When it comes to preparing estate planning documents, it’s always better late than too late, which could prove devastating for family members. The cornerstones of an estate plan include:
- A will. This legal document tells who will manage your estate, who will get your assets, and who will become guardian of your minor children when you die. Die without a will and the state makes these decisions – often at an added cost to those you love most. According to Kenneth Feinberg, the overseer of the September 11 Victims Compensation Fund, half of those who died did not have wills.
- Durable power of attorney (POA) for finances, which delegates the power to legally handle your financial affairs should you become disabled or incapacitated. Without this, no one may be able to access your financial accounts, securities, or any other property in your name without lengthy legal proceedings. Often, most importantly, no one would be able to pay your bills and conduct your financial affairs for you.
- Advance directive is a catch-all term that refers to health care directives, living wills, health care (medical) powers of attorney, and other personalized directives, all of which let you legally express your preference for continued health care should you later become terminally ill. A health care power of attorney (also called a designation of health care surrogate), names a spouse, child, or other trusted relative or friend to make health care decisions for you in case you are physically or mentally incapable of doing so on your own.
- Letter of instruction. A letter of instruction is an informal document that expresses your wishes after you die and gives your survivors and executor, information concerning important financial and personal matters that must be attended to after your demise. You don’t need an attorney to prepare it. Although it doesn’t carry the legal weight of a will and is in no way a substitute for a will, a letter of instruction clarifies any special requests to be carried out upon death. It also provides essential financial information, thus relieving the family of needless worry and speculation. Just as with other estate planning documents, be sure your loved ones know where your letter of instruction is located.
- A Legacy Letter, also known as an ethical will. A legacy letter is normally written for the benefit of your heirs and loved ones. While not legally binding it is a document that can be used to express family history, values, and important wishes you may have after your passing. There are many resources that are available online that can serve as a guide for drafting your legacy letter.
Smart Money Tips
- Travel insurance alert. After a painful hiatus for travel lovers, planning wonderful sojourns to distant locales is once again on the docket. Most people don’t consider purchasing travel insurance, but that could be a mistake. Travel entails many financial risks, including but not limited to accidents, illness, missed flights, canceled tours, baggage loss, theft, and emergency transportation. Deciding on acquiring coverage depends on the chances you’ll need it (the older you are, the more likely you will) and whether you can afford to pay out-of-pocket for any losses or emergency needs, which could be astronomical. I was recently reminded of this when reading about travel to a popular, but very remote, location that has limited medical facilities. But, the writer reassured, a charter flight could be arranged to the nearest comprehensive medical facility – for a mere $40,000.
While policies may cover more than one – or all – travel risks, there are five main categories: trip cancellation and interruption, medical, evacuation, baggage, and flight insurance. Costs for comprehensive policies vary but generally range from 5% to 12% of total trip costs. Rates rise significantly for those over 50. Since Medicare does not cover medical costs outside the U.S., check with your Medigap carrier to see if it covers emergency care overseas – probably not. (Thanks to my good friend, the peripatetic Pat, for suggesting this topic.)
- The surest way to build up your investments. Articles abound on how poorly prepared so many people are for retirement. Those who have accumulated retirement savings and benefited from generally salubrious investment markets fear that another big drop in stock prices may be at hand. Before concluding that you’ll never be able to afford to retire, keep in mind that there is two surefire ways to build up your wealth. 1) Save regularly and regularly increase the amount you’re saving. (If you are already retired a part-time job can help with this.) 2) Live beneath your means.
Food for Thought
Your emotions are often a reverse indicator of what you ought to be doing.
-John F. Hindelong
Money Can Be Funny
Just be glad you’re not getting all the government you’re paying for.
-Will Rogers
Word of the Week
illecebrous (il-ih-SEB-ruhs) – Alluring and enticing; physically attractive.
Origin: From the Latin illecebra meaning enticement or charm which comes from illecere meaning to entice.
As soon as he began to speak, his illecebrous qualities multiplied.