Insurance and the importance of having certain types of it

Death and disability documents

If you have loved ones who look to you for financial support, your death would create a financial loss as well as an emotional one. Even if people do not depend on you financially, someone will need to organize your affairs at the time of your death. Taking action now can help ease the emotional pain.

Wills

A wills is a legal document that appoints someone of your choice to dispose of your assets after your death as you wish. If you die without a will, this activity will still take place, but a judge will appoint someone to dispose of your assets according to state law. That may not be at all what you wish for or what you expect to happen.

The first thing you do in the will is appoint someone to handle your affairs as you direct later in the will. This person is called an executor, an executrix, or even personal representative. Usually, you select your spouse or sibling or parent, but nothing prevents for selecting a good friend or even some other relative outside your immediate family. You can pick anyone, but you typically do not want to pick an attorney, since an attorney will want to be paid substantially more than your spouse or friend. Your executor will most likely hire an attorney to help carry out some part of your instructions though.

A will may list your assets, your beneficiaries, and their relationship to you. If you children under the age 18 (minors), you will also want to name a guardian for them in the event both parents have past away. The guardian of the child’s assets can be a different person that the physical guardian of the child. That lets you leave the parenting functions to someone who would be a great parent for the child, while letting someone else handle the financial affairs.

Once this document is signed and dated and properly witnessed, it then becomes a legal document. You can write a new will to take the place of an old one if your circumstances should change in any way. Any valid new will automatically canceled and become void.

A lawyer will typically charge from $75 to $300 to write a will and typically includes a durable power of attorney, a health care power or attorney, and a living will in that price. Writing your own will is generally not the best thing to do. A better idea would be to write down exactly what you want and take it to a lawyer to be put into the proper legal format.

You should be aware that any assets that list beneficiaries by name are not covered by your will. For instance, your 401(k) account application asked you to list a primary beneficiary. If you listed your mother as primary and your sister as secondary, there is no way for your daughter to inherit any assets in your 401(k), regardless of the language in the will.

Worth mentioning: If you want to disinherit (intentionally omit) someone, you must say so in the will. Merely leaving a child off the list does not exclude them from, sharing in an inheritance with siblings. You can disinherit a child or a sibling or a parent, but not a legal spouse.

Durable power of attorney

A power of attorney permits someone else to transact legal and financial affairs on your behalf. You designate someone, typically your spouse or parent or sibling, to act in your place. Otherwise, no one could open your mail, deposit your checks, or pay your bills.

A more far reaching document is a durable power of attorney, used in the event of an accident or a medical emergency. It might be for a short period, such as a surgery, or for a longer period in the case of dementia. Without such a document it would take a court proceeding to have a guardian appointed when someone becomes mentally incompetent. Creating a durable power of attorney in advance of any need for one is a simple, inexpensive, a smart thing to do.

Health care power of attorney

A health care power of attorney, may times known as a health care proxy, permits someone else to make medical decisions on your behalf. You select someone, typically your spouse, parent or sibling, to act in your place when you are unable to make medical decisions. You should give a copy to your primary care physician and to any hospital at the time you enter.

If you are unconscious or heavily sedated, you may not be able to give your permission for surgery or some other course of treatment. A health care power of attorney might save your life in a medical emergency. It could also be used to permit someone you trust to hear about the proposed treatment, ask questions, and make a informed decision about your care and needs.

Important: You have to check your state’s laws regarding the language and other formalities of health care powers of attorney and other legal documents. Some states require these documents to be notarized or otherwise witnessed. We have found that there are a few websites that contain useful info regarding this exact topic. Whether you are retired or not, be sure to check out the AAPR website.

Living wills

A living will comes into play if you are terminally ill. You use it to express your desire regarding treatment options near the time of death. In a living will, you tell your health care providers whether you wish to be kept alive through technology or to allow your life to take its natural course without medical intervention. You can direct whether you want medicine for pain, to be fed and hydrated by artificial means, and similar specific actions you may or may not want to take place. A living will can save your family much grief at a time when things will be difficult enough as it is. Again, living wills are a very responsible thing to do.

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