Get Your Financial Affairs in Order

by Bethany K. Laurence, J.D.

Taking the following steps will help your family if you die or become incapacitated.

1. Make a financial power of attorney.
With a durable power of attorney for finances, you can give a trusted person broad authority to handle your finances if you become incapacitated and unable to handle your own affairs. This person is called your agent or attorney-in-fact (but doesn't have to be an attorney). For more information, see Durable Financial Power of Attorney: How it Works.

2. Protect your children's property.
You should name either a property guardian, custodian, or trustee to manage the money and property you leave to your minor children. (This can be the same person as the personal guardian you name in your will). For more information, see Leaving an Inheritance for Children.

3. Consider life insurance.
If you have young children or own a house, or you may owe significant debts or estate taxes when you die, life insurance may be a good idea. For more information, see Do I Need Life Insurance? and Using Life Insurance to Provide for Your Children.

4. Name pay-on-death beneficiaries.
Naming a beneficiary on a form provided by your bank or retirement plan administrator -- not in your will or trust -- makes the account automatically "payable on death" to your beneficiary and allows the funds to skip the probate process. Likewise, in almost all states, you can register your stocks, bonds, or brokerage accounts in this manner. In a few states, you can transfer your vehicles this way, too. For more information, see How to Avoid Probate.