The Importance of Planning for the Unexpected
If you have ever worked with a financial advisor, they likely asked you if your estate planning documents are in place or whether you have evaluated your life insurance coverage. Like many people, you might have brushed this off, prioritizing family and work over such discussions. However, what if things don’t go as planned? Have you set your family up for success when crisis strikes? While life is unpredictable, two things we know are certain are death and taxes. It’s time to stop avoiding these conversations.
In many households, financial organization often falls to one person. That’s why it’s crucial to have open discussions with your family early and often to ensure everyone knows how to keep the household running smoothly. For example, sharing logins and passwords for utility providers can prevent missed bills if the primary manager is suddenly unavailable. Additionally, both spouses should know how to contact essential professionals, such as your financial advisor, attorney and tax preparer. Keeping a document or folder with this information can be invaluable during a crisis.
Another important step for your family’s well-being is ensuring you have the proper estate planning documents and beneficiary designations in place. If you pass away without a will, your family may face a headache as they navigate the probate court’s decisions regarding your assets. This not only may lead to outcome you wouldn’t have intended, but the process can also be lengthy and tie up resources your family may need for living expenses. For accounts like IRAs or 401(k)s, simply updating your beneficiary designations or adding a transfer on death (TOD) designation to your taxable brokerage account can make a significant difference. A few hours spent on your estate plan today can save your family time, money and stress in the future.
Evaluating your life insurance coverage is equally important and can dramatically affect your family’s financial future if overlooked. For instance, if you are the primary earner, your group term life insurance through work may not provide sufficient coverage. Should you pass away during your working years without additional insurance, your family may struggle to maintain their lifestyle. While they cope with the emotional turmoil of loss, the last thing you want is for them to face financial stress. Investing in adequate coverage now is far less costly than the potential burden on your family later.
If you’re feeling stuck and need a push to get started, consider scheduling a meeting with Heritage Wealth Architects and all the adults in your household. This can facilitate discussions and help generate a game plan for moving forward. If you have questions, please reach out to our team today.