we hadn’t planned to write this post this week (or anytime soon), but last week, claudia of two cup house posted on some things that her father’s sudden passing made her realize she needs to do. the same day, the adventure sports world got news that yet another prominent athlete died, leaving behind a wife and two young children. news like this tends to hit ski towns like ours especially hard, and it’s sadly not a rare occurrence. the subject of how our society glorifies extreme athletes, encouraging others to take greater and greater risks, is a subject for another day. but the confluence told us that we needed to share how we plan for the worst while hoping for the best.
of course we hope we live super long lives. i want to live to be 100, or at least 90, and while the mr. doesn’t share my lofty age aspirations, he wants to make it to at least 80. (i don’t know what he imagines i’ll do during those 20ish years without him… perhaps we can persuade him to stick around a couple more decades to keep me laughing.) that means that we need all the money we’re busily squirreling away to last a good long time, like 60+ years, and we’ll likely stay well under the four percent safe withdrawal rate to make sure that it does, in addition to having back-up plans in place.
but while we enthusiastically plan for a long future, we also make sure that we have everything in order should the unthinkable happen, and something tragic befall one or both of us. i had the experience of helping someone move out of a house packed to the gills with a lifetime’s worth of stuff, and it was one of the hardest things i’ve ever had to do. it’s something i don’t ever want someone to have to do for us, and that thought motivates us to keep clutter from piling up in our home. likewise, if we’re incapacitated by an accident, we don’t ever want anyone to have to make hard choices on our behalf, or question our wishes, and so we’ve tried to make things as easy as possible for whoever might be left behind.
at the ripe old age of 36, i believe i’m on my fourth or fifth will. (yes, i definitely got some weird looks in the college dorm when i asked some friends there to sign as witnesses on my first one. but i had to make sure my nine inch nails cds went to a good home!) the lesson to take from this is not that i’m a weirdo (although you wouldn’t be wrong about that), but that doing a will or any of the other documents included in our estate plan is not hard. it’s also not expensive, or it doesn’t have to be. there are great, legally enforceable tools available on sites like nolo.com, for very reasonable rates. we’re big fans of their willmaker plus software, which includes all of the docs we mention here. here’s what’s in our estate plan:
will — our will is pretty straightforward, since we have no children and don’t plan to. we live in a state with rights of survivorship, so the will isn’t really necessary if only one of us dies — the surviving spouse will just keep all assets. but if we both die, we designate the relatives and charities that our assets are to be divided among. we will likely decide in the future to establish a living trust, which would avoid probate court for surviving relatives and have some tax advantages, but it’s a bit more costly and we haven’t done it yet. at least the will is clear and simple, which minimizes any potential disputes (not that we think our families are the types to dispute a will, soap opera-style.). we review our will periodically and update it when we want to designate additional beneficiaries (like our niece and nephew, who weren’t born when we first did our will).
durable power of attorney for finances — if something should happen that renders us unable to make decisions for ourselves, we’ll want to be sure our finances are in the hands of someone we trust. a durable power of attorney for finances does that.
health care directives — our health care directives cover health care decisions if we’re not able to make them for ourselves, and include an advance directive and another power of attorney. we each have an advance health care directive, or living will, which specifies our preferences on difficult subjects like whether we want to be resuscitated or be placed on life support, or whether to donate organs, so that loved ones don’t get put in the position of having to decide at what would be an extremely stressful and emotional time. we also have durable health care powers of attorney, which designate who is authorized to make health care decisions on our behalf if we can’t make them for ourselves. the power of attorney docs have contingencies, so we each have the other listed as the primary designee, mostly to have ourselves doubly covered, in case the hospital doesn’t believe that we’re married because we have different last names. if something happens to us both, our contingent designees would then step in to make decisions on our behalf. note that health care directives don’t enforce themselves, so it’s critical to make sure that trusted loved ones have notarized copies, know to provide them to the hospital if something tragic happens, and know that they may need to push to have them enforced.
final wishes — the will, power of attorney docs and health care directives are all legal documents. they are written to comply with laws and legal standards, and they are not inclusive of everything we would want to happen should we die sooner than we intend to. to cover everything else, and to convey our thoughts to loved ones, we have prepared non-legally binding final wishes documents. these cover things like our funeral preferences (mostly that i want a marching jazz band and a second line), notes on assets loved ones would inherit, notes on pets, and some of the mushy stuff we want to be sure people know if we don’t get to decide what our last conversation with them is like.
