Our three-week trip away from our children forced Mr. T and I to finally kick into gear and make a legal will (you know, because planes falling out of the sky are actually a thing these days!). We always knew we needed one, but it seemed so daunting! Well, guys, we did it. It is done. And now I’m here to help you through doing the same thing. Obviously, I’m no lawyer or financial advisor, so don’t go around thinking this is legal or financial advice. I’m just here to help you with the first step: thinking through most of the things you’ll need to consider before drafting your own will.
Two months ago, Mr. T and I said: “We leave in a month. We need a basic will, an advanced health directive, and a legal power of attorney. Where do we start?” This, my friends, is the list of where you should start. Today, we will take you through the large list of decisions that need to be made before you’re even ready to start the documents! Ready? Here we go:
An advanced health directive is a document that dictates the care you want to receive at the end of your life. I, for one, am a big DNR (do-not-resuscitate) person, but a good health directive should be more than that. Do you want a feeding tube at all? If you have an advanced fatal illness and are unresponsive, do you want to be given the chance to live indefinitely? How long do you want to be unresponsive without any action? How about if you don’t improve after 30 days of artificial breathing and feeding? Do you want pain relief at the end of life? Is that more important than sustaining life? Do you want any reasonable action to be taken to extend that life? How about after your death? Do you want to donate your body to science? Research? Transplant program? There are no wrong answers for any of these questions. This is your life and the point of this document is to ensure that you’re the one that gets to decide how it ends. You also need to choose someone to carry out those decisions for you as well as an alternate. Mr. T is the one that has to pull my plug if that time comes, but if he isn’t available, that task is left to my sister. Remember, if you don’t have this document, these decisions are left to family members and doctors and they aren’t on the same page.
You’ve already made choices about how you want to handle your health if you’re incapable of doing so, but you also need to figure out who you want to handle the financial side. Your will is for when you die, but it gets tricky when you’re technically alive but unresponsive. Your will doesn’t take effect yet, but there are bills to pay and finances to manage and you’re still unresponsive! The Living Will allows you to choose who (in an event where you are unable to do so yourself) will be able to have access to your funds and finances to pay your medical, mortgage, utility bills, etc. and make financial choices on your behalf. Obviously you don’t want to choose someone that will run away with your money.
- Executor: You need to determine who will be the person that will take this will you’ve spent so much time drafting and make sure it happens. This is a lot of work. Figure out who you trust that would be capable of doing this task on your behalf.
Skip down if you have none. If you have kids, there are more considerations (and if you have kids from a previous marriage or have obligations to a former spouse or children, there are even more considerations I won’t go into here).
- Guardianship: First, you need to decide who you want to take your kids in the event of your death. You need to consider your own preferences, of course, but you also need to take that person’s situation into account as well. How is their health? Family life? Could they actually do it? (Also, as an aside, you should decide on one person, not a couple in case anything happens to one of them and it becomes unclear to whom the kids should go.) You also need to pick an alternate for this position. If you live someplace away from family (like Alaska!), you should pick a local guardian that will watch your children until your guardian can arrange to come get your children.
- Trust: The trust determines how your children get the money you’re leaving them. You can determine that the guardian can use whatever funds from the estate necessary for the raising and educating of your children and then determine how they get the rest of the money. It’s not a great idea for any 18-year-old to be instantly given (potentially) hundreds of thousands of dollars. Trusts are often set up to distribute the money in something like 3 increments (in case they blow the first one, they still get two more chances). If you set the increments to be when each one turns a certain age, they get their first third, it won’t end up being the same amount (markets fluctuate, etc.). For this reason, most trusts are set up to unlock the first amount when the youngest reaches a certain age. How and when you set these up are totally up to you. When the youngest reaches 25, then 30, then 35? 21, 27, 30? Only 2 increments at 20 and 30? Your choice.
- Trustee: If you set up a trust, you also need to figure out who will be your trustee. This is the person that is in charge of all the money in your trust and making sure it gets doled out appropriately to your guardian when the kids are young and at the allotted times when they’re older. You want someone trustworthy and good with money.
This is more than just determining who gets your money. First, you need to identify where your money is!
- Bank Accounts/Retirement Accounts/Stocks and Bonds: For all of your accounts, go online and make sure you have a beneficiary listed. If they allow an alternate, fill that in as well. Identify your accounts. Do you have annuities? Bank accounts? CDs? Social Security? 401ks? Pensions? Military retirement? If you have kids, do they have 529s?
- Debts: Any debt you owe anywhere. List it and how much. Credit Cards? Mortgage? Student loans? List your credit cards somewhere safe so people know what bills to pay if you die even if you do pay your bills every month!
- Insurance Policies: Do you have life insurance policies? If they’re term, when does the term expire? What is the amount? If they’re whole-life, what’s the value? Do you have some that comes with your employment? Do you have long-term care insurance? None of these are useful if no one knows they exist when you die or are incapable of recalling the information!
- Personal Property: What do you own that’s worth money? Do you want it all to be included in the estate as a whole (ie: potentially sold), or do you have specific bequests for your stuff? Do you have a safety deposit box? Can anyone access it but you?
- Frequent Flier Miles: If you’ve been collecting miles, you definitely want to give your loved ones the gift of travel if possible. It’s unclear which miles can actually be transferred upon death, but your best chance is to put it in your will.
You want to be cremated? That needs to be put in your will! You want your sister to sing at your funeral? You want your funeral to be a Spice Girls-theme BBQ where everyone wears glitter and cowboy boots and plays beach volleyball? Write it in your will!
Again, I’m no lawyer, so this isn’t meant to be a comprehensive list of considerations, but it’s a pretty good start. Sit down and start making lists. Starting the conversation is better than doing nothing. On Wednesday, I’ll cover the next step: how to set up all the legal documents and save money doing it! If you learned any lessons from Prince’s death this year, let them be: Party like it’s 1999 and have a will when you die!