Get your paperwork right, now! – Wills, Beneficiaries, Living Wills, POAs and more

Aug 28 / Jay Zigmont, PhD, CFP®

Many people say they are too young to think about a will and other paperwork. In our current political climate, it is more important than ever to make sure you have all of your documents in top shape. In particular, if you are Childfree, single, a couple who is not married, an LGBTQIA+ married couple, or in a group, you need to get your paperwork done now. If you don’t get your paperwork in place, you are counting on the state to make decisions for you, which may not match your wishes.

To start, your paperwork does not have to be complex. You most likely don’t need a fancy trust, high legal bills, and stacks of paperwork. What you do need is to check a series of boxes, and to do it in a compliant manner. I will walk you through exactly what you need (and why), but for most of my clients I send them to a simple service, Trust & Will. For $159 (single) or $259 (couples) you can get all of your paperwork done, and then you just need signatures (and witnesses or a notary depending on the state). NOTE: I do not receive any referral or affiliate fees from Trust & Will as I am a fee-only, advice-only CFP® professional. You can use other services, I am just familiar with Trust & Will.

Before you dig into actually filling out the paperwork, here are some things to consider:

  • What do you want to happen to your estate after you die? You can choose anyone to get your estate, or a combination of people and places. You can also change this later. For many couples your might use a simple “I Love You” will that passes your estate to your partner, but then you need someone or somewhere for your money to go if you are both pass.
  • Who do you need to take care of after you die? My wife and I need someone to take care of our animals after we die. Who is counting on you and who can you count on to take care of your animals and people after you die?
  • Who do you trust? You will need to appoint someone to make decisions for you. If you don’t have someone you trust, you may be able to pay someone to be your trustee and fiduciary (more on this later).
  • What are your medical wishes? You need to be sure to explain exactly what you do (and don’t) want done in case of a medical emergency. For example, my mother does not want extraordinary measures (no machines) while my father wants every machine in the world.
  • What accounts and ‘stuff’ do you have? You will need to do a bit of an inventory of everything you own and make sure your beneficiaries are set appropriately. It is a good time to do some house cleaning with your accounts.

Understanding the paperwork:

Last Will and Testament (commonly known as a will)

A will outlines exactly what you want to be done with your possessions, dependents, and arrangements after you pass. Wills can be very simple, or extremely complex. From a financial standpoint, your will handles all of your money and accounts that do not pass on death (for more, see the section on beneficiaries below). You appoint an executor (or executrix) to carry out your wishes. The best practice is to have both a primary executor and a back up (or secondary) in case that person is no longer alive or can’t do the tasks.

If you don’t have a will, the state will follow its own process for your possessions. Each state has its own quirks, but the first stop is usually any next-of-kin. As Childfree people, we break the system. Some states will then shift the money to your siblings or parents. At some point, the state may just not be able to find someone to give your stuff to, and they will just take it themselves. I don’t know about you, but for me, the idea of the state taking all of my stuff is just not acceptable. Hence why you need a will.

Writing the will itself is not complex. It is effectively fill in the blanks with what you want to happen with your stuff, animals, or anything else you are responsible for. You will need to decide what you want to do with your money. Keep in mind it is YOUR money, so no one else gets a vote. You DO NOT have to give it to family, or you can. You can donate it to your favorite park, university, pet shelter, or a good friend. You can change your will at any time, so it is not a permanent decision but you need something on paper now.

Each state has its own quirks for how the will must be signed. Some want 2 or 3 witnesses, while others want a notary. Your local bank may offer notary services (who may also be able to be witnesses). If your bank can’t help, shipping centers (like a UPS store or PakMail) often offer notary services for a reasonable price. Keep both a physical copy of your will and an electronic version. Also, make sure the executor of your will has a copy.

Beneficiaries and Transfer on Death (TOD)

A will needs to go through probate in your state, which can be a lengthy and expensive process. To get around this, you want to make sure all of your accounts have appropriate beneficiaries or other designations to transfer on death (TOD). For example, if your 401k has a beneficiary, when you die it automatically becomes theirs and does not need to go through the will or probate (it may still need to be accounted for in estate taxes but that is beyond this discussion).

You want to go through all of your accounts (bank, retirement, insurance, house, etc.) and identify both a primary and a contingent beneficiary (or beneficiaries). For example, your spouse might be your primary beneficiary and the national park service as your contingent beneficiary.

