Advance-planning documents can help ensure that all your financial and medical wishes are carried out to the letter. This is especially important when Alzheimer's disease and dementia come into play. It's essential to draw up these documents -- and update older ones -- while you still have the decision-making capacity to do so. If you don't have the appropriate documents, a court may step in and appoint a guardian for you. Because of the differences in state law and the complexities involved in ensuring that your instructions are airtight, see a lawyer for help in drawing up these documents.
Power of attorney for finances. This legal document allows another person to manage your finances on your behalf. Naming a competent, trustworthy agent is essential. Many seniors designate a family member for this task. You can build in checks and balances by requiring that the agent provide a periodic accounting to a third party, such as another relative or a lawyer. Or you can require that another individual sign off on any gifts of your property.
Powers of attorney should state the agent's authority to handle specific investment accounts, annuities and other assets -- details that aren't included in some off-the-shelf documents. Make sure the power of attorney is "durable," meaning that the agent's powers continue when the person creating the power of attorney becomes incapacitated.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Living trust. This document can provide detailed guidelines on how your property should be managed if you become incapacitated. You transfer your investments, real estate and other assets into the trust and name yourself as trustee, so you maintain control of the property. You also name one or more successor trustees to manage the property if you become incapacitated, and you include detailed instructions on how the money should be used if you are hospitalized or need long-term care.
After you die, the trust allows the successor trustee to transfer your property to your beneficiaries without having to go through probate. If you have a living trust, you still need a financial power of attorney to manage transactions that may fall outside the scope of the trust, such as dealing with credit card accounts. To provide checks and balances, it's best to name different individuals as your living trust's successor trustee and as your agent under a power of attorney.
Health care directives. A living will documents your wishes regarding life-sustaining treatment. Find living will forms for each state at www.caringinfo.org. Some states combine the living will with a health care power of attorney in one form.
The health care power of attorney allows you to appoint someone to make medical decisions for you if you become incapacitated. You also can include specific instructions on how your agent should make your health care decisions. Laws governing these documents can vary from state to state. Look at the American Bar Association's health care power of attorney guidance, titled Giving Someone a Power of Attorney for Your Health Care, at www.americanbar.org.
Also, seniors looking to include more details in their advance directives might consider the Five Wishes form, which meets legal requirements in more than 40 states. The form, available at www.agingwithdignity.org, allows users to designate a health care proxy and outline the care they want under various medical scenarios.
Standard will. The will identifies the individual's beneficiaries, who will receive the assets in the estate. It also names the executor, the person who manages the estate. The executor will have no legal authority until the person dies. Separately, individuals must designate beneficiaries of their retirement plans on the plan documents themselves; naming beneficiaries for retirement-plan assets in a will is not legally binding.
Letter of instruction. This document will provide your family the financial and other information they need if you become incapacitated. At the very least, the letter should list all of your investment accounts, insurance policies, loans, cemetery plot records, real estate holdings, military benefits, overseas assets and even frequent-flier memberships. It should also provide the location of important documents and the names of key contacts, such as your lawyer, financial adviser and insurance agent. Make sure to include the computer passwords for all of your online accounts.
Your letter also could direct heirs to cancel club memberships and to call current and past employers regarding company benefits and stock options. Include funeral instructions and information you would like in your obituary. You can place all of the documents in a binder. Consider using a booklet, the Family Love Letter (www.familyloveletter.com), as a guide. Make sure to note the location of any items you may have hidden.
Special needs trust. This trust is set up to provide for an incapacitated spouse if the well caregiver dies first. The amount put in the trust will be based on the expected cost of care over the individual's lifetime. Such trusts are drafted so that the assets are not considered to belong to the disabled person. That protects eligibility for certain government benefits, such as Medicaid benefits for nursing-home care, without requiring the ill patient to first spend down all assets. Assets could be spent on extras, such as special therapies, a geriatric care manager or a private nursing-home room. A trustee would make spending decisions.
Haven't yet filed for Social Security? Create a personalized strategy to maximize your lifetime income from Social Security. Order Kiplinger's Social Security Solutions today.
-
Retirees in These 7 States Could Pay Less Property Taxes Next YearState Taxes Retirement property tax bills could be up to 65% cheaper for some older adults in 2026. Do you qualify?
-
Estate Tax Quiz: Can You Pass the Test on the 40% Federal Rate?Quiz How well do you know the new 2026 IRS rules for wealth transfer and the specific tax brackets that affect your heirs? Let's find out!
-
'The 'Mamdani Effect' in New York: Can the City Afford a Millionaire Tax?State Tax Will higher income taxes drive the wealthy to flee New York in 2026?
-
Older Investors: Boost Your Savings and Retire EarlierThis one measure can help older investors retire up to two years earlier and potentially double their retirement savings.
-
457 Plan Contribution Limits for 2026Retirement plans There are higher 457 plan contribution limits in 2026. That's good news for state and local government employees.
-
Medicare Basics: 12 Things You Need to KnowMedicare There's Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare — and much more.
-
The Seven Worst Assets to Leave Your Kids or Grandkidsinheritance Leaving these assets to your loved ones may be more trouble than it’s worth. Here's how to avoid adding to their grief after you're gone.
-
SEP IRA Contribution Limits for 2026SEP IRA A good option for small business owners, SEP IRAs allow individual annual contributions of as much as $70,000 in 2025, and up to $72,000 in 2026.
-
Roth IRA Contribution Limits for 2026Roth IRAs Roth IRAs allow you to save for retirement with after-tax dollars while you're working, and then withdraw those contributions and earnings tax-free when you retire. Here's a look at 2026 limits and income-based phaseouts.
-
SIMPLE IRA Contribution Limits for 2026simple IRA For 2026, the SIMPLE IRA contribution limit rises to $17,000, with a $4,000 catch-up for those 50 and over, totaling $21,000.
-
457 Contribution Limits for 2024retirement plans State and local government workers can contribute more to their 457 plans in 2024 than in 2023.
