Documents and directives are a part of modern life. You might have documents proving you own your house, showing the terms of your mortgage and detailing the agreement for your credit card. You might have a prenuptual agreement, a divorce decree or an employment contract.
Once you retire — or even before you retire — you should think about documents that will serve you in your later years. These four documents may not be the only ones you need, but they are the basic ones that every retired person should prepare, for your own sake and your heirs.
A will. This is a legal document expressing your wishes about how the property you own should be distributed after your death. Your property includes money and investments as well as real estate and personal property such as a car, household goods, clothes and any other personal items. A will also names the person, or people, who will manage your estate after you die until your property is distributed. You can find forms for a will online, but you might want to hire a lawyer to ensure that your will conforms to both federal and state laws. Consulting a lawyer is especially important if there is any possibility that someone might contest your will. It might be trickier than it first appears to make sure your assets are properly distributed to a spouse, sibling, child, stepchild, grandchild or perhaps to a charity. Also, remember that if you have an investment account you can typically designate a direct beneficiary that goes outside your will.
Power of attorney. If you get injured or incapacitated for any reason, who’s going to pay your credit card bill, car payment or medical bills? You can give a power of attorney to a spouse, close friend or relative who can make financial decisions for you in case you can’t do it yourself, either on a temporary or permanent basis. You can find a power of attorney form online and your financial institution may provide one to you, but you can also go to a lawyer. Typically, your power of attorney can not only make your payments and cash your checks, but also trade or cash out investments, buy or sell property in your name or make other financial decisions on your behalf. So while it’s important to name a power of attorney, make sure the person is someone you trust.
Health care directive. This document names a person who essentially serves as a power of attorney for your health care rather than your finances, although it could be the same person. The directive authorizes your loved one to withhold or withdraw medical care or medically supplied nutrition, to admit or discharge you from a medical facility and to hire or fire anyone responsible for your care. The health care directive can also provide guidance to your loved one in the event you face an irreversible medical condition as to how much intervention you want. You can include information about whether to prolong life at any cost, supply palliative care only and whether you want to donate any organs or tissue for scientific purposes.
Information sheet. This is not an official document, but rather a record you keep for the benefit of your children or anyone else handling your estate. You should note any significant property you own and what to do with it. How else will your kids know that your old baseball card collection or your mother’s silver spoon collection is actually worth something or has important sentimental value? List any bank or investment accounts, including IRA and 401(k) accounts. You should note the name of the financial institution, the account numbers and the approximate balances. And there’s no harm in sharing this information with your loved ones long before they need it.
Tom Sightings is the author of “You Only Retire Once” and blogs at Sightings at 60.
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