When you need them, you really really need them.
Living in our complicated modern world takes paperwork. You probably keep a state ID and a Social Security card around, maybe a birth certificate if you’re particularly organized.
Even if you’ve already got the basics covered, it’s a good idea to prepare a few additional documents ahead of time. You may not need them very often, but when you do, you’ll be happy you took the time.
| 📑Note: We are not lawyers, this is not legal advice. |
Documents you definitely need
Yes, that includes you! No matter what your situation, it’s a good idea to have around.
A will
You might think wills are for aging and wealthy gentlemen in mystery novels, but this is a document every adult should have.
A will is a legal document that lays out what should happen to your estate when you die. And no, “estate” doesn’t have to mean land or capital. Who should take care of your pets? What happens to your Facebook account? How do you want your remains handled? All of these are potential problems that creating a will solves in advance.
A will should be written with a lawyer’s help. Once you’ve got one, review it every year by yourself and every three years with a lawyer.
Documents you probably need
That’s probably still including you, yes. You can get by without these, but they’re still a good idea for many people.
Durable power of attorney
Durable power of attorney grants someone the power to act on your behalf in legal and financial proceedings, even if you’re incapacitated.
Imagine you’re in a coma. How do you pay for long-term medical treatment, or your kid’s back-to-school supplies? Durable power of attorney can prevent your life from falling apart while you’re unable to maintain things yourself.
Health care surrogate
Medical care is very serious business, which is why you’re required to sign about a billion forms when you visit the doctor. Any choices you make can have major implications, which is why you need to have a plan in place for emergencies. A health care surrogate is able to make health decisions for you while you’re incapacitated.
These health care decisions are legally required to be for your benefit, but what that means can be open to interpretation. Only grant this power to someone who you can trust to make calm, rational decisions in a crisis.
This is not a living will, by the way! End-of-life care decisions are a separate matter.
Other advance directives
A living will or a do-not-resuscitate (DNR) order are other forms of advance directives that specify what should happen in particular circumstances such as a persistent vegetative state. A health care surrogacy covers most situations, but for such big (and potentially controversial) decisions like when to stop life support, it can be a good idea to make sure people know your wishes.
Documents you need if your finances are complicated
Many if not most people can get away without this, but if you’ve got a lot of assets or a particularly complicated estate, this is a good idea.
Revocable trust
Specifically, the kind known as a “living trust.” You transfer ownership of most of your assets to a trust, with yourself (or someone you are very very confident in) as the trustee.
A living trust can work in tandem with other legal documents, like a will, to ensure that you and your family remain in full control of your finances in any number of situations. They’re usually written so that you maintain full control of your assets and you can alter the terms or revoke the trust at any time. It’s just another layer of protection you can put up around your money.
Documents you need if you have kids
If you have kids, get this handled. This is not something you want to leave to chance.
Declaration naming pre-need guardians for minor child
This is what it sounds like: who takes custody of your kids if something happens to you.
The last thing you want in the event of a tragedy is confusion or controversy around who will be taking care of your children, especially if not all of your family members are equally responsible. Know in advance who you trust with this, and make sure to put it in writing.
Bottom line
By now, you should have a sense of which documents might be necessary for your situation. Don’t wait – talk to an attorney as soon as you can.
And for help preparing for financial matters, schedule a call with the tax and accounting experts at DiMercurio Advisors.
