Essential Financial Documents That You Should Prepare Now!
Anything can happen in life, this might sound foreboding but long-term financial planners or advisers recommend that you prepare the following very important documents without delay.
Will
In case of death, how do you want your property to be disposed of? This is the primary reason why you should create a will today. It will definitely save your family a lot of time and money, since if you die without one, this means that your estate will require extra legal fees and your money will most likely just go to taxes (this is called “intestate). Furthermore, your property will be subject to state law disposal.
In some states, the safety deposit box of the deceased are automatically sealed, so you must leave a letter of instruction and a copy of your will to a place where your executor can easily find it.
Letter of Instruction
Some experts advise people to write a letter of instruction to let the family know important details when they die. Though this is not a substitute for a will, you can include what funeral or burial arrangement you wish to have, who should they notify in case of your death, the amount of money you owed and to whom, and where the documents are located.
Executor
Your estate’s executor may be an entity (for example, a trust company) or a person (for example, an attorney or family member) who will carry out the specific instructions in your will. Remember that the court will appoint an executor for you in case you did not name one.
Trust
A living trust (revocable) will say who controls your assets when you are alive and also after you have died. You can discuss trust creation with your financial planner or your lawyer. The assets that are placed in a trust will be automatically given to your beneficiaries, therefore avoiding probate costs. Take note that you can also take advantage of the benefits of a trust since it is not just intended for very rich people.
Life Insurance
If you have a spouse or children, or anybody that will be financially hurt upon your death, then you need a life insurance. It is intended to provide financial assistance to your beneficiaries. To avail of this, you can consult any financial planner, or rely on abundant information from consumer groups, at the library, or on the web.
Health Care Power of Attorney
It is also important for you to appoint a durable power of attorney to manage your money and supervise your health care arrangements in case you become incapacitated. If you did not provide one, the court will be tasked to name a guardian who will handle your affairs. In addition to these responsibilities, the appointed person may also be called upon to decide on life and death situations (for example, the decision to switch off your life support machinery).
Financial advisers also recommend long-term insurance care that will cover the costs of nursing home, as well as long-term disability insurance that will provide financial assistance for long periods if you are unable to work due to your injury.
