Tuesday, April 6, 2010

Get Your Finances in Order...In Case You Die

Some people think I am rather blunt and reading that headline I am inclined to agree with them, but, and this is a big BUT, when you are talking about a topic people would rather ignore, like death, sometimes you have to shock people to get their attention.
Now that I have your attention...

Everyone is going to die. Hopefully for you, me, and everyone else, death will come later rather than sooner, however, everyday I get to review reports of people who have died--everyone from the elderly who die of natural causes to the teenagers who were full of life just prior to the car accident/drug overdose/freak unexpected medical incident that rapidly took their life. In most cases death is sad and traumatic for surviving loved ones, and it for this specific reason that it is extremely important for everyone, no matter how old or young you are, to get your financial house in order now, before it is too late.

I have seen more than enough cases of family members fighting like hyenas over an estate because there was no Will and only vaguely remembered promises made by the deceased loved one, more than enough cases of the primary wage earner thinking they would save money by not buying life insurance only to die unexpectedly and leave the family destitute, and more than enough cases of people who have waged more-than-long-enough battles with incurable diseases left on life support because there were no advanced medical directives.

The way to protect your family when you die, is to start with the basics. Here's nine things you need to get organized straight away so that if the worst should happen, your loved ones will be taken care of:

  1. Have a Will which has been legally created, notarized, and is in compliance with state laws. We update our wills about every five years or so as things change (ie: the kids moved out, we buy or sell a business, we buy or sell a property, etc).

  2. Have a Living Will to make your wishes known in the event that you are unable to do this (in my case, I made it very specific that if I am on life support, I want the plug PULLED as quickly as possible. I did this knowing that my hubby, loving as he is, would never even consider making such a decision).

  3. Have a Medical Power of Attorney that will give someone you trust the ability to make medical decisions on your behalf in the event you are unable to.

  4. Keep a list of financial information in a safe location that your attorney/executor/trusted friend or relative will be able to access in the event of your death. This list should include information on your investments, bank accounts, property, debts, etc. so that the people you left behind will be able to sort out your financial situation if you are not there to help them. Be sure to include with this list other important documents such as birth certificates, marriage certificates, property deeds, military DD214, etc.

  5. Have life insurance. The amount you need depends on what kind of financial responsibilities you have. For example, if you are a single person with no dependants, you may only want enough insurance to cover your death expenses (funeral, burial, etc) and clear up your debts, whereas if you are the sole wage earner with a wife and five kids, you will need a significantly larger amount of insurance to cover the family's expenses for a number of years into the future.

  6. Have information in writing in regards to what you want to happen to you after death. Do you want to be buried? Cremated? Do you want a wake? Last rites? What are your religious preferences? The most organized lady I know was an elderly neighbor who had everything planned, and paid for, before she died. She had already set up the funeral and burial and all that her friends and few remaining relatives had to do was show up to the memorial service.

  7. Be debt free. One of the best ways to help your family after you die is to not leave them a pile of debt. It is hard enough dealing with creditors on a good day but when you are dealing with creditors and grieving at the same time it can be completely overwhelming. If you are debt free (hopefully including the house) that is one less problem you leave your loved ones.

  8. Leave a letter to be delivered to your loved one(s) after your death. Your attorney can hold on to this for you or you can keep it in your safe deposit box. The letter should include what you would personally like to say to them as well as other private information you want to share such as internet passwords, information about your online accounts (what do you want to happen to your websites and FaceBook account?), and anything else you don't want to leave unsaid.

  9. Get rid of stuff now (or securely hide it in a way that it will disappear when you die) that you don't want your family members to see after you die. Pictures of your new girlfriend? Not a good thing for a grieving wife to find. Evidence of other things you wouldn't be proud of sharing with the world? Do you really need to keep mementos?

Preparing for death is never easy or fun, but it can be such a better experience if you do this while you are still alive and healthy as opposed to leaving it to your grieving family members after you die.

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