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Over 21? It’s time to do some estate planning

Getting your financial (and other) affairs in order is not just for old or wealthy people, says Jean Chatzky. Here’s a checklist.

Q: I'm a 45-year-old mother of two. My family is comfortable, but I'm not worth millions. Do I need to worry about estate planning?

A: Some people believe that estate planning is for wealthy people. Others believe it's all about trying to save on taxes so that more of your money gets into the hands of your heirs than those of Uncle Sam. Both are wrong: Estate planning is for everyone.

Estate planning is for everyone who has loved ones they care for — and want them to be cared for in perpetuity. It's for everyone who'd like to have a say in who gets their stuff, rather than let the government make the call. It's for everyone who would like to have a say in how they are cared for if they become ill or disabled and can't fend for themselves. It is for everyone over the age of twenty-one.

That's not to say it has to be expensive. If you have substantial assets, you should hire a lawyer. But the basics of an estate plan can all be obtained in the form of inexpensive software, on the Internet, or at your local stationery story. You need:

  1. An emergency information sheet. This is a letter, one or two pages, a road map that could take a total stranger by the hand if something happens to you and make sure the right people are contacted and the proper documents found. It should include names and phone numbers of your closest family members, friends, and neighbors, as well as of your doctors, lawyer(s), clergyman, accountant, and anyone else you rely on. It should not give the location of your will and the other documents on this list. This is not a legal document, but it is a necessary part of a complete estate plan.
  2. A durable power of attorney. This is a legal document that gives another person the right to handle your finances — your tax and legal matters — if you're sick, disabled, or out of the country. As soon as you have assets in your own name, you absolutely need one of these.
  3. A living will. This tells the management of a hospital whether or not you want life support should that be necessary. Often, you're asked to sign one of these before you check into a hospital. Often, that's too late.
  4. A health care proxy. This goes hand in hand with a living will in that it gives another individual the right to make health-related decisions on your behalf (some people call this a durable power of attorney for health care). Again, you'll want to put one of these in the hands of the proper person — one who will honor your views on matters like life support — before it's necessary to make those decisions.
  5. A will. This legal document tells the state where — to which people and/or institutions — you want your belonging to go when you die. If you're married, it is true that most states will automatically make your spouse the heir. The argument "That's what I'd want anyway" lets many people off the emotional hook that writing a will involves. Unfortunately, the argument doesn't hold up. Why not? What if you die together? If you have children, it is even more imperative you write a will because a will is where you name a guardian for those kids. That is most certainly not a decision you want in anyone's hands but your own.

Jean Chatzky’s Bottom LineThis week: Buy or lease a car?It depends on your situation. Buying is often a cheaper option for the long term. Still, if you like a new car every few years, you may be better off leasing. Here are four questions to help you make your decision:

1. How many years will I have this car? If the answer is three or less, you're better off leasing. At four you could go either way. More than four, buy.

2. How many miles do I drive annually? If it's more than 15,000, you ought to buy. Leases usually figure on mileage of 12,000 to 15,000 a year. Drive more than that and you'll pay an additional 10 to 15 cents per mile. Ouch!

3. Do I take good care of my car? Be honest. If you're the kind of person who never misses an oil change and avoids curbs at all costs, you'll be fine when it comes time to return your leased car. But if not, buy. Otherwise, you could find yourself looking at a hefty bill for "excessive wear and tear."

4. Do I use my car for business? If yes, you may want to lease.

Jean Chatzky is the financial editor for “Today,” editor-at-large at Money magazine and the author of “Talking Money: Everything You Need to Know About Your Finances and Your Future.” Copyright © 2004. For more information, go to her Web site, .