How & Why to Get Your Affairs in Order

Have you ever thought about what would happen with your assets, finances, and outstanding debts if you passed away?

While the idea of “having your affairs in order” may make you think about death, it simply means having your finances, property, and personal/medical information set up so that they can be properly handled in the event that you pass away or become otherwise incapacitated. Many people order their affairs for the first time because they’ve gotten married, had a child, or bought a house and want to be responsible, not because they’re nearing the end of life.

With a better understanding of exactly what it means to get your affairs in order, as well as the benefits and the steps needed to do so, you can get these important matters taken care of more easily than you might think.

What does it mean to get your affairs in order?

“Having your affairs in order” is an umbrella term that refers to having a plan in place to transfer your assets to heirs and carry out any other wishes, such as funeral arrangements. Making a list of all your assets is one example of getting your affairs in order; so is putting that list in a place where your loved ones can access it.

This can prevent considerable stress and expense. For example, if you pass away without a will, your loved ones may end up having to go through a drawn-out probate process, where the court will refer to succession laws to decide how your assets will be divided.

As daunting as getting your affairs in order may seem, the entire process of getting your affairs in order doesn't need to take more than a few hours.

Why & when to get your affairs in order

You shouldn’t wait until later in life to get your affairs in order. Major life events such as a death in the family, a marriage/divorce, or the birth of a child are often motivation to start the process. Although it may not be the most exciting thing on your "to-do" list, there are many benefits to getting your affairs in order for both you and your loved ones.

Enjoy peace of mind

Simply knowing that all your affairs are taken care of can give you comfort and a sense of security in your future. This is especially true if you're the type of person who enjoys being organized and having even the seemingly smallest of details planned out. With all your affairs in order, you won't have to worry about what will happen with your assets, property, and finances in the event of your passing.

Protect your loved ones

Having your chosen beneficiaries receive any settlements or payouts that you've designated in your will protects them financially, of course. But having your affairs in order can also save your family and loved ones a great deal of stress, time, and hassle down the road. When a person passes away and doesn’t leave a will or any instructions for handling assets or debt, major rifts can grow between family members as they attempt to piece together the deceased’s final wishes from memory or intuition.

Carry out your wishes

Getting your affairs in order now means you can rest assured that your final wishes will be communicated and carried out as accurately as possible. This includes everything from preferences regarding your final resting place to any charitable donations and distributions of assets.

Things you need to address

Now that you have a better understanding of what it means to get your affairs in order and why it matters, you may be wondering where to begin. Generally, the best way to get the assistance and guidance you need throughout the process is to work directly with an estate planning lawyer, who will be able to walk you through the documentation and legal processes required to set everything in stone.

Even without an estate planning lawyer, however, there are some basic things that everybody can and should address as part of getting their affairs in order.

Important documents & paperwork

First, it's a good idea to gather any and all important documents and paperwork so that it is in one place. This way, when a loved one needs a certain document (such as your birth certificate) to execute something in your will, they will know exactly where to find it.

Typically, it's best to store these kinds of documents in a fireproof safe, filing cabinet, or other secure location in your home. Ideally, you'll also want to save digital copies of these documents on a computer, external hard drive, and/or cloud-based device.

Once you have your important documents saved in a centralized location, you should share this, as well as any lock codes or passwords needed to access it, with a trusted family member.

Some specific examples of documents you'll want to have gathered and securely stored include:

Birth certificates
Social Security cards
Marriage certificates
Insurance policy paperwork
Copies of tax returns
Financial/bank statements
Password lists

Sorting through your important documents also provides an excellent opportunity to make sure that appropriate beneficiaries are named on things like bank accounts and retirement plans.

Wills & trusts

It's also a good idea to have a will and/or trust, which gives you the opportunity to name who you want your money and assets (such as real estate and other property) to go to after you pass away. Both wills and trusts can establish beneficiaries for your assets, but there are some important differences.

Most importantly, a will names an executor (somebody who will carry out your will after you pass) whereas a trust does not. A will is necessary if you want to designate a legal guardian for any minor children after you pass. A trust, on the other hand, does not require probate like a will generally does—and it keeps information out of public record.

Speaking of executors, make sure you name somebody that you can trust to carry out the terms of your will. Ideally, this will be somebody who is responsible and reliable, as well as ethical and organized. It's never a bad idea to name a backup executor on your will in case your first choice is unable or unwilling to serve in the future.

If you want to have a preemptive say in your health care in the event that you become unable to make your own wishes known, you'll also want to set up a living will, which provides a written statement detailing your preferences and wishes for medical treatment.

Life insurance

Another critical aspect of getting your affairs in order is making sure you have the right life insurance coverage in place. Specifically, a life insurance policy is designed to pay out a designated sum of money to your named beneficiaries in the event of your death. This payout can then be used by your loved ones to help pay for funeral expenses, college for your adult children, and even ongoing living expenses (such as mortgage payments).

There are 2 main types of life insurance:

Permanent life insurance: Lasts for the entirety of a person's life with cash value that accumulates over time. Has higher premiums and is guaranteed to pay out. Whole life and universal life are types of permanent life insurance.
Term life insurance: Lasts a predetermined length of time with no cash value. Has lower premiums and isn’t guaranteed to pay out.

As part of getting your affairs in order, take time to review any current life insurance policies and make sure you have the right types and amounts of coverage in place to protect your loved ones.

Power of attorney

Establishing a power of attorney is another step you may want to take when getting your affairs in order. Whereas an executor is authorized to carry out your wishes after your death, granting someone power of attorney allows them to carry out your wishes while you’re still alive.

There are different types, including:

General power of attorney: This is a person who is able to make decisions on your behalf while you are alive and well. You might designate a general power of attorney to sign a contract on your behalf while you're away on vacation or help you manage your finances/investments. With a general power of attorney, you get to decide exactly what powers to give the person—and these powers automatically expire in the event that you become incapacitated.
Durable power of attorney: This is a person who is able to act on your behalf, but only if you are no longer able to make your own decisions. A durable power of attorney is generally designed to remain in effect permanently until you pass away.

Updates & revisions

Even once you have your affairs in order, you'll want to review everything at least once a year to make sure that your wishes and needs are still reflected in your wills, trusts, and life insurance policy. Be sure to make changes as needed to keep your affairs in order at all times.

You can make updates to these documents and policies manually. If you have an estate planning lawyer, this person may be able to make changes on your behalf.

Multigenerational family in the kitchen making salad and looking at tomatoes

Protect what matters most with AAA Life Insurance

AAA offers an array of life insurance products to meet the needs of you and your family in every stage of life, all from a name you can trust.

Learn more about AAA Life Start your quote online

Insurance

How & why to get your affairs in order