Preparing for the Unexpected
Even though my husband and I are both fairly young and in great health, we've decided to get on the ball and get our wills done. Like many people, we've been putting this task off, but now it's time to site down and spend some time planning. After all, unexpected things happen.
I've been gathering information over the last couple months, but hadn't really sat down and done anything. This week, I decided to go ahead and figure out what we need to get done. Needless to say, I was a bit overwhelmed at first.
What I discovered is that we need to do a lot more than just create a will. Here's a peek at our to-do list:
- Revocable living trust
Most of this stuff was at least vaguely familiar, but I wasn't sure of all the details. Thus, I decided to look a few things up and answer some questions that had been bothering me.
We don't have any children, but since that's a possibility, I looked into that angle a bit. Of course, if you do have children, these things are even more important as you'll want to protect them in the event of your death.
It's never a pleasant thought, but having the appropriate documents in place can give you some peace of mind knowing that you've done all you could to take care of your family.
Having a will vs. a revocable living trust
I was surprised to discover that creating a revocable living trust was recommended along with a will. I hadn't really heard the term, so I decided to investigate. A last will and testament is a legal document that basically designates how your money and estate will be distributed after you die. You can also include your burial wishes and if necessary, you can name the guardian for your children.
When creating wills for couples, you can opt for mirror-image wills, where each spouse creates a nearly identical will in favor of the other. This is different from a joint will, where both spouses share one will. I found that joint wills can be more difficult after one spouse dies, which is the opposite of what we want. We would like to make the difficult process as easy as we can for each other.
A revocable living trust is a document that allows you to accomplish many of the same things as a will. A big advantage of a revocable living trust is that there's no need to have a probate court weigh in on things. I also discovered that you can include in your trust a plan for who would handle your assets should you become incapacitated.
Why have both? If you have any assets that aren't included in your trust, then your will serves as a backup to ensure that your last wishes are carried out.
Things to consider when preparing your documents
After deciding to create a will and/or living trust, there are still some issues that need to be addressed.
- Who are your beneficiaries?
- What property and other assets will you include?
- Who will serve as your executor?
- If both of you die, who will serve as guardian of your child(ren)?
My husband and I need to sit down and really talk about this. For example, we have to decide if our assets will be split between our siblings and parents, or if we should just include our siblings.
Other considerations: life insurance
My husband and I got term life insurance policies to cover expenses if one of us dies in the coming years. Deciding on how much life insurance you should have for the well-being of your family involves a lot of thought. That being said, there are some general rules of thumbs that you may want to consider.
- What is the life insurance for? Do you intend on supporting your family off the proceeds? Do you want them to pay off the mortgage? What about leaving behind a cushion of some sort?
- Do you have a life insurance plan with your employer? Some jobs offer a small life insurance policy at no cost to employees. Check with your Human Resources department to see if you already have at least a bit of coverage.
- What's your annual income? Insurance companies often give ranges of 8-12x your annual income. If you know your family's needs, simply choose a multiple that makes sense for you.
One final thing... Make sure you keep the documents in a safe location. Be sure that your executor and spouse know where they are so they can easily find them if something bad happens.
Thoughts on preparing for the worst
Preparing for your demise takes time, but doing so will ease the pain and stress for your loved ones as they go through a very difficult time.
If you're looking for more info, here are some resources that I found useful:
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