, complex estates or large amounts of money are involved, consider using an attorney who specializes in estate law to draw up the will.

A few other important considerations:

• Before assigning an executor, make sure that person is up to the task.
• Name an alternate executor, in case something happens to the primary.
• Make sure your will agrees with any beneficiary forms you've signed for retirement plans, IRAs, life insurance policies and other assets. Often, those forms will take legal precedence. This is especially critical if you've divorced, remarried or had additional children and never changed beneficiaries.

 

Financial durable power of attorney. This document specifies who will have the legal authority to pay your bills, manage assets and conduct other financial matters if you become incapacitated and are unable to do so yourself. If sibling rivalry might become a factor, consider a trusted friend, financial advisor or bank trust department.

Health care durable power of attorney (health care proxy). This document assigns someone to make medical decisions for you if you're unable. Make sure you assign someone who would closely follow your wishes and can make tough decisions.

Living will. Also called a health care directive, this document tells doctors your wishes regarding which medical treatments and life-support procedures you do or don't want. Have your doctor put a copy in your medical file.

With all of these documents, make sure you sign and date them properly and have them witnessed and notarized, when appropriate. Create a master file with these and other important documents and tell your kids where it is. Documents might include birth and marriage certificates, employment, military and tax records, bank and investment accounts, real estate and automobile titles, medical and insurance policies, contact information for your doctors, lawyer and financial advisor. Consider stashing a back-up copy in a safe deposit box.

There are dozens of variations on these and other legal documents you should know about. AARP (Expert Caregiving Financial and Legal Answers by AARP) provides detailed information, including an extensive glossary of legal terms. Another good resource is Practical Money Skills for Life, a free personal financial management site created by Visa, which features information on many issues related to elder care and financial planning (www.practicalmoneyskills.com/learn/life_events/elder_care).

Nobody wants to think about their own mortality, but you can spare your family a lot of grief in the future by planning now.