I am NOT an attorney or a CPA. Please, please, please consult an attorney licensed in your state to get everything done legally. What I’m sharing here are things that I learned after my grandmother died.
No one likes to think about it but it’s going to happen. The questions is: Will your family know what to do when it happens to you? If you have assets (checking accounts, retirement accounts, a car, etc.) you need to figure out what you want to happen to those things after you’re gone. What if you don’t die? What if you are injured and/or become incapacitated? If you’re not sure, this is the list for you! Time to get it done and most of it can be done for free with a little bit of time. So, without further ado ….. here’s a list of family documents that every parent needs to have:
A will. Simply put, a will is a document that tells people what you want to happen to your things (bank accounts, investments, home, jewelry, car, etc.) after you die. There are companies that will provide them to you for free. Some states will accept handwritten wills (aka holographic wills). Having a will does not mean that your estate will avoid probate.
A living trust. A living trust is a trust that is in effect while you are alive and can manage it. You get to put things that you want to avoid probate into the trust and manage those things while you’re alive. While you’re alive, you get to choose who will manager the trust after you’re dead. Once you die, whomever you said gets to manage it takes over. Probate is generally not needed.
A healthcare directive. This document tells people what you’d like to happen in the event of a terrible health event. For example, would you want to have extraordinary life-saving measures taken? How long should they let you be in a coma before your family decides to pull the plug? These aren’t fun decisions but they are necessary. You can download your state’s form and register it for free in most states.
A healthcare power of attorney. This document tells the hospital, or whomever, who you want making medical decisions for you. Consider who will do what you want versus who will do what they think is best. Who will have a clear head and be willing to go to bat for you. This multi-state form from the American Bar Association should do the trick.
A durable power of attorney. This is a document that gives someone the power to make legal decisions for you. You want to have a document that becomes valid once an event occurs (accidents, death, etc.), not a document that is always valid. You don’t want someone to sell your house and clean out your bank accounts. Hopefully, the person that you put in this role wouldn’t do that anyway but one can never be too sure. Get a “springing” durable power of attorney just in case. Here is a bit about powers of attorney.
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Parent of a student