"What if I died tomorrow. How would my loved ones fare financially?" That is the unthinkable...the dreaded question nobody likes to think about, but not doing so can have serious consequences. A death can cause plenty of emotional stress on a family - make sure financial difficulties don't get added to the mix. Take steps now so that if the worst were to happen, your family knows and understands how to execute your wishes and has the financial support it needs to carry on.
The nonprofit Life and Health Insurance Foundation for Education (LIFE) offers the following five simple steps to help people get their financial affairs in order so that they can rest easy knowing their families would be taken care of when they die:
1. Make it a Family Affair. Be direct when talking with loved ones about this difficult topic. Keep the conversation private, in a setting where everyone feels comfortable and involve as many immediate family members as you can. Then talk through worst-case scenarios to find out what everyone's concerns are and needs would be, financial and otherwise. An example might be identifying who would take care of your children if you and your spouse died or deciding how much money your family would need upon your death to meet ongoing living expenses and fund future plans. Answering these questions will help ensure that your family is well taken care of no matter what twists and turns life brings.
2. Pay it Forward - Purchase adequate life insurance for you and your spouse now to help your family avoid financial potholes down the road. Having the right amount of coverage will help ensure that your family's dreams can be realized even if you're not there to witness them. How much and what kind of life insurance to buy is based on a number of factors, so seek assistance from a qualified insurance professional.
3. Where There's A "Will" There's A Way. I often hear people say, "I don't want to make a will...I might die." Guess what...you're going to die anyway. You might as well die with a will in place. Make a will and update it frequently. Make sure it specifies executors, trustees and guardians for dependent children. And don't forget to get a living will also (health care directive) to make sure loved ones know whether or not you want to be kept on artificial life support. Likewise, you need to designate a power of attorney - someone you authorize to manage your affairs, typically financial ones, if you're not able to handle them yourself.
4. Rest in Peace - Make decisions for final arrangements including: your funeral, type of burial, where you want to be buried and whether you want to be an organ donor. Write wishes down and inform family and close friends.
5. Make a list and check it twice - Make a master list of all key financial information, to include bank account numbers, mortgage and insurance policies. Then go one step further and write down where important non-financial information and valuables are located, including birth and marriage certificates, titles and deeds and safe deposit box keys. Be sure to include contact information for all of the professionals who help with your financial and legal affairs, such as your insurance advisor, attorney or accountant. Lastly, keep copies of the list in a safe place and tell your family members how to get to it.
While we all like to hope for the best, it's always wise to plan for the worst.
