Harrison Lazarus Advisors: Top Ten Financial® - Chapter 5

Most people want to leave their family in the best situation possible if anything should happen to them. Although most people feel this way, many fail to act to make it happen. My friend, Sam is a good example of what I wouldn't want to happen to anyone. His father, a successful lawyer and one helluva guy, left him and his sisters with a financial mess to clean up after his death, even though his death to lung cancer was not unexpected. Rather than have the opportunity to grieve after his father's death, Sam and his sisters had to scramble around to take care of his father's estate, which was crumbling before them. Now, Sam was sad and angry, leaving him even more emotionally drained. Had his father read this chapter and completed the necessary documents prior to his passing, Sam and his sisters would have had the opportunity to grieve the loss of their wonderful father properly.

There are two things we can be certain about in this life: death and taxes. And of those two, taxes are, by far, the more predictable. We know we have to pay taxes at least annually (income), biannually (property), sometimes quarterly (estimated), monthly (excise), weekly (payroll), even daily (sales). Past all that, death starts to look like the real wild card.

Considering the natural uncertainty of life, it is both wise and responsible to prepare for the unforeseeable as soon as possible. This includes getting our financial responsibilities in order.

No matter what your thoughts are regarding death, we can have the financial foresight to take care of our loved ones in a thoughtful way with a few documents as follows:

Power of Attorney,
Living Will, and
Last Will and Testament

Power of Attorney

Power of Attorney is also known as a financial durable power of attorney. The purpose of this document is for you to appoint an agent to act for you in a lawful way, and make decisions on your behalf. For example, if you become ill to the point that you either lose the capacity to make sound decisions or lose confidence that your decision making is sound You will then need someone to make well-reasoned, effective financial decisions for you. Some of the agent's powers include:

Real and personal property transactions.
Banking and investment transactions.
Legal and tax matters, or
All of the above.

Living Will

The second document is a Living Will and is also called an advance health care directive, which typically includes a health care durable power of attorney. For many, the controversial and unfortunate case of Terri Schiavo spotlighted the need for a Living Will. A Living Will empowers you to do four things:

Name someone else to make health care decisions for you.
Give instructions about your own health care.
Express your wishes regarding donation of organs, and
Designate your primary physician.

The first item of the Living Will is a power of attorney for health care. Similar to the financial durable power of attorney, this allows you to name another individual as your agent for health care decisions.

The second item of the Living Will allows you to give specific instructions about your health care. Choices are provided for you to express your wishes regarding the provision, or withholding of, treatment to keep you alive or to provide pain relief.

The third item of the Living Will allows you to express your intention to donate body parts following death. Perhaps you want to donate your whole body or just those parts most beneficial to someone in need.

The last item of the Living Will allows you to designate a physician to have primary responsibility for your health care.

Last Will and Testament

The third and final document is the Last Will and Testament, also known simply as the Will. The purpose of a Will is to tell a story. It is not an autobiography about your life before death, but the story of what you leave after death and to whom. This includes the material possessions as well as living things.

Choosing your beneficiary or beneficiaries is one of the most important steps since this determination provides for your beneficiaries to receive exactly what you have determined for them. Furthermore, one or more of your beneficiaries may have additional roles that may include: executor, trustee and/or guardian.

The executor is charged with carrying out the terms of the will and to manage the estate until all assets have been disposed of.
The guardian looks after the children, if they are minors at the time of your death.
The trustee is responsible for managing trust property and administering the trust according to your intentions.

Be aware that many assets (pensions, 401k's, IRA's, insurance proceeds) are not subject to the Will. In some cases, all that is needed is a death certificate for the beneficiary to claim these assets, making it important to separately elect your beneficiaries for these assets.

To put your intentions into action, listed below are potential resources (along with a rough estimate of cost) to address or complete the three documents that will provide you and your family with peace of mind:

An attorney ($ thousands)
Software - Quicken Will Maker Plus or Kiplinger Willpower ($50)
Online - Legacywriter.com or Lawdepot.com ($15 - 20 per doc)
Hard Copy (Wolcott's preprinted forms at Patrick's & Co. or other office supply stores)

Of the methods noted above, consulting with an attorney is obviously the most costly. Yet, for some people, it may also offer the peace of mind that can come with specific legal assistance regarding some of the more complex and difficult decisions you have to make, particularly in terms of your Last Will and Testament.

The three documents, that are at the core of this chapter - the Power of Attorney, the Living Will, and the Last Will and Testament - won't reduce your tax liability, but they will improve the likelihood that your health and wealth wishes will be carried out in a responsible and thoughtful manner.

Chapter 5