Let’s be honest, no one *likes* to think about mortality. And for this reason alone, many people put off preparing for this event. It’s much more exciting to plan for the next family vacation and all of the things you have every intention of being very much alive for.
But here’s the reality. Planning your affairs in advance of a tragic incident that results in you passing away unexpectedly or becoming incapacitated for any length of time is not really for you anyway. It’s for your spouse, your children, your parents, and anyone else who loves you and whom you love.
If you don’t make these important decisions now while you can, you are, in effect, deciding to burden your family with impossible decisions later. And worse, you might be leaving the most personal decisions – like what happens to your children if you can’t care for them – to your state government. And if that doesn’t keep you up at night, I don’t know what will.
I will always tell you and my clients what you need to do to reach financial success and protect the life you’ve worked so hard to build. Which is why this week’s Profit Boss® Weekly is focused on the estate planning areas you need to have covered as soon as possible. No one sees a tragic accident coming or plans for a terminal diagnosis, but they very possible and likely to affect many of us in our lifetime.
Here’s what you need to do to get your estate planning documents formulated and finalized.
Update Your Beneficiaries
Update your beneficiaries on any investment account, life insurance policy, trusts, will, and retirement plan. The last thing you want is for your ex-spouse to get your life insurance benefit over your current spouse or children.
Get Life Insurance
Speaking of life insurance, do you have a policy in place? If you are married or have minor children, this is a must. I recommend term life policies that cover you for as long as you have dependents. To find out how much life insurance you should have, multiply your current salary by the number of years until your youngest turns 18. Then add your mortgage balance plus any existing debts.
Create a Revocable Living Trust
This is just the name for the estate planning tool that legally documents your wishes for how your assets and the guardianship of your children should be handled if you die. It names the beneficiaries for your property, names guardianship of your children, names a manager for children’s property, names an executor, instructs how debts or taxes should be paid, avoids probate court, reduces the chance of court disputes over your estate, and keeps your document private after death.
Detail Medical Directives in a Living Will
This is the document that allows you to explain your wishes regarding your medical care in the event you are unable to communicate these wishes at the time. What life-sustaining efforts do you want? These are decisions that are extremely difficult for loved ones to make on your behalf but that you can determine now just in case you’re ever faced with this situation.
I really wish they would change the name from “estate planning” to something like “life planning,” because so many people hear the word “estate” and think these planning tools are only for the top 10% of wealth earners. This could not be less accurate. Estate planning is for everyone. These simple tools allow you to make decisions now regarding your life for the people you treasure more than anyone else in this world.
Let me help you get your estate plan in order if you haven’t checked off these boxes yet, or if you want someone to review the current plans you have in place. It’s beneficial to review your estate planning documents and make changes as your life situation changes.
My firm monitors beneficiaries on behalf of clients, and we can put you in touch with estate planning attorneys if you don't have anyone in mind yet. These are the professionals who draft the legal documents I mentioned above. Typically, the revocable living trust, medical directives and will are all sold as a package, so getting all these items done together not only covers most of your estate planning considerations but it can also be cost-efficient.
Start thinking about how to answer those really tough questions about who you’d want to raise your children if you weren’t around.