Financial Literacy for Everyone
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Estate Planning

It's hard to think about, but no one lives forever. Putting the legalities in place will make it easier for your loved ones in the event of your death.

Wills

A will is the first step in estate planning and should be at the top of your "to do" list. After you die, the provisions of your will determine who will inherit your property, who will become the guardian of your children, and who will wrap up your financial affairs.

Trusts

A trust allows you to have more control over the money you leave to someone than does your will. For example, if you leave money to a young child, it can be put into a trust and used only for education. Or the money could be disbursed to the child when he or she reaches the age of 18, 35 or even 50. A trust also protects the money from creditors since it cannot be taken from the beneficiary to pay debts. You can control the type of account where funds are deposited how it is invested.

Powers of Attorney

If you are unable to make legal decisions because you are somehow incapacitated, someone will need to make these decisions for you. You need to decide who this person will be in advance. This is called giving someone power of attorney.

There are two main types of powers of attorney. A durable power of attorney gives a person, or people, authority to manage your finances and other legal affairs for you if you are not capable of managing these yourself. It can be long-term or short-term and allows the party who has power of attorney to use your money to take care of you, sign your tax returns, handle your investments, and other important matters. The power of attorney can be effective now, or be a springing power that becomes effective only upon your incapacitation.

A healthcare directive is a power of attorney that allows the person you designate to make healthcare decisions for you if you are unable to make those decisions yourself. For example, someone holding power of attorney can decide on heath care options. It gives them "unequivocal authority" to take "extraordinary measures,” and possibly even ask doctors to turn off your life support systems if he or she feels that is what you would have wanted.

Living Will

A living will is a clear statement about your wishes regarding artificial life support. If your brain is dead and your body remains functioning only with the help of life support, a living will directs attendants in what choice to make for you.

Directions To Your Executor

These "directions" are similar to a will except that they deal with items of smaller value. Through this handwritten letter -- it must be handwritten and signed -- you can designate your executor who you wish to inherit such items as dishes, art, photos and other heirlooms. This letter should be referenced in the will.

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