As the adage goes, you can’t take it with you. Whether you want to spend your last dime or leave it all behind when you go, creating a comprehensive plan for your estate begins earlier than you might think. If you don’t have children or obvious heirs, documenting your wishes and making them accessible will help ensure those wishes are fulfilled should something happen to you.
“If today were your last day on earth, who would get your stuff?” says Jean-Luc Bourdon, a certified public accountant in Santa Barbara, California, and a member of American Institute of Certified Public Accountants’ personal financial planning executive committee. It’s a question he poses to all of his clients, especially those without kids. While parents may think their children are the answer, Bourdon says people without children need to plan more carefully.
“When it comes to what you’ll leave behind, there are only three buckets: Uncle Sam, charity or individuals,” he says. “Generally speaking, Uncle Sam is the least appealing.”
Many people with children create a will to ensure their children are cared for, and in the absence of a will, next of kin are the obvious heirs. But for people without children, a will can be just as important, and it can easily be overlooked.
“It’s important to check all the estate planning documents,” Bourdon says. “Having a family creates more of an urgency in making sure those documents are in place. A will or a trust, health care directives and power of attorney forms are essential for anyone at any age, but people without children should especially have them in place because the person making decisions in the event of an emergency isn’t always obvious.”
Whether you’re planning to leave money to a favorite charity, establish a trust for a treasured pet as Bourdon and his wife have done or set funds aside for loved ones, creating a will, even as early as your 30s and 40s, is key to ensuring that your hard-earned money isn’t taken by the government after you’ve gone.
But planning doesn’t just mean writing a will. Sound planning encompasses a wide range of documents that cover not just financial wishes, but directions for everything from health care directives to long-term care insurance to living wills and even organ donation instructions.
Frances Hopkins, a nursing student in Sacramento, California, says that such conversations are natural ones to have when discussing financial planning, because the soaring costs of prolonged health care and often-protracted court cases that arise when there’s a disagreement over someone’s wishes can be avoided with clear instructions. However, she says, people often avoid having the conversations.
“It’s hard to talk about those things,” she says, “and sometimes it’s hard to admit there’s a loved one you don’t want in charge of those decisions, should you be unable to make them for yourself. It’s a hard conversation for people to have.”
Hopkins says the more information you can provide in a health care directive, the better. It doesn’t have to be fancy, just thorough.
“Writing your own health care directive, with everything from the type of lifestyle you prefer to what you want in terms of lifesaving and invasive measures, can help a hospital make difficult decisions in the event of an emergency and spare loved ones the agony of trying to guess what you would want,” Hopkins says.
But for someone to act on your behalf in the event of an emergency, you must first give them access to your medical files, and you should do so when you’re healthy enough to pass along the permission.
“One of the things people don’t think about is if you’re single and over 18, you need to have a [Health Insurance Portability and Accountability Act] authorization form to give someone access to your health care information,” says Niv Persaud, a certified financial planner and managing director of Transition Planning and Guidance, a boutique financial advising firm based in Georgia. “You have to identify who in your life can make medical decisions for you if you’re not mentally or physically capable.”
Hopkins says even able-bodied, healthy and mentally sound individuals should prepare for the worst-case scenario.
“You could be out riding your bike and suddenly be hit by a car,” she says. “Those kinds of things can happen in the blink of an eye. Here you are trapped in your own body without being able to communicate.”
Laws and forms for everything from wills to advance directives vary by state, but a variety of free or inexpensive online resources — like caringinfo.org, LawDepot, LegalZoom.com or individual state legislature websites — can provide templates.
Whether you want to leave anything behind or make sure you’ve used it all in the pursuit of a well-lived life, creating and communicating a thorough plan for your wishes is key to making sure those wishes are met. And as soon as the plan is created, make sure the right people — trusted loved ones, doctors, lawyers and anyone else who might need to know your plans — have access to it.
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No Kids? You Still Need an Estate Plan originally appeared on usnews.com
