In February 1997, Patricia Powell was killed in a car accident.
Her husband Ray, an alcoholic who'd been sober for 12 years,
fell apart and started drinking. A year later he died of liver
disease. They left three children, a modest Maryland house and a
$100,000 life insurance policy. But they named no guardian and
they left no will. 

That, I suppose, shouldn't come as a surprise. According to a
landmark Consumer Reports survey, 70% of the people in this
country don't have wills. That unfortunate statistic includes an
awful lot of parents--and more of my friends than I care to
count. What followed in the Powell case, however, was wildly
unusual.

With the help of an attorney, the middle child, Shawn, age 10,
filed for bankruptcy in August. It was a gambit to prevent
foreclosure on the house. The family had no savings and no rich
relatives. And until a court-appointed guardian was in place to
receive a check, the life insurance company wouldn't pay. It was
a nightmare, says the attorney, Brett Weiss. And it could have
been avoided, with Estate Planning 101.

There are several documents that parents--and anyone else who
wants to control the disposition of their assets--must have.
They're not costly. Having a lawyer prepare them runs around
$500. Or you can do it yourself with software like Nolo's
Willmaker ($69.95). Don't let the year end without making sure
your kids are taken care of. Here's what you need:

--A will. It can be quite basic, one that passes everything to
your spouse (or whomever) and then--for families--into a trust
for minors. It should name an executor to transfer the title of
your assets and a guardian to raise your kids. They don't have
to be the same person, but attorney R. Daniel Brady of Raleigh,
N.C. cautions against naming a couple as guardians: "In case of
divorce, that's asking for trouble."

--A durable power of attorney. This gives someone the ability to
handle your finances--write checks, sell stocks and so on--if
you're incapacitated. The person you choose may double as your
executor but, again, it's not a must.

--Advanced directives. You need a living will that specifies
whether you want life support and a health-care proxy that gives
another person the right to make health-care decisions for you
if you can't. (Doctors sometimes ignore living wills, but having
one can help guide the person with the proxy.) Parents should
also ask about an authorization for health care for a minor
child, which gives your delegate the right to consent to medical
care for your kids. That's an especially good idea if you travel
without them.

--A family trust. Parents' wills should dictate that assets flow
into a family trust rather than directly to minors. You name a
trustee who can spend the money for things like health care and
education. Then, typically when the kids turn 25, the money is
parceled out in chunks. Notes Brady: You may be tempted to split
the assets equally among your kids from the moment the money
arrives in the trust. Don't. Lumping the funds together gives
your trustee the ability to use discretion as a parent might.

As for the Powell kids, the attorney says it looks as if they'll
keep the house, mostly because their parents did one thing right:
They purchased life insurance. "If it hadn't been for that, we
might have been able to delay the inevitable," he says. "But that
would have been all we could have done."