Having a conversation about death is difficult. Having a conversation about money and death is even more difficult. Nobody wants to think about losing a loved one, but waiting until it’s too late can leave your family with a complicated financial burden in an especially tough time. Having a plan in place in case you, your spouse, or both of you pass unexpectedly is vital to make sure your loved ones will be protected. Here are a few actions you can take today to prepare for an unexpected death.
Creating a Plan
Outside of the emotional loss when a loved one passes, the most impacting loss usually has to do with income. Having a plan for making up the lost income from the unexpected death of a spouse is an important aspect of any financial plan that must be thought through. For most, this income can be made up through a combination of life insurance, existing assets, Social Security, and other survivorship benefits. The purpose of creating a plan that takes into consideration all your resources is to show you whether or not you will be able to maintain the same lifestyle as before, how long will your resources last, and where gaps might be.
If you look at potential scenarios in advance, you will be able to think through different strategies that could be options in the event of an unexpected death. For example, if you see a gap in your mortgage coverage, you may want to purchase an additional policy to make sure you’re covered.
In addition, it helps to consider your expenses as it relates to your plan. Understanding your fixed and variable expenses will allow you to be flexible in the future if there is a need to downsize your lifestyle.
Creating a Will
A will is an important tool in estate planning, in which you can outline exactly what is to happen to your property, such as investment accounts, real estate, and other personal belongings. In addition, your will dictates guardianship to your children. By creating a will, you are taking control of your most personal and prized possessions in case you pass away. Without a properly documented will, the State decides what happens to everything mentioned above, which usually leads to hardship and undue stress on your family. It’s important to note that wills can easily be updated and we recommend doing so from time to time, especially after life transitions.
Naming a Power of Attorney (POA)
There are a few different flavors of a power of attorney (POA). First, there is what is called a financial power of attorney, who, when named, would be designated to handle your financial affairs upon your death (or if you are deemed incompetent to do so yourself). There is also what is called a durable healthcare power of attorney, which would be someone designated to make decisions you cannot make related to your health and well-being. The durable healthcare POA is typically associated with your advanced healthcare directive, which is a living will stating your wishes for medical care.
Organizing Important Information
Another often overlooked part of preparing for an unexpected death is maintaining all of your important information so someone else can retrieve it someday. Oftentimes, one spouse may handle finances, budgeting, etc., which results in the other spouse being out of the loop. This is a major issue if there is no record or system that maintains a list of important parties, log-in information for accounts, expenses and bills, and other critical items.
Some items that may fall within this category include contact information for your estate planning attorney, financial planner, insurance agent, etc., and inventory of legal documents and assets, with details as to their locations. Finally, we recommend using a password manager to securely keep a record of all your family’s banking account information, investment account credentials, digital assets, etc.
What to Do Next?
Rather than allowing this difficult topic to overwhelm you, think about the comfort that will come after you’ve checked off the boxes we’ve discussed. And remember that you don’t have to walk this path alone. I would be honored to guide you as you make these vital decisions. If you’d like to start a conversation with me to plan for your future as well as the unexpected, please email me at email@example.com or give me a call at 916-276-8677.
James Callens is a financial advisor at GLH&C Financial Services, a full-service, comprehensive wealth management firm. Jim has over 30 years of experience in the financial industry and uses his extensive resources, knowledge, and experience to help his clients experience simplicity and clarity in their financial life. Jim spent over 20 years working for GE Financial Advisors, both in their insurance services department and as a regional manager and financial advisor. He took part in GE’s Six Sigma Quality Training program and completed the National Association of Life Underwriter’s four-year LUTCF course. Jim also earned his certificate in financial planning from the University of California at Davis. In 2011, Jim combined his own firm, Callens Financial Group, with GLH Financial Services, creating GLH&C Financial Services, so he could provide even more value to his clients.
Jim is a member of the Financial Planning Association of Northern California and National Association of International & Financial Advisors (NAIFA). He has served as a board member of several nonprofit organizations and has been involved in Cub Scouts leadership and youth sports coaching. Jim lives in Folsom, CA, with his wife, Melissa, and his four children, Jacob, Kristen, Grant, and Andrew. Together, they enjoy outdoor activities such as kayaking, bicycling, and vacationing at Lake Tahoe. To learn more about Jim, connect with him on LinkedIn.