Are you adequately prepared for illness, old age, and death?
Penny Vance, fiduciary managing director at PNC Wealth Management says there are three financial documents everyone should have: a will, an advanced medical directive and a durable power of attorney.
“While you still have time to make sure everything is in order the way you want it to be, it’s good to do this proactively,” she says. “Don’t wait until the last minute when you are not thinking clearly or when it’s too late and you don’t have what you need to protect yourself, your assets or your family.”
Vance says it’s a common misconception that only rich people need wills.
“In fact, the will is important for everyone,” she says. “In its very basic form, it ensures that your wishes are carried out after you are no longer living. I think that’s the piece that most people miss out on. A will gives clarity on who should receive whatever assets you have left. That can include everything from your 401(k), life insurance, family heirlooms, artwork or any financial assets.”
A will can protect what happens to your business when you die. Wills can also provide for charities or care for your pets.
Vance stresses that a will is even more important for those who have kids.
“If you have minor children, you have to make sure you have a guardian appointed for them,” she says. “If you don’t that falls by way of the state, not by your own wishes.”
An executor is another must-have in your will. An executor is someone who is given the legal responsibility of taking care of your remaining financial obligations. If you don’t name an executor in your will, one will be appointed by the state.
An advanced medical directive
If you become ill or incapacitated, what actions will be taken in regards to your healthcare? Who will make medical decisions for you? Vance says this is where an advanced medical directive and healthcare proxy comes in.
“I prefer to see a living will coupled with a healthcare proxy,” Vance says. “Those two should always work together. The living will or advanced healthcare directive gives clarity as to what kind of care the person wants. The healthcare proxy is a document which a person appoints an agent to legally make healthcare decisions on their behalf.”
As long as you are healthy and functioning, she says the healthcare proxy will stand in the background and remain there until you need it.
“So many of us make it into our 90s before we pass away,” Vance says. “It’s very important that while we are living and capable, we give some thought to who we want to stand in our place for us when we can’t make decisions for ourselves.”
A durable power of attorney
Not unlike the healthcare proxy, Vance says we all need someone who can make financial decisions for us when we are no longer able to.
“It goes back to the fact that we are all living so much longer,” she says. “So many of us will end up in assisted living or care residences. We need to know we have someone we trust - whether it’s a family member, one of your children or an attorney – somebody who is taking care of our assets and covering our financial needs.”
Once you have drafted your will, advanced medical directive and durable power of attorney; your work isn't done. Vance says it’s important to review the financial documents as often as you visit the doctor.
“Once a year at a minimum, we should be reviewing all of that and making sure it’s in place,” says Vance. “It’s not any fun to go to the doctor. It’s not necessarily fun to review the plan for what comes next. But they are equally important to our health and our longevity.”
Linda Bell joined FOX Business Network (FBN) in 2014 as an assignment editor. She is an award-winning writer of business and financial content. You can follow her on Twitter @lindanbell