5 Must-Do Moves to Protect Your Family & Finances

When it comes to financial planning, many times, it’s the simple tasks that have the greatest impact. They take little time or effort, yet I’m amazed at how often they’re put off. You can quickly knock out these 5 must-do moves to protect your family and finances in the next 30 days. Your loved ones will thank you.

1. Don’t make your loved ones go on a wild goose chase

Keep all your important documents, such as your will and other estate papers, in a lock box or safe place. Be sure your family knows where to find them. Also, don’t forget to include a list of online accounts and passwords so your loved ones don’t have to scrounge around your messy desk to gain access to valuable accounts.

2. Your wishes will not magically be granted after you’re gone

If you die without a will, the state will decide, through the laws of intestate succession, how to divide and distribute your assets. Do you want to leave it up to the state to determine who gets your rock collection? Of course not, so please see an attorney to draft a will.

Now, if you have a will, that’s great, but if the last time you updated it, you had a mullet or perm, it’s probably time for another update. Your will should be updated when one of the following occurs:

  • Marriage, divorce, break up.
  • Laws change – every so often, the estate tax laws change, and those changes may have an impact on your estate.
  • Win the lottery or inherit a large amount.
  • Become a parent or grandparent.
  • Health crisis: It’s stressful enough, but it is an excellent time to review your estate documents.
  • The mullet and perm are back in style.

I think you get the point. Have an updated will in place.

3. At some point in life, you probably will be incapacitated

No, a Friday night at college isn’t what I mean. I know, I know, who wants to think about being incapacitated? Nobody, but that’s the problem. You’d best think about this now to possibly save a boatload of stress for your family in the future.

You need to have definite plans in place to take care of financial and medical decisions when you can’t. The incapacity planning should include some or all of the following:

    1. Power of Attorney: Granting a power of attorney allows someone to manage your financial affairs if you are unable to do so. There two kinds, “springing power of attorney,” which only goes into effect under circumstances that you specify, like when you become incapacitated, and “durable power of attorney,” which is effective immediately, and your incapacity is not required.
    2. Health Care Proxy: A person appointed to legally make healthcare decisions when you are incapable.
    3. Living Will: Also called an advanced medical directive, this document outlines your wishes should you become terminally ill. It’s better to deal with this potential issue now rather than later when emotions make decisions much more challenging.

Again, please review with an attorney to see which of these are appropriate for you.

4. The one thing you (or your loved ones) wish you had when you don’t have it

I’m talking insurance. One of those necessary items we’re not thrilled to pay for, but sure are happy to have when we need it.  Insurance is needed for a reason, for a few reasons. If you die, it helps your loved ones move forward. Insurance can be used for the following:

  • Replace your lost income
  • Replace your lost retirement savings
  • Pay off debt
  • Cover the cost of tuition for children
  • Cover future expenses

Whether it’s an employer-provided policy or one you get yourself, make sure it’s enough coverage for your needs. See your fee-only advisor (not an insurance agent) to discuss what type of policy and coverage is best for you.

5. What happens in Vegas doesn’t always stay in Vegas

You went to Las Vegas 25 years ago for a long weekend to celebrate your new job and returned married. It lasted a few months, but you named that brief spouse beneficiary to your new 401(k). Not good. What else did you do in Vegas?

Please, please, please, if your relationships have changed, check your named beneficiaries. It is a simple thing to do. So simple that it’s easily forgotten. If ignored for years, it could make some loved ones unhappy.

I shouldn’t have to say this, but make sure you have named primary AND contingent beneficiaries to all of your life insurance policies, annuities, retirement benefits, 401(k)s, and IRAs. Otherwise, the proceeds go through the estate and your heirs lose some of the tax benefits.

You should be able to take care of these quickly, so sit down and get a plan in place. You’ll be able to sleep better at night knowing your family is protected. 

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