By Martin Weil
Learn more about Martin on NerdWallet’s Ask an Advisor
60% of people say that making sure their family is not burdened
by tough decisions is “extremely important.” — The Conversation Project
What would happen to you if you were incapacitated? What would happen to your affairs if you died? Do you know?
If you’re like most Americans, a relative, close friend or perhaps even a stranger will be thrust into the position of making decisions about your well-being or finances. They will probably have little or no preparation, and no understanding of your wishes—simply because you will not have left any instructions.
This subject has been front of mind the past several weeks as I commute from Northern to Southern California to manage the needs of a family member who has slipped into dementia. I am certainly not the first person to be faced with having to make difficult life choices on behalf of a person who is not my child. But even for someone like myself, one whose profession involves helping others in this very situation, the challenges are daunting and come as a complete shock.
An increasing number of us will be facing the declining health, incapacity, dementia and/or deaths of aging relatives, and our own as well. Most of us will be totally unprepared. But there is a way to make this job easier for others, and that is to have a completed and recent set of estate documents:
- A health care directive lets you name someone to make medical decisions for you if you are unable, and provides guidance to them and to doctors as to the sort of care and medical procedures you would choose to have—and choose not to have—if you were able to do so for yourself.
- A power of attorney allows someone you designate to take charge of your financial affairs if you are unable. These powers can be “durable,” meaning in effect until revoked, or “springing,” meaning they typically take effect after one or more doctors certify that you are incapacitated. The former is best for a spouse or a very trusted child. The latter is best in most other situations.
- A will and/or living trust appoints the person of your choosing to manage your estate after your death, provides them your specific direction for how to distribute your assets and personal effects, and can provide guidance for how to take care of any minor children.
These are basic essentials for every adult, aged 22 or 82. (And yes, I do mean you, the 25-year-old still imagining yourself as invincible.) These are legal documents that do not have to be expensive. They may not even require a lawyer. Here is a free Health Care Directive form from the State of California. For the other documents, most of us can be adequately served by the do-it-yourself templates that can be purchased at modest cost through such sites as Nolo Press or Legal Zoom.
And while you’re at it, it’s a great idea to make a list of all your bank accounts and other financial assets; contact information for your financial advisors, attorneys, and so on; and a list of your passwords to email and financial websites. Keep this information, obviously, in a very secure place, but make sure your family knows how to access it when needed.
None of this is particularly hard. But it does require a commitment to see the process through. Don’t let denial stop you. Failing to take these simple steps leaves a larger-than-necessary burden on your loved ones. A little bit of preparation can be one of the best gifts you will ever give your family.