Updated on 12.17.10

Out With The Old, In With The New: Prepare for the Inevitable

Trent Hamm

Throughout the month of December, The Simple Dollar is posting a daily series focusing on specific activities you can do right now to set the stage for a great 2011. Out with the old, in with the new.

20. Prepare your will and your master information document.

If you have no dependents, no descendents, and no one who would value having any of the items you possess, you can skip this one.

If any of the above applies to you, though, pay attention. The worst thing you can do to the people you care about is die suddenly with no sort of estate plan left behind and no indication of what and where all of your accounts are. Not only is your family grieving, but they’re left to deal with confusion in figuring out where all of your accounts are, talking to a lawyer about intestacy, and hoping that a judge can resolve things reasonably.

You don’t want that, not if you care for those that you leave behind. I’ve watched it happen before and, to put it simply, it’s a depressing mess.

The minimum I would suggest for anyone in terms of an estate plan is a will and a master information document. Let’s address these in order.

A will A will is simply a document stating what you wish to happen to your property and assets should you pass away. This usually handles everything for small estates; if you’re not a millionaire, a will should handle everything you need.

I do not recommend using a software program to prepare your final estate. It’s a great tool for getting your ideas in order and ensuring that you have everything taken care of, but get your final will checked over by a lawyer who can make sure that it’s legally binding in your area. I would also make sure that your executor, whoever you designate that to be, has a copy.

Get it done. You won’t regret it.

A master information document Hand in hand with a will, in my opinion, is a master information document, something I discussed in detail a while back.

Essentially, a master information document outlines all of your account information and other information someone would need to know about in the event of your passing. Much of this information will be highly private, so you want to make sure that when you prepare such a document, you store it in a secure place and let only the most trusted people know where it is.

Having such a document can be incredibly valuable in the event of sudden death, as it makes it very easy for your survivors to close out accounts and so forth instead of having to hunt for information. Rather than digging through mountains of statements, they can just simply refer to your document and have all of their concerns well in hand.

Other things to consider While you’re at it, you may want to consider some other items.

An advance health care directive states your wishes with regards to medical procedures intended to prolong your life in medical situations where you are incapable of making such a decision for yourself. I have ceded all such choices to my wife, but many people may want to have control over such decisions.

A durable power of attorney states who you wish to make legal decisions on your behalf if you are similarly incapacitated.

If you have a large estate, there are many other options to consider. I would strongly encourage you, if you have a net worth in excess of one million dollars, to consult a lawyer with regards to estate planning.

In any case, you owe it to the people you love to take some time to get these pieces in place. No one likes to think about their own mortality, but when you don’t think about it, you push that burden off onto the people you love at the very moment when they could really use your helping hand.

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  1. Interested Reader says:

    Are you still recommending that people have an “estate handling” meeting with their families?

  2. Maureen says:

    How did that meeting with your family go? Were people receptive? How did your parents feel about it? I am also wondering if you would still recommend having such a meeting with your parents and potential heirs.

  3. Katie says:

    Couldn’t agree more about the importance of preparing for the inevitable. If you could give your loved ones peace of mind on the worst day of their lives by spending fifteen minutes filling out a form, would you do it?

    Do you know who would make your health care decisions if you couldn’t do it for yourself? Especially if you are separated but not yet divorced, single, or part of a committed couple that is not legally married, you might be astounded to learn who state legislators think should be making your life and death decisions.

    Do your decision makers know what you’d want? My experience has been that most people assume their loved ones know, but find out the hard way they don’t.

    I am a much bigger fan of having a health proxy or power of attorney rather than an advance directive. Most advance directives contain boiler-plate wording about what treatments you would and would not want: ventilators, feeding tubes etc. This is rarely useful in medical crises.

    Most people’s choices hinge on probability and degree of recovery. For example, if you had a bad car accident and needed to be in the intensive care unit with a ventilator and a feeding tube for two weeks but were expected to fully recover, most people would choose this care. But if you were unlikely to recover much brain function after your ICU stay and thus have a high chance of needing years of nursing home care for diaper changes, some people would rather forego the ventilator and tube feeds and let nature take it’s course.

    What makes this so difficult is that in the most dire situations, there’s usually a less than one percent chance of an unexpected but dramatic recovery, a real chance that you die no matter what treatments are tried, and a fairly large chance that if aggressive measures are taken you’ll survive the ICU stay but require years of permanent nursing home placement.

    No advance directive can possibly anticipate the complexity of the medical decisions faced by most families. Much better for you to chose someone you trust and have a frank conversation about what degree and probability of recovery would make it worthwhile to you to undergo aggressive treatment. Are you an optimist, willing to risk a high chance at years of nursing home placement in exchange for a small chance at full recovery? What does adequate quality of life mean to you? Mountain climbing? Or being able to listen to books on tape? Are you a Patrick Henry who’d rather ‘live free or die’ than go to a nursing home? This is what your loved ones need to know.

    Facing these questions is tough. The paperwork is easy. Most states allow you to download a health care proxy form from the internet, select your first choice and a backup, and sign the form in the presence of a witness or two. Some states won’t let the same person be your financial and health care power of attorney or proxy.

    Let all of your loved ones know who your decision makers are, and the broad outlines of your wishes. This will help preserve family unity and support your decision makers if they must face the challenge of carrying out your wishes. On the worst day of your family’s life, you will have given your loved ones a measure of peace. It’s worth it.

  4. Briana @ GBR says:

    I’m only 20; am I too young for a will? I will be preparing a master document though with important log in information for my personal accounts.

  5. Sandy says:

    @ Briana – you are never too young for a will – no doubt at your age you don’t have much, but what you do have should go to the people you want if you should die.
    @ Katie – you got it girlfriend. My parents had me late ( Mum was 41 – late for having a baby in 1967 ) and I’m an only child too, and this year I have had to go through utter hell trying to sort them out. Mum had to be put in a dementia unit, and neither Mum nor Dad had made any plans for their old age. I had to go to court to get control of her finances because Dad is beyond doing it. It was expensive and unpleasant, and if my parents had set an enduring power of attorney in place – I could have stepped straight in.
    Now, I have to go in and sort their house out because its too much for Dad so he can also go into a home.
    All this, on top of my own marriage break up made for a really great year – not!
    Parents – PLEASE get yourselves sorted wrt wills, enduring power of attorney etc, as an only child left to sort out a huge mess, believe me, its horrible.

  6. Marle says:

    What is the best way to have a master financial record and secure it? I need something like that for my husband, because he doesn’t pay attention to that stuff and if something happened to me he wouldn’t know how to find any of our money. I access all my accounts online, so the easiest thing for him would be the usernames and passwords (a list of account numbers he wouldn’t know what to do with, and since I didn’t change my last name it might be quite difficult for him to get access to the accounts that aren’t joint). Obviously, a list of usernames and passwords to all your banks is a big security risk. So what would you do with it? If it’s stored on a computer connected to the internet how do you make sure hackers can never ever get to it? If it’s physically written down or on a usb drive, where would you put it so that if your house was robbed theives couldn’t find it? A fireproof safe would be a idea, but wouldn’t theives just take the safe and break it later? Maybe I’m just being too paranoid, but at my age it’s a lot more likely my house will get robbed than I’ll die anytime soon. I’d like to have a master financial record for my husband, but if that got into the wrong hands it would devastate us, so I haven’t made one.

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