One of the more uncomfortable things to do is face your mortality. Talking about death, dying, and even physical and/or mental incapacity isn’t anyone’s idea of a good time. That is why many people put off estate planning as long as they possibly can. In a lot of ways, this is the financial equivalent of the proverbial ostrich burying their head in the sand. You can ignore the inevitable, but that doesn’t mean it isn’t going to happen.
The following article is a quick piece designed to get the reader thinking about getting the process started. Of course, a financial or legal professional can help dot all of the I’s and cross of the T’s. However, the first step belongs to you.
Trusting Others to Take Control
When You Are Unable to Manage Your Financial Affairs
What if an illness, an injury, or even an extended stay out of the country meant that you were no longer able to manage your financial affairs? Who would take care of paying your bills, managing your portfolio, and making critical financial decisions? A family member or a friend may be willing to take on the responsibilities, but that person would need to have both the time and the relevant skills to do an effective job.
A more workable alternative to relying solely on a family member or friend may be to create a revocable living trust. In the trust document, you could appoint a professional trustee to take over your financial management duties if necessary. Of course, if you’d want someone close to you to maintain a hand in your affairs, you could name that individual as a co-trustee to serve alongside a professional trustee. Your trustees’ responsibilities would be as broad or as limited as you decide when you set up your trust, and as the law permits.
When you create a living trust, you transfer assets into the trust, generally naming yourself as the trustee. You also name a successor trustee, typically a professional. You manage your finances as usual, until the circumstances that you have identified in your trust agreement prevent it. Then, the successor trustee (and co-trustee, if you name one) will take over the management of the trust’s assets according to the trust’s terms. One additional advantage to a revocable living trust is that you can change trustees, amend the trust’s provisions, or add to (or retract) the responsibilities that you give to your trustee.
When You Want Someone to Make Medical Decisions on Your Behalf
If you worry that you won’t be able to convey your wishes regarding medical care should you become seriously ill or injured, then you may want to talk with your attorney about executing a “durable power of attorney.” A durable power of attorney for health care, also known as a health care proxy, is a legal document that names a person who can make medical decisions on your behalf if you are unable to make those decisions yourself. Surprisingly, only 41% of the general population and 67% of those age 65 or older have a written document that names who they want to make decisions about their medical care.1
When You Want to Choose to Accept or Reject Life Support Measures
A living will can bring clarity to one of our final life decisions. In general, it specifies what type of medical care you will accept or refuse as it relates to life-sustaining treatments. A common use of a living will is to provide instructions to medical professionals as to whether and for how long they can use life support measures to keep you alive.
Relinquishing control over any aspect of our life or finances is never easy but may be necessary in certain circumstances. Talking about contingency planning with a family member or trusted professional may be helpful in making a decision.
1Kaiser Family Foundation Serious Illness in Later Life Survey, 2017.