(3 Minute Read)
Do you have a specific plan in place for your end-of-life care? Or how your family will be cared for after you pass? Many people put off such tasks because they find them unpleasant, but in order to assure the comfort of you and your loved ones, it’s important that you legally document your wishes. Today, we’ll cover several of those documents and their differences.
Advance directives refer to a variety of legal documents and actions that detail the medical decisions a person would want in the event they are unable to communicate them due to illness or incapacity. These advance directives must comply with state requirements and must be in writing. You can change these directives whenever you wish. For more information, the National Institutes of Health has drawn up this comprehensive guide.
A living will is a type of advance directive. It is the oldest form of advance directive, having been first proposed in the late 1960s. Due to increasingly advanced medical technology, a person’s life was and often is prolonged by use of feeding tubes, mechanical ventilation, dialysis, and more. Quality of life is sometimes compromised by these treatments, and the financial toll is often burdensome. Living wills allow a person to specify the kind of treatment they’d like to receive in situations such as these. A living will often names a medical or health care power of attorney that is authorized to act on your behalf and to carry out your specified wishes. Read more about living wills at the Mayo Clinic.
When you create a trust while you are still alive, that is a living trust. You will act as trustee and beneficiary until you pass. At that point, whoever you have appointed to be trustee will take over. A trust can include cash, property, and investments, and you can legally specify how and to whom these assets will be disbursed. The benefit of a trust over a will is that your assets are controlled even after you pass. They are, however, a little trickier to set up than a standard will, but someone with a wealth of assets should strongly consider creating a trust. Not sure if a trust is right for you? Read more about trusts and wills on Forbes.
While planning for end-of-life care is no one’s favorite task, it’s a necessary undertaking that will provide guidance and comfort to your loved ones. Consider which assets to pass on and which you can transition and use now. If, for example, you have an unwanted or unneeded life insurance policy, you have the option of selling it in order to cease regular payments on the policy and obtain a cash amount higher than the policy’s cash surrender value. Invest these funds on behalf of a grandchild or use them to travel. As always, talk to your trusted financial professional before making any decisions.