Reading some of Suze Orman's financial planning tips can make me feel bad about myself.
While I don't have too many regrets about big life decisions, like my spouse, where I live, or how I raised my kids, there is one thing I haven't done well that sometimes keeps me up at night: being understanding. financial planning.
Don't miss the move – SIGN UP for TheStreet's FREE daily newsletter
Yes, I know it's never too late to fix it and I'm slowly but surely there are a couple of things I could have done better and several things I should have done sooner.
Among the things I should have done sooner: Prepare legal documents related to my finances that will protect my family when I die. Or at least make things easier for them.
Here's why I find it very difficult to admit this shortcoming: I'm married to a lawyer (so yes, part of the fault is his!). We (he!) could write these documents in a weekend.
You know that saying about the shoemaker's children having holes in their shoes? Well that's me (and by me I mean us).
Related: Is Social Security's bridge strategy a good idea?
I'm in good company. According to a Caring.com Survey 202468% of Americans do not have a will. About 40% of people who don't have a will say it's because they don't believe they have enough assets to leave to anyone.
However, a will and other essential documents Suze Orman – and almost every other personal finance expert on the planet – says all needs, it will do more than help you distribute assets. These documents will also allow you to control your healthcare decisions and even provide guidance for the care of minor children.
In no particular order, here are the four financial planning documents everyone should have.
The most important reason to have a will
A will is essentially a document that you use to set out what you want to happen to your assets when you die. In a will you name the beneficiaries: individuals or charities.
While most financial planning experts would recommend hiring an attorney to create your will, you don't necessarily need one. In at least 15 states, including Arizona, California, Texas, New Jersey, Michigan and North Carolina, you can create what is known as a “holographic will,” meaning it is handwritten.
Each state that allows handwritten wills has slightly different requirements, so if you choose to make your will yourself, you'll want to make sure you meet your state's requirements.
If you die without a will, it can complicate things for family members because what happens to any of your assets depends on the laws of the state where you live.
In some states, if a person is married and dies without a will, all of his or her assets automatically pass to the spouse. In other states, assets are divided between the spouse and children; In other states, the parents of the deceased person may also be entitled to a portion of the assets.
The most important reason to have a will is because it allows you to decide which people or organizations will receive your assets when you die.
Related: Suze Orman Has Heartfelt Words About Delaying Social Security Until Age 70
The Most Important Reason to Have a Revocable Living Trust
A revocable living trust is a legal document that gives one person the power to make decisions about another person's money or property held in a trust.
By the way, trusts are not just for the “rich.” As Suze Orman writes“A revocable living trust is an incredibly powerful document that can be of great help. You maintain control of all your finances for as long as you want and can make changes to your trust as often as you want. That's what it is.” revocable'. 'medium.”
According to the Consumer Financial Protection Bureau, one reason to create a revocable living trust is to avoid the costly and lengthy probate process. During a probate proceeding, a judge decides how to distribute a deceased person's assets to his or her beneficiaries and also pays debts.
The most important reason to have a revocable living trust is that it allows you to maintain control of your money and property and designate who receives the money and property when you die.
The most important reason to have durable financial power
A power of attorney (POA) is a legal document that allows someone to act on your behalf if you are incapacitated. It is especially helpful for older people who may not be able to make decisions for themselves.
A durable financial power of attorney gives another person permission to access your IRA, pension, or other financial accounts, and allows them to pay your bills.
Appointing someone else to make financial decisions for you is also risky, as it gives someone else control over your money. This is a case where it is worth hiring a lawyer to draft the POA document, as it can be drafted in a way that protects against potential abuse.
More on retirement strategies:
- Tony Robbins Warns Americans About Social Security Mistakes to Avoid
- Dave Ramsey has strong words about Medicare for retired Americans
- Suze Orman Offers Honest Social Security Advice to Retirees
The most important reason to have a financial power of attorney is that if you do not have one and you become incapacitated and can no longer make decisions for yourself, a family member or friend may have to go to court to be appointed as your guardian – a process which can be expensive, long and public.
The Most Important Reason to Have an Advance Directive for Health Care
An advance directive is a way to tell medical professionals and your loved ones what your wishes are regarding your medical care. There are actually two common types of advance health care directives, as defined by the National Institute on Aging– A living will and durable power of attorney for health care.
- Living will: A living will tells your healthcare providers how you want to be treated if you are unable to make your own decisions about emergency treatment. You can say which common treatments or medical care you would like, which ones you would like to avoid, and when each option applies.
- Durable Power of Attorney for Health Care: A durable power of attorney for health care is a document that names a health care agent – a person who can make health care decisions for you if you are unable to communicate your wishes for yourself. A power of attorney can be chosen in addition to or instead of a living will.
Is there a point at which you would no longer want to receive treatment for an illness? Do you want painkillers even if taking them could hasten your death? These are the types of situations you can mention in your living will and then reinforce them into a durable power of action for health care.
The most important reason to have an advance health care directive is that it allows you to speak for yourself regarding health care decisions, even when you actually cannot.
So more excuses for me. I commit to completing all these documents by the end of the first quarter of 2025.
Related: Veteran Fund Manager Issues Dire S&P 500 Warning for 2025