life insurance — we each have two term policies: one through work, and one through usaa. our work-provided life insurance is what we think of as our income back-up, and would be sufficient to let either one of us retire right away if the other died, which is what we both want for the other. our usaa term policies go until we’re in our late 50s, at which point we’ll probably let them expire. until then, we keep them to cover health care expenses that would likely accompany any accident or extended illness that would lead us to die young. there is legitimate debate about whether or not financially independent people need life insurance, but we feel like term insurance is cheap enough to not be an issue. whole life or universal life, though, is another story, and we stay far, far away from those.
other insurance — we currently have employer-provided long-term disability insurance, but since that’s something that just replaces income, we almost certainly won’t buy that on our own once we quit. what we may very well buy, though, is long-term care insurance, which would cover a stay in a nursing home or rehabilitation center. we’ll update you on that one in a few years… ;-)
this is one of those subjects that’s hard to talk about, and not exactly uplifting to think about, but for people like us who are planners by nature — which we assume applies to 99 percent of fire bloggers — it only makes sense to put a little thought into your estate plan. for us, it’s not even about our “estate,” it’s about making sure that we aren’t ever a huge pain in the ass for people left behind. cleaning out a house full of stuff, or dealing with complicated finances with unclear direction, is not something we ever want our family or friends to have to do on our behalf. and there’s huge peace from knowing that you’ve got everything in order, and won’t leave a mess behind.
have you done any planning for the worst? anything we should add to our list? have you found a better solution than the nolo site or products to do estate documents inexpensively? please share!
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Categories: the process
I applaud you for having a will! So many of my friends don’t- even ones with kids! My employer even offers a legal service benefit which essentially lets you meet with a lawyer and get a standard will for free… and only a little bit more if you want to set up trusts or anything more complicated. I’ve seen too many people die (both young and old) who didn’t properly plan, and left their families in immense grief trying to sort out life and finances… its so much better to admit that one day we will all die, and try and shield our love ones from extra stress when they already have so much to grieve.
How cool that your employer offers that — although NOT cool how they’ve been stretching out the layoff question. Boo, bad employer!! And I love how you put it — having plans and legal docs in place shields your loved ones from a lot of the awfulness. It’s worth getting over the morbid side of estate planning to shield those we love, and allow them to grieve instead.
I’m a bit embarrassed to admit that I just recently learned about long-term care insurance, but it seems like a really good idea. It was probably not on my radar because none of my family members have had enough foresight to buy such insurance. A financial planner told us that the best time to buy this insurance is during your 40’s or 50’s, so I think we’re safe in continuing to focus on our debt for the time-being.
That’s not worth being embarrassed about — MOST people don’t know about long-term care insurance! And we’re not even sure it’s necessary. It’s just something we’ll think about when we have more time on our hands! :-)
UGH! It’s totally on my list and with kids, I really need to stop being a terrible parent and get a will together. At least we have life insurance! THIS MONTH… I will do it! Also, advanced directives are so important! Oregon requires them now, which is so smart. I work a lot in healthcare research and we are NOT good at planning for the end in health, finances, or emotions. (And I’m a terrible example with my lack of a will.)
It doesn’t make you a terrible parent, but probably good to go ahead and do a will. :-) Seriously, with some of the online products, you can crank one out in a half hour, and then spend more time and do a revised one later. Something is better than nothing! We’ve also heard some horror stories having to do with lack of healthcare directives, which got us off our butts on those. :-S
PS – I just came across this great little video talking about advance directives. Thought it might be pertinent: https://youtu.be/bbYhRUIMAhk
Thank you for sharing, Maggie!
I think it’s great that you’re organised, and given that this is one of the areas I specialize in at work from an accounting/tax perspective I speak from experience when I say that it is often neglected.
I was amazed to find out a few weeks ago that a client with a net worth of over $30m didn’t even have a will. And then a staff member came to see me yesterday to discuss getting a will for his father who is on his deathbed with cancer.
There’s no doubt that it can be a grim topic, but it certainly does pay to be prepared!
Holy moly — no will and $30M?! I think the subject is much MORE morbid if you don’t deal with it until you’re sick. But dealing with it when you’re young and healthy, and death is this abstract concept, is much easier. Such a shame that so many people don’t want to think about it, and risk leaving things in disarray or not having their wishes honored!
Yeah, even with $30m+ of net assets he said that they didn’t think there was any point in making a will. They’re sceptical about whether they achieve anything, but they’re coming around to our way of thinking (slowly). And I found out today that his wife is having a health scare so that’s quite ironic.
