Have You Checked to See if Your Affairs are In Order?
A Not Too Uncommon Story
Ever hear horror stories about people who die with no life insurance policies and the surviving family has to scramble to get money for final arrangements. Or stories a spouse dying and then the other spouse losing the home because they don’t money to keep up payments or taxes? Or stories about life insurance policies that fall to a person’s estate because beneficiaries were never updated to remove deceased parents, spouses, or kids? Or policies with kids named as beneficiaries but can’t access the money because they are underage? Or situations where Children and Family Services step in to figure out what to do with someone’s kids when parents thought they resolved that through a local agreement with the godparent? Or situations where the ex-spouse gets the policy money instead of the current spouse; or the new wife gets the money instead of the children?
Did you know insurance companies have tens of millions due to beneficiaries that they can’t find? Why do you think that is? Sometimes beneficiaries never knew they were named in a policy. Sometimes it’s because insurance companies only get a beneficiaries’ name. Its difficult to find people when you only have name to go by. Is this a strategy of life insurance companies? I don’t know. But after you put thousands of dollars into a policy, you want those monies to get to the right person?
Get your affairs in order and then do your periodic check-in.
Getting Started
God is not the author of confusion. And although we dupe ourselves into thinking everything will be okay, that’s not a wise or biblical approach to life. Do your due diligence.
You can do a periodic check-in every year or two but try to get it in your head to do it every time there’s a life changing event. Life changing events can be: persons who come into the picture (through birth, marriage, or otherwise); people who leave the picture (through death, divorce, dissolved relationships, or otherwise); and additions of and loss of assets.
Regarding Life Insurance
Do you have life insurance? If not, everyone needs life insurance. You need life insurance- even if you have no dependents. You need enough to cover your final expenses, any debt that could potentially fall on someone else, and to support any people, churches, charities, or organizations you care about.
Once your insurance is in place, periodically confirm:
Beneficiaries are up to date. Was there an addition or loss to your family; or any other person or organization named in your policy? Is there anybody you need to add; or anyone you need to remove?
Policy Amounts are correct. Do you need to increase the amount on your policy because you couldn’t afford the amount you really needed when you opened the policy? And now that you are making better financial decisions and have more money available, you want to make that necessary correction? Do you have enough to cover the cost of maintaining your family’s standard of living if you were out of the picture? Is there enough to pay off the mortgage or cover monthly mortgage payments if your income was all of a sudden gone and the burden fell on your spouse? Many widows lose their home within a year of their spouse passing. Do you have increased responsibilities, a new spouse, aging parents who are dependent of your financial support, or something else?
On the other hand, do you need to decrease the amount of your policy? Are there fewer people dependent on you for financial support? Are children grown, moved out, have good careers, and established their own policies for themselves and their families? Have you been doing well building up cash and other assets so that you are close to being or already self-insured? That means, you have enough to cover all those things life insurance was meant to do. If that’s the case you may not need life insurance or may not need as much. Some opt to keep it as part an additional asset for their estate and legacy because paying it forward to the next generation is important to them. Is your home paid off, so you don’t have to worry about that burden being placed on your loved ones? Don’t forget that property taxes and insurance still need to be paid even if the home is paid off. Someone shared a horror story with me, about someone they know who lost their paid off beachfront home because they couldn’t pay taxes.
Did you move and need to update your contact
information (address and phone number)?
Did you or any of the beneficiaries have a name change?
Do you have a term policy and when does it expire? Are you buying term and investing the rest?
Do you have a permanent policy and is your death benefit increasing, decreasing or staying the same? What about cash value?
Was there a change in your insurance carrier and do you know who holds your policy now?
Does anyone else other than your spouse know what policies you have and/or where to find them?
Regarding Your Will
Do you have one? Have you taken measures to speak to who will care for your children and who gets what pertaining to your assets?
Does the Executor of your Will need to be changed for some reason? Maybe the have passed or have grown distant from you? Or maybe you want someone else to hold that very important role, now.
Does any beneficiaries in your Will need to be removed or does anyone need to be added?
Does anyone need to be added to or removed from the guardianship clause? Have kids grown up and/or guardians need to change because of death, illness, or a change in relationship.
Regarding Your Trust
Do you have one and/or need one? Do you want to leave a legacy behind by way of protecting assets? Maybe you have a family home, land, money, investments, or a business that you want to protect from being squandered and loss through mismanagement. Maybe you recognize most people are not good with financial decisions so you own putting in a middleman to work on you and your beneficiaries’ behalf.
Is your Trust Revocable- meaning it can be changed?
Does the Trustee, Co-Trustee, and/or Successor need to be updated?
Is the person you chose in the above roles selected because they are good with money or because you like them? Don’t forget that you can chose a financial institution to be your Trustee.
Do beneficiaries need to be added or removed?
Do assets need to be added or removed?
Regarding Accounts
Is contact information up to date?
Are beneficiaries up to date on bank accounts?
Are beneficiaries up to date on investment accounts?
In many states, these assets will fall to your spouse by default. Is that the case for your state? Is that what you want?
Other Areas to Check on
Do you have a Medical Power or Attorney and/or health care directive in place? Who is your designated personal representative and have you had a conversation about what your wishes are and whether they feel they can carry them out?
Do you have a Financial Power of Attorney? This could be the Executor of your will or your Trustee.
Does your family know what your wishes are concerning your death? You may have put this in your will, but keep in mind that many people don’t look at the Will until they much later. They are consumed with grief and making final arrangements. So have the conversation while you can.
Does someone other than your spouse know where you keep your important papers?
Do you have a list of your assets so that there aren’t unclaimed policies or unclaimed account money. This would be things like bank accounts, investment accounts, life insurance policies (from deceased worker’s employer, surviving spouse’s employer, private insurance, social security survivor benefit insurance, and possibly even a small policy from their credit union)?
Do you have contact information noted so they know who to contact for what?
Conclusion
We covered a lot of ground. Thanks for sticking in there with me. Chances are you won’t have all of these things in place. If that’s the case, I urge you to start building your financial foundation by tackling one thing at a time. Consistent concerted efforts can transform your financial situation in a matter of a couple months or a couple years. You aren’t in competition with anyone else, except the old you. So keep growing and keep going; learning and applying.
