Your will should cover the disposition of your assets, name a guardian for your kids, name someone to manage property you leave to your kids, and name the executor of your estate. The executor is the person with the authority to see that your will is enforced.
In addition to a will, you may want to create a living will or advance medical directive. These are documents that let your doctors and caregivers know your wishes regarding medical care in the event of a major medical event where you may be unable to make your wishes known. To give your living will more power, you may also wish to assign medical power of attorney to your spouse or another loved one. Having someone acting on your behalf can help ensure that your wishes are followed.
You should consider creating a power of attorney for someone who can take over your financial affairs if you are alive but unable to manage them. You can assign someone either “durable power of attorney” or “springing power of attorney”. The former is automatically in place. The latter requires a court hearing to prove that you are not competent to handle your own affairs. A lawyer can help you decide which is right for you.
Finally, consider writing a “digital will“. This is a document that identifies all your online accounts at sites like Facebook, Flickr, and Myspace, and gives your family instructions about what you want done with them. It should include all relevant usernames and passwords. While not a legally binding document, this can be an invaluable tool for your loved ones to gain access to your social media accounts and manage them in the way you desire.
Organization
Once you’ve created these documents, you want to keep them organized in a simple, clear place where your family can easily access them should they need to. That could be in your file cabinet, with your attorney, in a safe deposit box. Wherever you do it, you should also make sure your heirs will have simple, organized access to your financial records and accounts, and any other important papers.
For most of us, these records aren’t just on paper anymore. Not only do I need to be sure my estate executor has access to my bank account numbers and 401K accounts; I probably want that person to be able to access those accounts online, too. They’ll need to get into my computer, and be able to access my Google documents and Mint account if they’re going to really make sense of my finances. You’ll want to include any necessary banking usernames and passwords with your important papers, along with your digital will.
Communication
When you’ve created your estate plan, tell your family about it. Be certain the person you picked to be guardian for your kids is willing to do it. Make sure your executor knows where you keep your will and other important papers. Let your heirs know what to expect from your will. All this will cut down on confusion and conflict after your death.
As you can see, doing all this requires having your financial and personal affairs in order. That effort will serve you well in your lifetime, as well as being a boon to your heirs when you’re gone.
The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems by Joan N. Feeney and Theodore W. Connolly
You've read stories of people becoming debt-free. In personal-finance blogs, the stories are always ones of debt problems overcome through hard work and frugality. Sadly, in the real world, that doesn't always work. For reasons like illness, divorce, job loss, economic downturn, business failure, natural disaster, war — some debts entered into in good faith simply cannot be paid back. (See also: CitiMortgage Told Me to Default on My Loan)
Feeney and Connolly's new book is about how to find the dividing line between these cases, and what to do once you know which side you’re on.
Money-Management Skills
The authors provide a good short course in money management much like you’d find in any personal finance book or blog — how to budget, how to cut expenses, and how to take control of your finances. Then the book starts talking about debt — mainly about the many, many ways to use debt unwisely. In particular, they’ve got a great chapter on the sort of debt that people with financial troubles turn to in a usually futile effort to stave off financial catastrophe for one more month — payday loans, car title loans, pawn shops, loan sharks, etc.
Even before that, they provide some basic advice on negotiating with your creditors. Especially in the world of finance as it is today, there are plenty of people who could actually fulfill their obligations — except that the creditors have written rules that let them lard up a debtor’s obligations with late fees and penalty interest rates. A knowledgeable debtor with good negotiating skills can often cut through those problems and get their obligations settled reasonably cheaply.
One bit in that section that I particularly like is on the psychology of debt collectors: Some will browbeat you, some will humiliate you, some will pretend to be your friend — but however they act, they’re all just trying to get as much money from you as possible. They don’t care what other debts you have or whether you can support your family. If you don’t understand this — if you allow yourself to imagine that the ones who act like friends are actually friendly — you’re going to be less successful in your negotiations. (I talk about the same psychological issues in my post Don’t Treat Businesses Like People.)
The authors provide some useful advice on seeking help (credit counselors and the like) if your financial problems are beyond what you can manage with those basic skills — and about avoiding the scams that often masquerade as help for people with debt troubles.
Sometimes, even with help, debt problems cannot be overcome. Specifically, if you can’t cover your minimum expenses plus interest on your debts and have money left over to pay down the principle on your debts, then you're over the line. Once you're in that situation, your financial situation can only get worse — your debt burden will rise every month, even if you don't borrow any more money.
When to Consider Bankruptcy
If you could support yourself — pay for your family’s shelter, food, and clothing — except that other obligations drain away more than all the rest of your money, then it’s time to consider bankruptcy.
Even if it’s time to consider bankruptcy, it may not be the best choice. Some obligations (child support, student loans) cannot be wiped out in bankruptcy. Alternatively, if you can’t even afford the necessities, then your household is not a viable economic unit and bankruptcy won’t help.
The core of the book is the information you need to figure whether bankruptcy is worth considering — and the information to consider it and make an informed decision.
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The Funniest Fox <b>News</b> FAILS (PICTURES)
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