August: National Make-A-Will Month
August is recognized as National Make-A-Will Month, making it an appropriate time to address an important part of financial planning that is too often postponed: putting your wishes in writing.
Most people understand that they should have a will. However, a complete estate plan should generally address more than what happens after your death. It should also provide instructions and authority to people you trust if an illness, accident, or loss of capacity prevents you from making financial or medical decisions for yourself.
Three foundational documents can help provide that protection:
- A last will and testament
- A durable financial power of attorney
- An advance health care directive
These documents are not only about protecting your assets: they are also about protecting your family, maintaining control over important decisions, and creating greater peace of mind.
A Will Provides Direction When Your Family Needs It Most
A will explains how you want certain property distributed after your death. It can also name the person responsible for administering your estate, known as the executor.
Without a valid will, state law generally determines how property passing through your estate will be distributed. The result may not reflect your wishes or your family’s individual circumstances.
A properly prepared will can help you:
- Identify who should receive your property
- Select an executor you trust
- Name guardians for minor children
- Address personal possessions and family heirlooms
- Provide for charities or other organizations important to you
- Reduce uncertainty and potential disagreements among family members
A will is not only for wealthy families. Anyone who owns a home, maintains financial accounts, has children or grandchildren, or has personal property they care about should consider having one.
Your will should also be coordinated with the rest of your financial plan. Retirement plans, IRAs, life insurance policies, annuities, and certain investment accounts may pass according to their beneficiary designations rather than the instructions in a will. Beneficiary designations should therefore be reviewed regularly and after major life events.
A Durable Power of Attorney Protects You During Your Lifetime
A will becomes effective after death. A durable financial power of attorney is designed to help you while you are still living.
A power of attorney allows you to appoint at trusted person—often called your agent—to handle specified financial and legal matters on your behalf. A durable power of attorney can remain effective even if you become unable to manage your own affairs.
Depending on the authority included in the document, your agent may be able to:
- Pay household and medical expenses
- Manage bank and investment accounts
- Handle insurance matters
- Sign tax documents
- Communicate with financial institutions
- Manage real estate
- Address ongoing business or legal obligations
Imagine that you are temporarily hospitalized, recovering from an accident, or experiencing a longer-term cognitive decline. Who would pay your bills, communicate with your financial institutions, or manage an urgent financial matter?
Without the proper document, even a spouse or adult child may encounter delays or legal obstacles. In some circumstances, the family may need to pursue a court-supervised guardianship or conservatorship before someone can act.
Choosing an agent is an important decision. The individual should be trustworthy, organized, financially responsible, and willing to act in your best interests. It is also wise to name a backup agent in case your first choice is unable to serve.
An Advance Health Care Directive Helps Your Family Make Difficult Decisions
An advance health care directive, sometimes called a living will or a health care declaration, addresses your medical wishes if you cannot communicate them yourself.
It may describe the types of treatment you would or would not want under certain circumstances. A related health care power of attorney or proxy document allows you to name someone to make medical decisions for you when you are unable to do so.
This planning is not limited to end-of-life decisions. A medical crisis can occur at any age and may temporarily leave someone unable to communicate.
Without written instructions, family members may be forced to make deeply personal decisions without knowing what you would have wanted. That uncertainty can create tremendous emotional pressure and may lead to disagreements among people who care about you.
New Jersey’s advance-directive materials specifically recognize that documenting your wishes can help ease the decision-making burden placed on family members and others responsible for your care.
An advance-directive gives your loved ones guidance. Just as importantly, it allows you to maintain a voice in your medical care—even when you cannot speak for yourself.
The Greatest Benefit May Be Peace of Mind
Estate planning is often viewed as a discussion about death. In reality, it is a discussion about control, responsibility, and protecting the people you love.
Having these documents in place can provide reassurance that:
- The right people will be able to act for you
- Your financial obligations can continue to be handled
- Your medical preferences have been communicated and will be respected
- Your property will be distributed according to your intentions
- Your family will not be left guessing during an already difficult time
Completing the documents is only part of the process. Your agents, executor, and appropriate family members should know that the documents exist and where they can be located. Your health care representative should also understand your values and medical preferences. The National Institute on Aging recommends discussing advance-care decisions with loved ones rather than relying solely on the written document.
When Should Your Documents Be Reviewed?
Estate-planning documents should not be prepared and then forgotten. =
Consider reviewing them after:
- A marriage, divorce, or remarriage
- The birth or adoption of a child or grandchild
- The death or incapacity of a beneficiary, executor, or agent
- A significant change in your assets
- The purchase or sale of a business
- A move to another state
- A major change in your health
- A change in your family relationships
- Several years without a formal review
Your beneficiary designations, account registrations, and estate-planning documents should all work together. An outdated beneficiary form can undermine an otherwise carefully prepared estate plan.
Make This the Month You Take Action
National Make-A-Will Month is an excellent reminder to ask yourself these three questions:
- Do I have these documents?
- Do they still properly reflect my current wishes?
- Do the people I selected know what I expect of them?
If the answer to any of these questions is no—or if you are uncertain—schedule time with a qualified estate-planning attorney. Your attorney can prepare documents that comply with your state’s laws and are appropriate for your personal and family circumstances.
Your financial advisor can then help review your beneficiary designations, account ownership, insurance coverage, retirement assets, and broader financial plan to make sure the various pieces are properly coordinated.
At Retirement Refined, we believe good retirement planning is about more than investments. It is about helping you prepare for life’s uncertainties while giving you and your family greater confidence about the future.
Taking care of these documents may be one of the most thoughtful gifts you can give the people you love—and one of the most meaningful steps you can take for your own peace of mind.
Thank you for reading!
Paul Levin, CFP®, ChFC®, RICP®1, TPCP®
This material is provided for general educational purposes and should not be considered legal or tax advice. Estate-planning laws and requirements vary by state and individual circumstances. Consult a qualified attorney and tax professional regarding your particular situation.
- RICP® conferred by The American College. ↩︎