Make sure to check and update your beneficiaries each year. While nothing might have changed, you do want to make sure your accounts still have the right information. It is also just a good habit to check each year. There have been numerous nightmare situations where an ex was listed as a beneficiary and never changed. Once you die, there is no way to change it.
With some accounts, you may not be able to specify a beneficiary but you may be able to set it up to transfer on death. For example, many bank accounts might be owned by you, but then say TOD John Doe, which means it is passes to John when you do.

Living Will (or Healthcare Directive)

Each state may call a living will or healthcare directive something different, but the bottom line is that it is a document that outlines your medical wishes. The big question of course is if you want to live on machines or not, but you can specify a wide variety of wishes. Your living will is the guide for what you want to be done if you can’t make decisions. You can specify what procedures and medicines you do or don’t want to take. The same goes with if you want to be an organ donor and more. Your primary care doctor may be able to help you through some of the decisions and documenting them appropriately.

The challenge for Childfree people again is that the healthcare system assumes there is a next-of-kin. Without a next-of-kin or a living will, doctors will use their own judgment and protocols to make decisions for you. Instead of relying on a doctor to make the decisions, in your living will you appoint someone to be your Healthcare Proxy or Medical Power of Attorney. This person makes sure that your living will is followed and makes decisions for you when there are things outside of your living will.

If you are in a couple or group but not legally married, it is very important to make sure you have a living will and that your spouse is appointed as your healthcare proxy. You could have been with someone for a decade, but without the paperwork, in the eyes of the hospital, they are only a friend and have no power. Make sure your healthcare proxy has both a printed and electronic copy of the document and that it is on file with your doctor.

Power of Attorney (durable, springable, etc.)

A Power of Attorney (POA) allows someone to act on your behalf. There are often two types, a medical POA and one that covers everything else (including finances). The important thing is to have someone you can count on to make your financial (and other) decisions if you are incapacitated. You will hear this called a durable POA, which also may be ‘springable’ (which varies by state). For example, if you have a stroke and can’t make decisions, the POA can then make decisions for you, including paying your bills, all of your finances, signing forms for you, and the like.

There is a level of trust needed here as either you need to limit a POA (which is possible but may not allow them to do what is needed) or allow them to do everything. Once again, if you are in a long-term couple but not married, a durable POA is a must. They need to have a copy on hand at all times as you never know when they will need it.

In case I die file (an I Love You File)

In addition to all of the legal paperwork, you need to build an In Case I Die (or an I Love You File). That file needs to include:

  • All legal documents
  • All of your insurance, bank, and financial information
  • Any passwords that might be needed
  • Location of any valuables or other important items
  • Caring instructions for your pets or others
  • Any of your last wishes

Let your executor know where this file is or give them a regularly updated copy. Make sure you have both hard copies and electronic versions of everything. The nightmare situation is if you only have hard copies of your paperwork and then your house blows away in a tornado. Also, keep in mind that if you put all of your paperwork in a safe deposit box and don’t give it to your executor or POA, they may have to go to court to get access to the safe deposit box and paperwork (quite a nightmare).

A special note for LGBTQIA+ couples:

With the recent Roe decision, there is a considerable concern that same-sex marriage might be at risk. To that end, you need to make sure you have all of the documents above, and not just rely on your marriage to cover things. For example, right now the hospital may allow your married spouse to make decisions for you, but that could go away overnight. Get your paperwork done now.

A special note for if you do not have someone you trust to take these roles:

It is common for Childfree people to not have a next-of-kin, family, or friends that they would trust to be their executor or POA. In some cases, this may just be that they don’t want to be a burden on those people. If you don’t have someone, you can pay someone to do these tasks for you. Look for a fiduciary and trustee. Commonly this would be provided by local attorneys or banks. You don’t need a trust, but you need a trustee. A trustee would follow your wishes in your will, living will, and other guiding documents. Look for someone you pay on an annual basis to be that person (effectively you are paying them to be ‘on call’ if something happens to you). Only hire someone who is a ‘fiduciary’. That means they legally have to put your interests ahead of their own and will be registered with the state or federal organizations.

Don’t forget to do the same for your parents.

While you are doing your paperwork, don’t forget to help your parents and other loved ones with theirs. In addition to all of the paperwork above, you may want to make sure you are listed as a “trusted person” on their accounts. Many financial institutions offer to list a trusted person that they can call if anything seems ‘off’. This is very important if there is a case of elder abuse, diminished capacity, or something like that.

Talk to an attorney – Nothing here should be considered legal advice. The information is provided only for educational purposes and you should seek your own counsel.

If you would like help with the financial components of your documentation, I’m here to help. I am an advice-only, fee-only, fiduciary, CERTIFIED FINANCIAL PLANNER™. You can book a no-cost introductory meeting with me at https://calendly.com/coachdrjay/childfree