Planning Your Financial Future
Several types of legal documents are available to protect your financial resources and outline your wishes if you become unable to make decisions. Taking time now to plan your financial future will give you a greater sense of security and peace of mind throughout survivorship.
Planning Your Financial Future: Detailed Information
This information is meant to be a general introduction to this topic. The purpose is to provide a starting point for you to become more informed about important matters that may be affecting your life as a survivor and to provide ideas about steps you can take to learn more. This information is not intended nor should it be interpreted as providing professional medical, legal and financial advice. You should consult a trained professional for more information. Please read the Suggestions and Additional Resources documents for questions to ask and for more resources
Adapted with permission from the National Coalition for Cancer Survivorship, from National Coalition for Cancer Survivorship. A Cancer Survivor's Almanac: Charting Your Journey, 3d Edition. Ed. Barbara Hoffman. Hoboken: John Wiley and Sons, 2004. For more information or to order a copy of A Cancer Survivor's Almanac: Charting Your Journey, visit NCCS at www.canceradvocacy.org.
Most people want to make the decisions that affect their finances. Planning for your financial future means creating legal documents that provide instructions for managing your finances and property when you are unable to do so. The legal documents ensure that your property will be distributed (divided among those you want to have it) the way you want it done. With proper planning, you can affect how decisions concerning your property will be made when you are no longer able to do so. Three types of documents — traditional wills, trusts and powers of attorney — help ensure that your property goes to whomever you want to have it.
Although talking these matters might be difficult, you should decide with family members how they will care for themselves if you become unable to provide for them. Advance planning can protect your family from having to make financial decisions without your input. It may also save taxes and legal fees.
What is a traditional will?
A traditional will is a written document that states how you would like your property to be distributed when you die. Although thinking about writing a will causes anxiety for some (few people are comfortable thinking about their own death), it is important if you want to control how your property is distributed after your death. A traditional will is one way to ensure that your decisions about your property and family are respected.
Even the simplest will should perform three tasks:
- Explain how your property should be distributed.
- Appoint someone to care for your minor and/or disabled children.
- Appoint an executor (the person you choose to make sure the instructions in your will are followed).
- What happens to your property if you do not have a will?
If you die without a valid will, your state will distribute your property according to state probate laws (laws that apply to wills). The state may or may not distribute your property as you would like. State probate laws are designed to promote fairness and predictability by allowing only very close relatives, such as a surviving spouse and children, to inherit. They are not designed to protect your family's long-term financial needs after your death.
- Do I need an attorney to prepare my will?
You may write your own will. However, your will is more likely to withstand any legal challenge if it is prepared by an attorney. If your will is challenged by a family member you did not name in your will and declared invalid, the state may ignore your intentions and distribute your property according to its probate laws. This process could cost a great deal of money.
- What must a will contain to be valid?
Each state has laws that describe what makes a valid will. For example, these laws state how many witnesses must see you sign the will and whether your will must be typed.
Every state requires, at a minimum, the following three elements to recognize a will as valid:
- If you are preparing a will, you must be capable of making decisions about your property. You must know:
- The purpose of the will
- The nature of your property
- The beneficiaries you name (the person(s) you name to receive your property)
You must also be acting of your own free will (no one is forcing you to make these choices).
- Your will must be witnessed by disinterested witnesses. These are adults who do not stand to gain by your death and who are not named in your will as a beneficiary, executor or trustee.
- You must sign and date the will in the presence of the disinterested witnesses. You must also make it known to them that you intend the document to serve as your will and that you are signing it without coercion (being forced to).
What is a trust?
A trust is a fiduciary relationship in which a person or institution has been chosen to act on behalf of yourself and others. In a trust, one party (the trustee) holds title to property for the benefit of another party (the beneficiary).
Different types of trusts accomplish different purposes. One purpose of a trust may be to legally shield your assets to keep you qualified for government benefits such as Social Security and Medicaid. For example, one way to avoid having to spend down your money (reduce your assets) to qualify for Medicaid is to give your money to a family member or friend in the form of a trust. Under the terms of such a trust, the family member or friend agrees to spend the money on your care.
- What is the role of a trustee?
By establishing a trust, you may appoint a trustee to use his or her discretion in making all decisions about your assets or you may restrict the types of decisions the trustee may make. Some trusts take effect only once you become disabled, while others transfer decision making powers to a trustee as soon as you sign the documents.
You should choose as your trustee someone who is able to make competent financial decisions such as operating your business, borrowing money, managing real estate, and filing your tax returns. Trusts can be quite complex. They must comply with state laws, and they have a variety of tax consequences. Contact an attorney to help you draw up a trust to be certain that it will accomplish the purpose you intend.
