If something happens to you, who watches over your health care, finances and other important matters?

No matter your life circumstances—whether you’re young and raising a family, or elderly and caring for yourself—you have plenty of responsibilities. For example, you make decisions about your health care (selecting doctors, choosing treatments) and handle financial matters (paying bills, choosing insurance, filing tax returns, managing your personal property and perhaps real estate).

If you become incapacitated, who will handle these responsibilities for you? And, when you die, who will wind up all that you leave behind?

Prepare Your Documents Today

When you prepare three important legal documents— a health care directive, a durable power of attorney for finances and a will—you name personal representatives in each. And if you make a living trust, you’ll name a representative there, too. These are the people that will handle your affairs, if you become incapacitated or when you die.

In addition, some of your other important documents—such as your living trust (or other trusts), life insurance policy, and financial or retirement accounts—may name property managers for young children. As with property left through a will, the property manager oversees the assets, distributing property or money as needed and turning over what’s left to the children when they reach adulthood or an age specified in the document itself.

If you know two or three competent, trustworthy people to name as personal representatives, you would be wise to name the same primary person as representative in each document. With one person in charge, decisions can be made with a minimum of confusion, interference and potential conflict. You can then name alternate representatives to fill each position if your first choices can’t serve.

If you must name multiple people to fill these roles—for example, someone with more financial savvy to watch over your money—do your best to ensure that the representatives you choose will work well together. And before you name anyone, talk to them to be sure they understand what you’re asking them to do and that they are willing to accept the responsibilities involved.

Once you’ve made your documents, you should review them every 2 or 3 years—or when you have a major life change (such as marriage or moving to another state)—to ensure that your choices still reflect your wishes and that your representatives are still able and willing to serve.

Leave it to Your Loved Ones

If you don’t prepare valid documents, your loved ones will have to sort through these matters. Here’s an overview of what they’ll face.

If you’ve left assets directly to minor children—through a trust, life insurance policy or financial accounts—the law requires an adult to serve as property manager to handle assets belonging to the minors. If a court appoints a property manager (rather than your naming one on the trust, policy or account), court oversight will be required until the children reach adulthood (18 in most states). Expenditures will be limited by state law. A surviving parent is also held to these requirements, unless he or she has been named as property manager on the documents leaving assets—such as life insurance—to the children.

In summary, your loved ones will be required to seek appointments in a court of law—a costly, lengthy, and public process. The work of the court appointees will be monitored by the courts, requiring ongoing reporting and maybe even putting up money in the form of a bond, to ensure they perform competently. Perhaps most importantly, those appointed may not be the people you would choose to handle your important affairs.

To make sure your wishes are carried out as you would like, and to lighten the load your loved ones will bear, make your legal documents now. To get started, consider purchasing Quicken WillMaker Plus (software available from Nolo.com). This best-selling software is routinely updated to reflect applicable law—and it is easy to use. You can use WillMaker to complete your documents or to jumpstart your work with an attorney.

Melanie Cullen is the author of Get It Together: Organize Your Records So Your Family Won’t Have To (Nolo), a workbook/CD-ROM for preparing and organizing your important records—for yourself and for your loved ones. She is a management consultant with TerraSys Consulting, Inc. and serves on the Projects@Work editorial board. She holds an MBA from the Graduate School of Business at Stanford University.


Image: Flickr Creative Commons / Marco Bellucci

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