Wish you had a financial game plan tailored to your priorities, lifestyle, hopes and dreams? You can start with this sneak peek excerpt from “Financially Fearless: The LearnVest Program for Taking Control of Your Money,” the new book from LearnVest C.E.O. and founder Alexa von Tobel, CFP®. Available to order today, so you can be one of the very first readers!
Today’s excerpt focuses on the key financial documents that everyone should have—making it the perfect latest installment in our 12 Days of LearnVest series. So today’s challenge is twofold: It’s time to take stock of the critical financial paperwork that you don’t yet have—and arrange to get it as soon as you can.
You thought insurance was the least fun topic we could discuss … but now we break out the list of documents you need! Woo-hoo!
Sorry, we have to. You can’t call yourself fully protected if you don’t have your critical paperwork done. Below are the six things you need to have under control.
1. Beneficiary Forms
A beneficiary form lets you indicate whom you would like money to be transferred to upon your death—even if you don’t have a will. If you have any of the following account types, you’ve likely filled this out already: a 401(k) or retirement accounts through work, life insurance policies, IRAs, annuity accounts, and 529 college savings accounts. If you’re married, it’s common to list your spouse as your beneficiary (and if you want to do otherwise, you may be required to have your spouse sign off on that). This saves you money because it keeps your assets out of probate court.
What to do: Ask for a copy of your beneficiary form for each account and make sure it’s properly filled out. Save your own copy.
2. TOD/POD Instruction
TOD (transfer on death) and POD (payable on death) are other ways you can transfer assets to a beneficiary without a will. TODs are typically used for any brokerage accounts that do not have a beneficiary form in place, and PODs are for bank accounts (like your checking and savings). Having these forms allows you to avoid probate even if your financial situation does not yet require a full-blown will or trust.
What to do: Make sure all accounts that do not have a beneficiary form have a TOD or POD instruction in place.
3. Living Will
A living will lets you communicate your medical preferences to your loved ones. This is awful to think about, but it helps simplify any tough decisions your family and friends may have to make if something happens to you. A living will includes naming your health-care proxy—the person responsible for carrying out your living will. We recommend choosing a loved one or even an unbiased adviser who can remain neutral.
What to do: Staying in control of your health-care decisions is a powerful tool, so make sure you have an up-to-date living will.