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Financial Education for Everyone

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May 25, 2007

Father's Day is almost upon us. This year, along with the traditional necktie or dozen golf balls, why not give your dad something that will make him feel like he's truly taking care of his family and watching out for their future – a financial and medical planning check-up.

Here's a checklist of some of the documents your father (and every other adult) needs to ensure he's protecting his family against expected and unexpected events:

A will. Surprisingly, over 50 percent of Americans don't have this crucial document. Without a valid will, many decisions about who will inherit your assets, how your estate will be managed and who will care for your minor children will be determined by the state, despite your preferences.

Do-it-yourself will kits are available online and in book stores, but if trusts, complex estates or large amounts of money are involved, use an attorney specializing in estate law to draw up the will. The American Bar Association provides a state-by-state guide for locating a lawyer, including free legal assistance for low-income people (www.abanet.org).

Trusts. Many people supplement their will with a revocable living trust, which is a way to pass property on to heirs without having to go through probate (an expensive and time-consuming process where the courts administer your estate). Hire an attorney to help draft your trust and be sure to add an “incapacity clause,” which allows someone you designate handle your affairs should you become ill or injured and can't speak for yourself.

Beneficiary forms. Have your dad round up beneficiary designation forms for any pension plan, 401(k), IRA, living trust, life insurance or other policies he has that will pay benefits upon his death. Many people assume that all such benefits will automatically be paid beneficiaries of their will, but that's not always the case.

Make sure he's signed the forms and that they still represent his wishes. For example, if he's divorced, remarried, or has had additional children in recent years, he may wish to fill out new beneficiary forms.

Durable power of attorney. This document specifies who will have legal authority to manage your assets and financial transactions if you become incapacitated and are unable to do so yourself.

Medical care documents. A health care proxy (also called a health care durable power of attorney) specifies whom you want to make medical decisions for you if you're unable to. Similarly, a living will (or health care advance directive) tells doctors your wishes regarding which medical treatments and life-support procedures you do or don't want.

There are dozens of variations on these and other legal documents you may want to discuss with your dad. AARP offers detailed information on its Web site (www.aarp.org/families/legal_issues), including an extensive glossary of legal terms.

Practical Money Skills for Life, a free personal financial management site sponsored by Visa Inc., is another good resource for information about planning for the unexpected (www.practicalmoneyskills.com/unexpected). As always, consult a financial professional regarding your particular situation.

While you're at it, help your dad create files for all important financial and medical documents so you'll be able to deal more effectively with any crisis that may arise and not waste valuable time searching for paperwork.

As a dad myself, I can tell you a little help with financial planning is a much better gift then a tie.


This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.