Managing financial documents for elderly loved ones is a critical yet often overlooked task. Whether you’re helping a parent or planning for yourself, having a comprehensive checklist can simplify decision-making and reduce stress.
From wills to living trusts and financial power of attorney, keeping these documents in order can prevent future headaches for families and caregivers. This guide walks you through the must-have financial records for elderly individuals.
Key Takeaways
Important legal documents that all seniors should have are a will and/or living trust, and medical and financial powers of attorney.
Without a medical or financial power of attorney, decisions will be left to those authorized by state law.
Store legal documents with Trustworthy to keep them secure and organized.
Important Legal Documents All Seniors Should Have
Let’s face it: we’re all going to get old, and when we do, we should be able to spend our retirement relaxing and doing the things we love. You shouldn’t worry about where your documents are or trying to prepare them.
The documents you will need will protect your medical, financial, welfare, and legal interests.
Last Will and Testament
Your last will and testament is an important document because it lists all your last wishes and how you want them to be carried out.
This legal document details all your possessions like money, investments, property, and other assets and advises who they will go to after your death. Your will also names the person who will oversee the distribution of your possessions to ensure everything is carried out according to your wishes.
If you don’t have a will after you pass, the court will distribute your possessions according to state laws. The problem with this is that the process can sometimes be drawn out. Also, people who you did not intend to inherit your estate may wind up getting it. This whole scenario can add extra stress to your already grieving family members.
So, how do you prepare the will?
First, you can choose to write a will with or without a lawyer, although having one present can help if you’re unsure about certain aspects.
Think about your final wishes and why you’re creating the will. When doing this, Ted Alatsas, a family planning lawyer in New York, advises:
“Do you have specific goals for your will? For instance, you may want to ensure a special needs child is taken care of after you are gone or use assets to cover a grandchild’s college costs.”
Here are the steps to creating a will:
List all assets: You can start your will by listing all of your assets.
Name all beneficiaries: Think about who you want to provide for and what you want to give them, and list this in your will with the names of your beneficiaries.
Name an executor of the will: Choose someone you trust to carry out your wishes and someone who will remain impartial. You could even hire an attorney for this role.
Gather all documents: The documents you will need for your will include birth certificates, marriage licenses, divorce certificates, property deeds, mortgage documents, a list of bank accounts and other relevant financial details, insurance policies, funeral plans, and contact details for your legal advisors.
Sign your will according to state requirements: Ensure you sign your will according to your state’s requirements. For example, some states will require additional witness signatures, while others may require that you notarize the will.
This process usually requires a lot of paperwork and communication. Store all of your estate planning with a secure online platform like Trustworthy. Trustworthy is a Family Operating System® you can use to store all your estate planning documents in one secure location, which is easy to access and share with family members or estate planning attorneys.
Living Trust
A living trust, also known as an inter vivos trust, differs from a will as the trust is an account funded by your assets after your death. Unlike wills, which only go into effect after you pass away, a trust becomes effective once you sign it.
This legal document outlines the terms of the trust and allows for your assets to be transferred directly to your named beneficiary upon your death. You’re able to manage and control your assets in the trust while you’re alive.
A reason why many people choose this over a traditional will is because, unlike wills, a living trust does not need to go through probate court. This is also a better option for families with complex situations like blended families, minors, or members with special needs.
Making a living trust is a pretty similar process to making a will:
List all your assets
Decide who will be your sole grantor.
Decide who will be your beneficiaries.
Gather all the relevant documents.
Choose a successor trustee. This person is in charge of making sure all your debts and beneficiaries have been paid.
Sign and notarize the trust.
Transfer the assets to the trust in order for it to become valid.
Financial Power of Attorney
You’ll want to appoint a financial power of attorney to handle your affairs. The person you appoint will step in to make decisions regarding your money and make sure payments are made if you are unable to. Depending on what type of power of attorney they were granted, they can handle your real estate from selling to renting property.
The different types of power of attorney available:
Limited: This POA is only granted for a limited time or a specific purpose.
General: This gives your appointed POA all the same rights and access that you have.
Durable: This remains in effect after becoming incapacitated.
Springing: Unlike a general POA, this does not go into effect until you’re incapacitated.
You can appoint whomever you like, including family members, close friends, or legal professionals. Try to pick someone who is financially savvy and is ready to take on this responsibility.
Frequently Asked Questions
What are the risks of not having a financial power of attorney in place?
If no POA was put in place and you have become incapacitated, the state probate court will take over and appoint someone. However, this is a long process that takes up money.
Can someone revoke a power of attorney, and if so, how?
A POA can be revoked at any time by the principal if they are mentally competent. The revoked POA must be signed by the principal and the agent.
Can a person have both a will and a living trust at the same time?
Yes, you can use both. If there are issues between the two, the trust takes precedence over the will.
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