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Essential documents you should have

Posted July 03, 2013 in Advice Column, Urbandale

Here are six legal and financial essentials that every person should have:

A last will and testament directs the distribution of your assets upon death. Without a will, your property will be distributed according to state laws. This may not be the division you want and it could be costly for your heirs to adjudicate. Your will leaves assets to your chosen beneficiaries, names a guardian for your minor children and appoints a person to carry out your wishes.

Surveys show that more than half of American adults do not have a will; more than 40 percent of people age 45 or older do not have a will, according to a recent AARP survey. If you already have a will, remember to review it every few years or after a life-changing event such as a marriage or birth.

When drafting a will, you should also draft a durable power of attorney. This document gives a spouse, family member or trusted friend the ability to help you with your finances should you become incapacitated.

If you are too ill to speak for yourself, you can express your wishes through a living will. This advance directive lets you detail your preferences for your care. Without a medical directive, difficult decisions will typically be made by a spouse, children, parents or a doctor — and conflicts can easily arise. A living will should be accompanied by a health care power of attorney, which nominates a specific person to make any and all medical decisions for you. The two work together; your appointed agent must follow the instructions you leave in your living will.

Although some employee benefit plans provide life insurance, it may not be enough. One rule of thumb is to have insurance equal to at least five times your annual income. Of course, the actual amount will depend on the future financial needs of your dependents and the amount of savings you have.

Social Security Administration studies show that a 20-year-old worker has a 30 percent chance of becoming disabled before reaching retirement age. Can your savings cover you for a long period without income? If the answer is “no,” disability insurance is crucial. It protects a certain amount of your income if an accident or serious illness keeps you from working for months or years at a time.

Contact an experienced attorney to start the process of updating your estate plan.

Information provided by Ross Barnett, attorney for Abendroth and Russell Law Firm, 2560 73rd St., Urbandale, 278-0623, www.ARPCLaw.com.

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