What is a power of attorney?
You may grant another person the right to make financial decisions for you by granting a power of attorney. This is a simple and inexpensive procedure in which you select another person (your agent) to act in your place and on your behalf.
When you give a power of attorney to your agent, you permit him or her to manage your assets, such as your bank accounts, stocks and house. Many cancer survivors can relieve themselves of the burden of paying bills and making financial decisions by granting that authority to a responsible person.
Because granting or revoking a power of attorney involves the power to manage your property and must comply with state laws to be valid, consult with an attorney to prepare the documents that will express your intentions and be accepted by banks and other institutions.
What are the differences between a will, a trust and a power of attorney?
- A will can be a relatively simple document that accomplishes one goal--it states what you want to happen to your property when you die.
- A trust, can accomplish several goals such as avoiding taxes and probate (the process of having a will declared valid by a judge)
- Unlike a will, a trust does not have to be reviewed by a probate court. Probate costs time and money.
- A trust is a private document; a will may be open to public inspection.
- Power of Attorney:
- A power of attorney is less complicated and expensive than a trust. A trust, however, is more flexible than a power of attorney.
How will a guardianship protect children?
If you are concerned about your ability to care for your children in the future, you can appoint a guardian to care for your children. Caring for them includes providing them with food, clothing, shelter, education and medical care.
You may also appoint a conservator or guardian of the estate to manage your children's finances. As the biological parent, you are still responsible for financially supporting your children. Your children may inherit from you.
State laws vary as to the rights of adults who are not biological or adoptive parents of children in their care. Consult with a family law attorney to decide whether you should legally appoint another adult to care for your children should you become unable to do so.
A guardianship will last until:
- The child becomes a legal adult.
- The child dies.
- A judge rules that the child no longer needs the guardian.
- The child no longer has any assets (if the guardianship was created to manage the child's assets).
This document was produced in collaboration with:
Barbara Hoffman, JD
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Planning Your Financial Future: Suggestions
The suggestions that follow are based on the information presented in the Detailed Information document. They are meant to help you take what you learn and apply the information to your own needs. This information is not intended nor should it be interpreted as providing professional medical, legal and financial advice. You should consult a trained professional for more information. Please read the Additional Resources document for links to more resources.
- Make sure your will, trust or power of attorney states your intentions.
Before you prepare a financial planning document, complete the following steps to ensure that it reflects your carefully-considered intentions:
- Discuss with your family their long-term financial needs.
- Make a list of your property (major items such as house, car, insurance policies, heirlooms).
- Decide whom (beneficiaries) you want to receive what.
- If you have minor and/or disabled children, decide whom you want to be responsible for their care and ask that person if s/he is willing to serve as your children's testamentary guardian.
- Select your will's executor and ask that person if s/he is willing to be responsible for distributing your assets.
- Organize information to do legal document planning.
Making decisions about planning wills and other financial documents can sometimes be upsetting for survivors and their families. Having a list of things to talk about can be helpful. Organize information about your family, medical wishes, finances and estate planning.
- Storing your will, trust or power of attorney
After you prepare a financial planning document, make certain it remains safe and reflects your current wishes:
- Give a copy to your attorney, and keep a copy for yourself. Because your safety deposit box may be sealed temporarily after your death, an attorney's office is the safest place to keep a will.
- Review your document every few years to determine whether it reflects your current intentions, personal situation and financial assets. For example, your assets may change or you may have another child. If you decide to change a document, have an attorney make the changes or write a new one to ensure that your new, and not old, instructions are followed.
- Finding an attorney
Be certain that your legal documents meet the laws in your state. A state or local bar association can help locate an attorney with experience in wills, trusts or power of attorney documents to answer questions and help you draft the documents.
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Planning Your Financial Future: Additional Resources
The resources listed below provide more detailed information and support services to help you with planning your financial future. Please read the Detailed Information and Suggestions document for more information and questions to ask.
LIVESTRONG Navigation Services
Online: Complete an intake form through the LIVESTRONG website.
Phone: 1.855.220.7777 (English and Spanish)
Navigators are available for calls Monday through Friday, 9 a.m. to 5 p.m. (Central Time). Voicemail is available after hours.
LIVESTRONG offers assistance to anyone affected by cancer, including the person diagnosed, loved ones, caregivers and friends. The program provides information about fertility risks and preservation options, treatment choices, health literacy and matching to clinical trials. Emotional support services, peer-to-peer matching and assistance with financial, employment and insurance issues are also available. To provide these services, LIVESTRONG has partnered with several organizations including Imerman Angels, Navigate Cancer Foundation, Patient Advocate Foundation and EmergingMed.
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