Wow — that’s so shocking to me! But then again I did my first will when I had a negative net worth, so clearly I just think differently than they do. I’m surprised even the though of people having to go to court and fight about the assets doesn’t motivate them!
So important to have a plan, because you just never know. I think is just as important for families to discuss wishes openly and honestly so if the unexpected happens there are no surprises.
I couldn’t agree with you more! And so much better to discuss those wishes before someone gets sick and it becomes too sad and stressful to talk about.
I love that you took on this topic! I’m tackling this next month (from a writing and actually getting my life in order perspective), but luckily, after a quick glance at my work insurance, and my no-debts-or-dependents-except-the-dog thing, I’m covered enough that if anything catastrophic happened in the next three or so weeks, I’d be OK. I also think it’s great that more people are talking about these things, because they’re important for *everyone* to know about – so much of the advice can centre on the importance of life insurance if you have kids, and there’s so many other facets to the discussion. I know my intention of creating a will to make sure my dog’s guardian gets a certain amount of money to pay for vet costs and food for his hopefully long full life might seem trivial, but hey – it’ll save some people a lot of time and heartache down the road if I put it in writing now and the worst should happen!
Oh I totally get wanting to make sure your dog is cared for! My second will was all about the dogs, accompanied by a lengthy set of final wishes all about the dogs. :-) Now they are one of several items, but no shame in looking out for your family, even if that family is mostly of the canine variety! Look forward to reading your post on it!
This is a really important topic and something we’ve been slacking on. I’ve thought about it many times over the last few years and it keeps getting put on the back burner. We’re going to make it a goal to create a will by the end of the year.
That’s a great goal! And don’t overthink it. It’s not permanent. Having some will and healthcare directives than having none at all, and you can always update them later. :-)
Thanks for the mention! With my dad’s passing and the craziness that comes with NOT having a will, I did not want anyone else to have to shoulder such a burden. Thanks to your comment, we had a ton of resources and knowledge to consider. The appointment with the lawyer to put together all of these docs is the 19th–literally cannot wait for this. And we’re covered on the insurance front now, so I’m starting to feel a little better now. Thanks again for all your help!
I’m so glad we could help, if even a little bit. I know in our case, having all of those documents in place gives us HUGE peace of mind. :-)
Making a will is not something that is already on my mind. Maybe it should be…?
I do’t have one for now, as I think all arrangements are in our wedding contract, and I have a fairly good idea of what the wife/kids will get. I am happy with that.
Reading your list, there are indeed quite some other topics I would need to cover…
You raise a point that we hadn’t considered — that of course different countries will have different laws and procedures for these matters. I know nothing of Belgium’s legal system, so don’t know what documents you need to have in place. But the larger point is: don’t wait until it’s too late to think about what you would want to happen if something tragic happened to you.
It is amazing that at your age you already have these things in place. I wished our parents would read your blog. Two quick stories:
– My 79 year old father in law just got out of the hospital yesterday after 7 days. He has numerous health issues. They did not know if or where they had advanced directive.
– My step-father at age 80 does not have one. This is after my mother needing full time care in a nursing home over two years ago. We try to approach the subject with him, receiving push back each time with him saying he will get around to it someday.
Wow — so sad to hear stories like that. Everyone will meet their end one day, and having the docs in place protects your loved ones — they don’t hasten your demise! Thanks for sharing, Bryan!
Took care of most of this a few years ago after we were married. Our employer offers an EAP (employee assistance program) so we were able to get our wills and PoAs done for free. We paid about $140 to create and file a quitclaim deed which would just seamlessly pass the house to my wife when I go (I bought the house years before meeting her). I think about adding a Living Revocable Trust someday but don’t see it as mandatory right now – we each have our beneficiaries designated on all accounts possible which should sidestep probate for the vast majority of assets.
A tragic end would’ve been messier a couple years ago since my wife is German and until recently was still technically employed by the GmbH (not the US LLC) but we’re unraveling all the foreign accounts now to hopefully make things easier in the future. In fact we get a lovely free flight this month back to Germany to wrap things up – no other expenses paid and we have to take vacation but better than nothing to see family and friends.
Wow, what a nice EAP benefit! Though we did ours with NOLO software, so didn’t pay much anyway. But free is always better! ;-) And I agree on the trust question. It’s nice to have, but not critical and not necessarily worth the expense at the current time. Have a great trip to Germany! I’m jealous. :-)