Reading some of Suze Orman’s financial planning advice can make me feel bad about myself.
While I don’t have too many regrets about the big life decisions, like my spouse, where I live, or how I raised my kids, there is one thing I haven’t done well and that sometimes keeps me up at night: comprehensive financial planning.
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Yes, I know it’s never too late to get it together, and I’m chipping away, but there are a couple of things I could have done better and several things I should have done sooner.
Among the things I should have done sooner: setting up the legal documents related to my finances that will protect my family when I die. Or at least make things easier for them.
Here’s why it’s extra hard for me to admit this shortcoming: I’m married to an attorney (so, yes, part of the blame is his!). We (he!) could draw up these documents in a weekend.
You know that adage about the cobbler’s children having holes in their shoes? Well, that’s me (and by me, I mean us).
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I’m in good company. According to a 2024 Caring.com survey, 68% of Americans don’t have a will. Around 40% of people who don’t have a will say it’s because they don’t believe they have enough assets to leave to anyone.
Yet a will and the other essential documents Suze Orman — and pretty much every other personal finance expert on the planet — says everyone needs, will do more than help you distribute assets. These documents will also let you control your healthcare decisions and even provide guidance for the care of minor children.
In no particular order, here are the four financial planning documents everyone should have.
Suze Orman advises every person to have 4 key legal documents prepared as part of financial planning.
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The most important reason to have a will
A will is essentially a document you use to set out what you want to happen to your assets when you die. In a will you name beneficiaries — individuals or charities.
While most financial planning experts would recommend hiring an attorney to create your will, you don’t necessarily need one. In at least 15 states — including Arizona, California, Texas, New Jersey, Michigan and North Carolina — you can create what’s known as a “holographic will,” meaning it’s handwritten.
Every state that allows handwritten wills has slightly different requirements, so if you choose to DIY your will you’ll want to make sure you adhere to your state’s requirements.
If you die without a will, it can make things messy for family members because what happens to any of your assets depends on the laws in the state where you live.
In some states, if a person is married and dies without a will, all of his or her assets automatically go to the spouse. In other states, the assets are divided between the spouse and any children; in still other states the deceased person’s parents might also be entitled to a share of the assets.
The most important reason to have a will is because it allows you to decide the people or organizations that will receive your assets when you die.
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The most important reason to have a revocable living trust
A revocable living trust is a legal document that gives a person the power to make decisions about another person’s money or property that is held in a trust.
Trusts are not just for “rich” people, by the way. As Suze Orman writes, “A revocable living trust is an incredibly powerful document that can be a big help. You remain in control of all your finances as long as you want, and you can make changes to your trust as often as you want. That’s what ‘revocable’ means.”
According to the Consumer Financial Protection Bureau, one reason to create a revocable living trust is to avoid the costly and lengthy probate process. During a probate proceeding, a judge decides how to distribute a deceased person’s assets to their beneficiaries and also pays off any debts.
The most important reason to have a revokable living trust is that it allows you to keep control of your money and property and designate who receives the money and property when you die.
An elderly couple is seen walking their dogs.
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The most important reason to have a durable financial power of attorney
A power of attorney (POA) is a legal document that allows someone to act on your behalf in the event you are incapacitated. It’s especially helpful for older people who may not be able to make decisions for themselves.
A durable financial POA gives another person permission to access your IRA, pension or other financial accounts, and allows them to pay your bills.
Designating someone else to make financial decisions for you is also risky since it gives another person control over your money. This is one case where it is worth the money to have an attorney write the POA document since it can be written in a way that protects against potential abuse.
More on retirement strategies:
Tony Robbins warns Americans on Social Security mistake to avoidDave Ramsey has blunt words on Medicare for retired AmericansSuze Orman offers candid advice on Social Security for retirees
The most important reason to have a financial POA is that if you don’t have one and you become incapacitated and no longer able to make decisions for yourself, a family member or friend might have to go to court in order to be appointed as your guardian — a process that can be expensive, lengthy and public.
The most important reason to have an advance directive for health care
An advance directive is a way to let medical professionals and your loved ones know what your wishes are with regard to your medical care. There are actually two common types of advance directives for health care, as defined by the National Institute on Aging: a living will and a durable power of attorney for health care.
Living will: A living will tells your healthcare providers how you wish to be treated if you can’t make your own decisions about emergency treatment. You can say which common medical treatments or care you would want, which you’d want to avoid, and when each choice applies. Durable power of attorney for health care: A durable POA for health care is a document that names a health care proxy — a person who can make health care decisions for you if you are unable to communicate your wishes yourself. A proxy can be chosen in addition to or instead of a living will.
Is there a point at which you would no longer want treatment for an illness? Do you want pain relief medications even if taking them might hasten your death? These are the kinds of situations you can call out in your living will and then have reinforced in a durable POA for health care.
The most important reason to have an advance directive for health care is that it lets you speak for yourself with regard to healthcare decisions, even when you can’t actually do so.
So more excuses for me. I’m committed to having all of these documents completed before the end of Q1 2025.
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