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Financial Documents You Should Have Financial advisers recommend that your long-term financial plan include the following: Wills A will states how you want your property disposed of after your death. Having a will saves time and money for your family, since dying without one—called “intestate”—means more money from your estate will likely go to taxes and requires extra legal fees. In addition, your property will be disposed of according to state law. Where to store a will can be a problem. In some states safe deposit boxes are automatically sealed upon a person's death, so a copy of your will and letter of instruction should be left where your executor can find it easily. Executor The executor of your estate is the person (family member or attorney) or entity (such as a trust company) that carries out the instructions in your will. If you do not name an executor, the court will appoint one. Letter of Instruction Some experts recommend leaving a letter of instruction to let your family know: where documents are located, what money you are owed, what burial or funeral arrangements you wish, and who should be notified. This is not a substitute for a will. Trusts Trusts are not just for the very rich. You might want to discuss the creation of a trust with your lawyer or financial planner. Assets placed in trusts are automatically given to the beneficiaries, avoiding probate costs. A revocable living trust says who will control your assets while you are alive and after you have died. Durable Power of Attorney for Health Care Also called a living trust, this ensures that your affairs will be handled as you wish if you become incapacitated. Unless you specify otherwise, a court could be asked to name a guardian to handle your affairs if you could not do so. In addition to managing your money and supervising any health care arrangements, the durable power of attorney can be called upon to make life and death decisions (such as whether to switch off life support machinery). As people live longer and need more health care, many financial advisers are also recommending long-term care insurance to cover nursing home costs. Long-term disability insurance, which will provide for you if you become incapacitated and unable to work for a long period, is also frequently recommended. Remember, many employers offer this type of insurance but it often only applies to on-the-job injuries. Life Insurance Life insurance is intended to provide for those who would be hurt financially by your death. Single people with no dependents do not usually need life insurance. On the other hand, if your spouse and children would suffer if your salary came to an abrupt end, then you need life insurance. Consult a financial planner, or review the considerable amount of information available about insurance on the web, at the library, or from consumer groups.
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