The following is a guest post from Joe Saul-Sehy who blogs at the creatively-named Average Joe’s Money Blog and is co-host of the 2 Guys & Your Money Podcast. When he isn’t reading Modest Money, Joe spends his time running marathons, playing board games, and following professional baseball. If interested in submitting a guest post, please read my guest posting policy and then contact me.
Back in “the day” I shared a hi-larious estate planning joke with my clients: if you know what day you’re going to die, wait on getting your will until then (because any time before that is a total waste of cash). If you don’t know, do it now.
I know, hysterical, isn’t it?
Good news. We now have certainty. You’re going to die tomorrow.
The Mayans have predicted (some say they didn’t but that’s total hogwash) that the world is going to end on December 21. That means we know exactly the day you’re going to die.
We’d better get working. Before I introduce you to estate planning, here’s a quick caveat: I’m not an attorney, and I don’t know your particular situation. I just know that there’s doom on the horizon, so let’s outline the basics.
Here are the basics of a good estate plan:
Will – A will tells the court where your things should go. The phrasing there is important. “The court” will direct your assets with a will. If you want to eliminate court involvement, you’ll need a trust.
Executor of your will – this person has many titles, but in essence, it’s the person who’s going to quarterback your estate. I’ve read about people who couldn’t decide who to have, so they chose two people to split the responsibilities. Don’t. If they fight at all (and it’s never about anything really important), your estate will be held up and could be drained by court costs. I witnessed one family fight over mom’s antique chair (mom had a $1.4 million net worth). Chose one person. Chose someone who is comfortable being seen as a jerk by the rest of the family. Your goal is to get it done.
Durable power of attorney – This allows someone to take care of your financial transactions if you’re laid up in the hospital or otherwise unable to take care of them yourself.
Patient advocate designation – This is the person who will speak with doctors on your behalf if you’re unable. If you have a medical pro in the family, that’s the perfect person.
If you have kids, a guardian and conservator – Although these are technically two different roles, many people have one person handle their children and their children’s money. However, I had some clients who had friends who were great with kids but money slipped through their fingers. Therefore, they had a different person handle the money. It’s okay (and maybe advisable in that situation) to have two people, but realize, these people will absolutely hate each other. The guardian will need money and the conservator’s job is to question every expense.
Those are the basic pieces of an estate plan. You may need more than these, but you should check with an attorney to find out.
Hey, Wait A Minute!
I just realized that if the world ends tomorrow, all of your beneficiaries will die, too! Problem solved! You don’t need any of this stuff!
…that is, unless those non-believers are right and the world doesn’t end tomorrow, in which case you should complete your estate plan right away (unless you know when you’re gonna die, then just wait till the day before, because sooner is a huge waste of cash…)