Personal Finance Advice

What happens to your money and assets when you die? Usually, your debts are paid and the remaining assets are split up according to your specifications as written in your will. If you don’t compose a will and specify what will happen to them, however, the answer can become much more complicated.

A will is a legal document that you compose while you are still of sound mind. This means that you can’t be mentally incapacitated when you pull your will together because then someone can dispute the validity of the will. Your will designates an heir (or heirs) to your assets and can also list other information such as designating guardianship of your children to someone upon your death. Other documents that can be paired with your will include a living will, which is a document that states whether you want to be kept alive using life support, but your will is used to specify who gets what upon your death.

It isn’t enough to talk to your family and friends about who gets what when you die. Not everyone may remember what you say and things might wind up disputed by people who want certain items or funds. In some instances, your assets may become tied up in litigation and get distributed by someone who has absolutely no connection to your family and friends. So don’t just tell your niece that you want her to have your wedding ring or your brother that you want him to inherit your house. Put these things in writing.

You have to make sure that the wording of your will is correct and legal for the state in which you reside. In some states you don’t even have to get an attorney help you draft the document, but don’t assume this is the case until you have researched it for yourself. You may be able to compose your own will using a software program, so check this out to see if it works for you.

If you are able to compose a will on your own, look into getting it notarized upon completion. This shows people that it is a legal document and that you are the person who wrote it, which is vital in case there is a dispute upon your death. You should also make sure to place a copy of the will somewhere for safekeeping. Your will doesn’t do much good if nobody knows that it exists, so don’t just write the will and then stash it away somewhere.

Your loved one is sick and needs someone else to pay the bills, otherwise everything will go delinquent. You need access to your loved one’s account in order to pay the bills so you go to your loved one’s bank to explain the situation and request access to the account. You hope that it will be a simple process because you don’t want to let your loved one down by allowing all the bills to go delinquent. After all, if your loved one recovers from the illness, the last thing you want him or her to deal with is a pile of late bills, right?

Good luck. Chances are, no financial institution is going to grant you any access to an account that does not have your name on it. Even if it’s your father, your brother, or your best friend since you were three years old, unless your name is listed on the account as an authorized user then there is very little chance that a financial institution will give you any sort of information about the account, let alone allow you access to the account.

Look at the situation from the perspective of the financial institution. Even if you can prove your relationship to the account holder, how is the financial institution supposed to know for sure that you aren’t out to steal money from the account? You may be the account holder’s sibling, but how does the bank or credit union know you aren’t the account holder’s deadbeat sibling? Your relationship to your loved one does not entitle you to access to financial information. The only thing that entitles you to account information in this situation is if you are granted access by the account holder in one way or another.

This is when a power of attorney comes in handy, but if your loved one did not secure one for you beforehand then it is something that you will have to obtain using legal means. This can be a tedious process and in the meantime your loved one’s financial affairs can start falling behind. You should also keep in mind that some financial institutions will not accept general power of attorneys, but instead want the power of attorney to have specific account information or for the account holder to file a document with the financial institution that is like a power of attorney but is an in-house document.

Don’t assume that you can simply walk into a financial institution and take over someone’s finances per that person’s request. There is a lot more to it than that, and it’s all because financial institutions want to protect their account holders from fraud.

If you have ever been in a situation where a friend of yours has financial problems and turns to you for a loan you already know what an awkward situation this can be. Even if you have the money available to lend, you may not be comfortable with turning a friendship into a financial relationship by lending money to your friend. On the other hand, since the other person is your friend you may not feel comfortable with refusing a loan if you have the money. It’s a tricky situation.

What do you do when a friend approaches you to ask for a loan? No matter what the monetary amount, it’s still a potentially delicate situation. More than one friendship has been ruined by money issues, and if you’re not careful then your friendship may follow a similar pattern. No matter if you decide to lend the money or not, approach this situation delicately.

You have a few different options when a friend asks you for a loan:

Lend the money. If you decide to lend the money to your friend, only do so if you don’t need the money for yourself. In other words, don’t lend next month’s rent payment in anticipation of a prompt payback from your friend. You should also make it a formal agreement. Don’t allow a handshake and a vague promise of payback to be sufficient. Instead, write out an agreement and have your friend sign it. Have specifications in place that state what happens if your friend makes late payments.

Give the money. Instead of lending the money, and if you have the funds to spare, you may opt to simply give your friend the money. Keep in mind that gifting over certain monetary amounts may result in some tax issues, but if you are merely lending a couple hundred dollars then this isn’t really an issue. The benefit of giving a friend money instead of lending it is that there is no awkward shift in power between you and your friend, although in order to really make this situation work you need to truly mean it when you say it’s a gift and not a loan. Don’t demand repayment a few months down the road if you once said there wouldn’t be a repayment required.

Don’t lend or give the money. If you aren’t going to lend the money to your friend, try to be as tactful as possible. Don’t lecture your friend about money management or feel as though your friend deserves a detailed explanation of why you can’t or won’t lend the money. A simple, “I’m sorry, but I can’t lend you the money” is sufficient.