With respect to your discussion on Durable Power of Attorney, be aware that in most all states, your spouse DOES NOT automatically have power of attorney over your affairs if you become incapacitated. This is a very common misconception and surprises many people.

Regarding life insurance, most adults should have a combination of whole and term insurance — the term should be used to replace income, and can be reduced over time as children grow up and become less dependent, and investments and savings grow. Insurance should also NEVER have “my estate” as a beneficiary, as that may make the proceeds liable to satisfy creditor claims. Whole life policies should be smaller, and cover expenses that will occur with death regardless of age, such as funeral costs.

And as a brief comment concerning the use of do-it-yourself will software, from a strictly mercenary point of view I’m a big fan. Because of the errors that inevitably arise, over time I end up getting more in additional fees from probating DIY wills than I lost by not drafting proper wills in the first place. Your readers should be aware that every dollar they “save” by doing it themselves may end up costing their heirs two or three dollars after their passing.

http://madchemistchick.blogspot.com/2008/05/from-around-web.html

If he can get it, and this applies to EVERYONE, be sure to get the disability rider where the premiums are paid should he have to go on disability. My husband paid just 7 months on one life insurance policy when he became disabled 15 years ago. I would be surprised if they offer him this rider, but if they are that dumb, take it!

And, all you folks sneering at getting a child life insurance, this is exhibit one on why it is a good idea. Take a good look at your own family tree and the diseases on it and make up your mind; however, a nasty injury can change things in a split second.

# of dependents * 5 * Annual Salary

is off. At least for me. It’s 3 times higher than what I have now.

I’ve created a spreadsheet to get the detailed costs year over year for 20 years of my term life policy, inflation adjusted, using average day care costs etc. and it came out in line with the 7X to 10X rule of thumb.

Remember three things
#1 For most people the goal of life insurance is to replace lost income of a working spouse – so the number of dependents shouldn’t have anything to do with your estimate

#2 Don’t forget to factor in Social Security benefits to your spouse and children in case you pass. They’re actually quite high.

#3 Don’t forget to insure a non-working spouse – in this case you WOULD factor in the number of dependents (for daycare etc.) but NOT an Income which is zero.

-Frank

I agree with the disability insurance, but it costs considerably more than life insurance. More people are likely to be disabled than die.

One solution to wills and any other need for legal assistance is pre-paid legal. It can be used to help with all kinds of situations like all that small print on all those documents we sign all the time, and even traffic tickets.

I just want to put in a word or two about designating a health care proxy instead of, or in addition to, a living will.

A health-care proxy is a person (usually a spouse, but it could be anybody) whom you empower to carry out your wishes regarding medical care should you become temporarily (coma) or permanently (brain death) unable to speak for yourself.

The living will is a great start, but it’s limited: it’s a piece of paper covering whatever specific situations you dream up; the health care proxy is your advocate under ALL medical circumstances and interprets your wishes to fit many diverse and unforeseen circumstances (which a piece of paper cannot do).

If you’re young and happily married with kids, your spouse becomes your health-care proxy kind of de-facto, but if you’re a single parent, divorced, or expect to be either of those, a health care proxy might be a really good idea (especially if you have deeply held beliefs on feeding tubes, artificial hydration, etc.–stuff that doctors aren’t allowed to make decisions about).

There is nothing more disheartening than an estate with no will. The lack of which results in in fighting, confusion, and resentment.

Our Healthcare DPA was created by a well known estate planning law firm and has some unique features. One can actually force healthcare providers to do as the agent says or they do not get paid from estate funds. This is especially important when physicians follow the hipocratic oath without regard to desires of the agent.

Again, great article.

Bob Doshier
Cotter, AR

Regarding the letters to our loved ones, is really is a great idea and will likely recommend my clients to write some up!

I also have discovered that her 2006 taxes were never filed. So now the estate has to cover any penalties. Lesson: sit down and make sure you understand the whole financial picture–not just the estate part of it.

One thing I did right was have a joint checking acct. with Mom. So a) I could keep paying bills and b) in Ohio at least, that account doesn’t have to be part of the estate, since it’s a joint account.

One other thing: don’t assume that the hospital has the living will, even if your loved one has been there before. I thought my mom had authorized certain steps, when the hospital had done them as standard, because they didn’t know differently.

Tucker

You might want to add that to your list!