5 Financial Documents Every Family Should Keep Handy:
Life moves fast—certain documents are too important to misplace, ignore or leave for “someday.” Whether you are navigating a difficult life event or planning for the future, having the below essential documents updated and readily available can make all the difference. If you haven’t prepared these documents—or if it’s been a while since they were reviewed—it’s a good idea to take care of that now. Working with an estate attorney in doing so can be invaluable in protecting your family, assets and wishes.
Keep a copy of these important documents with your estate attorney and in a secure place at home. Consider using a binder or secure digital vault to keep everything in one place—and let a trusted family member or friend know how to access it.
- Will and Trust Documents: Thoughtful estate planning with a will and/or revocable living trust is an act of care that protects your legacy and your loved ones. A will helps ensure your wishes are followed and your loved ones are cared for after you are gone. A revocable living trust allows a successor trustee to step in and manage your affairs if you become incapacitated. Moreover, it can add efficiency and privacy by stream lining the probate process or potentially avoiding it altogether.
- Durable Power of Attorney (DPOA): This document appoints someone you trust to manage financial and legal matters on your behalf if you become incapacitated or otherwise unable to make decisions while you are alive. It helps ensure that your financial life continues to run smoothly during an emergency or period of incapacity—protecting assets, credit, and important obligations.
- Health Care Proxy & HIPAA Release: Who will make medical decisions if you can’t? A health care proxy allows you to legally appoint someone you trust to make medical decisions on your behalf if you become unable to do so. A HIPAA release ensures that your proxy can access necessary medical records without red tape. Tip: Provide current copies to your doctors and loved ones.
- Insurance Policies: Life, disability, home, auto and long-term care policies should be stored in one spot. In an emergency, knowing who to call and what is covered is invaluable. Tip: Create a short insurance summary to keep in your household binder or digital vault.
- Statement of Net Worth: This is your personal balance sheet—a roadmap of your assets, debts and ownership. It is a snapshot that can help during tax time, financial planning or loan applications, as well as in the event of an unexpected accident, illness or death. We have this tracked for all of you. It’s great to provide to your attorney as things grow.
- Letter to Loved Ones: While not “essential” to managing your legal and financial affairs, writing a letter to your children or other loved ones can bring additional peace of mind and is a small way to leave behind a token of love and influence that your loved ones can revisit again and again. Take a look at Dennis’ past blog to help you get started.
As your financial advisor, it is helpful for us to have your estate documents on file so that we can: ensure your investment and financial strategies are aligned with your estate wishes; coordinate effectively with your attorney and CPA as needed; respond quickly and appropriately in the event of an emergency or incapacity; and help facilitate a smooth transition for your heirs and appointed representatives should the need arise.
NOTE FOR FAMILIES WITH YOUNG ADULT CHILDREN: Turning 18 brings new independence—as well as legal changes that can catch families off guard. Once a child becomes a legal adult, parents no longer have automatic access to their medical information and could experience obstacles to act on their behalf in the event of an emergency. This is the case even if the young adult remains on their parents’ health insurance or still lives at home. For these reasons, it is important to also have a conversation with young adult children about having their own HIPAA Authorization, Health Care Proxy, and Durable Power of Attorney.
