Let’s talk about death and disability.
No, please keep reading. Through my 20-plus years in financial planning, I know most people don’t like to discuss those subjects. But avoiding them can cause headaches, heartaches and even financial ruin.
It’s best to consider what's best for your estate should you die or become incapacitated. That way, you can rest easy knowing that if something bad happens, you may be able to minimize the headache, if not the heartache.
Here are five moves to consider:
Square Away Your Beneficiary Designations
I have worked with people who inadvertently had their ex-spouse listed as a beneficiary on IRAs, life insurance or the like. Heck, I’ve had a couple of cases where the ex-spouse was still a joint owner on investment accounts. That could be fine, if it’s your intent, but in most cases it probably isn’t. Examine all your financial accounts and employer benefits to ensure the person you listed is who you want to be your beneficiary.
Include The Right People In Your Plan
Whether you’re naming an agent to make decisions for you in the event you can’t, selecting an executor or successor trustee to manage things when you’re gone or choosing who will take care of your kids, go with the A team to make sure it’s done correctly. And remember the A team from 10 years ago may not be the A team today.
Establish A Game Plan
Your wishes don’t instantly translate into action. To make things happen after you’re gone, you will need to establish wills, trusts, powers of attorney (both medical and financial), and a letter of instruction detailing your wishes and providing what your key players need to know when the time comes. A qualified estate-planning attorney can help you assemble the plan. There are also a variety of services that can help you put the pieces together.
Update Your Plan
Speaking of a plan, if you made yours decades ago, it may need to be dusted off and refreshed. When I started in this business in the early 1990s, the estate tax kicked in at $600,000. That has since changed, so if the plan you’re using today was drawn up in accord with that rule, you could face unintended consequences. In the same vein, financial institutions may be less likely to recognize a 25-year-old power of attorney than one drawn up a couple of years ago.
Review Your Insurance
Life, disability, long-term care and health insurance all have direct or indirect effects on your estate planning. As your situation changes, so too will your insurance needs. Have you ever asked yourself if the policy you bought 30 years ago still makes sense today? If you haven’t, maybe it’s time.
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