It’s difficult to think about what may happen if your health starts to decline – or how your loved ones will carry on after your death. But doing nothing to plan for these events could result in losing control over your affairs while you’re still alive, and undesired confusion and anger after you’re gone.
You can help prevent these unwanted consequences from occurring by making these decisions while you’re still healthy, documenting them, and communicating them in advance to your loved ones.
- Documenting your healthcare wishes
It’s important to help ensure family members and friends are aware of your medical treatment wishes before a healthcare crisis takes the decisions out of your hands. Here are ways to formally document these directives:
- Healthcare proxies. A healthcare proxy, also known as a medical power of attorney, is a legal document that authorizes one or more people to serve as health agents who can make medical decisions on your behalf should you become physically or mentally incapacitated.
- A living will. These legal documents allow you to specify which kinds of treatment and long-term care options you prefer. In the form, you specify whether or not you wish a physician to employ resuscitation procedures, ventilators, tube feeding, or other life-sustaining procedures.
- Organ donations. If you’ve never registered as an organ donor with your state, you can do it online. Visit organdonor.gov to connect to your state’s donor registry.
- Interment agreements. If you’ve already made arrangements with a funeral home or a cemetery, make sure your loved ones are aware of this.
- Choosing an executor
The executor will be responsible for managing the distribution of assets in your estate. These include your home, your non-retirement investments, your vehicles, and other valuable items. Your executor doesn’t have to be a legal professional. If you ask a non-professional to serve as an executor, make sure they understand the responsibilities.
- Protecting your financial interests
Many parents don’t want their heirs to know how much they’re worth – or how much they may inherit. It’s perfectly acceptable to keep this information close to the vest, but it may be a good idea to set their expectations.
- Assigning a financial power of attorney. At some point, you may want to fill out a financial power of attorney to give control of your finances to others, should you no longer be able to manage them yourself. Like with a healthcare proxy, a spouse or partner is often assigned as a primary proxy, with a child or other family member or close friend as an alternate. Once you assign financial power of attorney, give this person an overview of all of the assets held in your banking and investment accounts as well as any outstanding debt obligations. Also consider introducing them to your financial advisor, accountant, or estate attorney so they can get to know each other before a crisis requires them to start working together.
- Discuss your trust. If you’ve placed most of your assets in a trust to remove them from your estate, make sure your heirs understand this decision.
- Examine tax issues for beneficiaries. While the beneficiaries of your trust generally won’t have to pay taxes on the value of the principal they receive after you’re gone, they may have to pay taxes on any earnings or income they receive.
- Finalizing your will
Hopefully, you’ve written a will that specifies clearly how your assets will be distributed. You may be hesitant about discussing it with your heirs, but you should consider doing so, especially if they’re under the mistaken assumption that they’ll be inheriting the bulk of your estate.
- Creating a need-to-know file
Once you’ve made these critical decisions, it’s important to communicate them ahead of time to those who will be most impacted. If you don’t feel comfortable talking about these issues in person, consider recording a video where you explain your wishes and tell them what steps you’ve taken to document them.
Thinking through these end-of-life issues can cause a great deal of anxiety. But if you can make and communicate these discussions while you’re still physically and mentally healthy, you’ll help make it easier for your loved ones to deal with these issues when the time comes.