Savannah was having a difficult time. Her 85-year-old mother was injured so badly that she was unconscious and had to be transported to the hospital in an ambulance. Once there, Savannah approached the doctor to find out what options were available for her mother and how she could make sure her mother’s wishes were honored regarding potential, necessary life support. Guess what? The doctor could not tell her much because Savannah didn’t have legal authority to be informed or make decisions on her mother’s behalf.
This is a common scenario, one that you want to avoid. Planning for your and your family’s future doesn’t just mean saving for retirement, college and rainy day funds. To have everything in order, there are certain legal documents you need to be fully prepared for whatever life might bring. Here are some of those documents:
Advance medical directive – This is a document that lets your family and your doctors know what you want to happen to you with regard to medical intervention and treatment. If you become incapacitated and unable to communicate your wishes to doctors, you can designate a proxy to make healthcare decisions for you. You may need input from your doctor and an attorney to properly draft this document, and once it’s finalized, you’ll want a copy to be on file with your physician and a copy that your family can access in case of an emergency.
Living will – A living will is a type of advance directive that designates what kind of medical treatment you would like to occur should you become incapacitated. Your designated proxy will have to follow your wishes outlined in your living will. You can have general statements in your living will, or very specific statements which spell out precisely what kind of measures you would like to be taken in the event you are incapacitated. A general living will could say something along the lines of in the event of an incurable illness, I direct that lifesaving measures be discontinued if they only serve to prolong my dying. A specific living will would dictate your preference for different aspects of your care such as antibiotics, CPR, artificial feeding, life support and more.
Durable power of attorney – Sometimes combined with the advance medical directive, depending on which state you live in, the durable power of attorney gives your proxy authority to carry out healthcare decisions that you’ve outlined in your living will and decisions outside of your living will, should issues arise that are not addressed specifically.
Will – Your will outlines how your estate, or your wealth and property, will be distributed after you die. If you die without a will, your property will be distributed according to your state’s laws about descent and distribution. It’s important to have a will prepared to make sure your property is distributed as you see fit. A proper will can save your family from any unnecessary arguments, legal battles or hurt feelings on top of their grief after you pass.
You should have these documents drawn up by an attorney or reviewed by an attorney. Keep them in a fireproof safe in your home or safety deposit box at the bank, and update them whenever necessary.
What does this have to do with financial planning?
Anytime you have invested in your future – whether by contributing to a retirement fund, investing in annuities or purchasing long term care insurance – you want to ensure your assets are being used in the ways you intended. If your or your family’s documentation is not in order, you are taking the risk that the money you worked so hard for will end up funding something (or someone) you would not choose if you had a say.
As much as we don’t like to think about our own mortality, aging and death are eventualities for all of us. This is why it is so critical to be prepared for any situation that could arise with us or with our loved ones. Take the time to get the right documentation, and sleep better at night knowing you and your family will have the tools to get through any crisis, financially or otherwise.
Wood Smith Advisors, a Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
“Finance Made Simple” blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.