Published July 29, 2015|6 min read
No one thinks that visiting the doctor or dentist annually will encourage bad health. It is a preventative measure to stave off illness and catch issues before they become problems. Yet, many assume talking about wills and insurance will make Voldemort, or at least dementors, appear. Words like guardianship, wills, budgets, and insurance are taboo along with finance and estate planning and are sure to kill any conversation.
I have spoken to several people from various walks of life, including lawyers, teachers, retirees, and grandparents, who admit that even though they have children, they have no will or guardianship in place. For parents, not having a will, guardianship, and life insurance policy is like leaving children home unattended and hoping nothing goes wrong.
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One couple said they did not have a will or guardianship because relatives who might be good for guardianship were not good with finances. The couple feared the guardian might not provide the education they wanted for their children, or worse, bankrupt the funds set aside.
However, as I told them, a guardian does not necessarily have to control the finances. Setting up a trust will allow the guardian to care for the children while the trust administrator handles the finances, bills, and education expenses.
Even if you do not have kids, you don't want the state dividing up your assets, or worse, keeping it for its own coffers. And the thought of the cousin I don’t like receiving my hard earned money because she’s the nearest living heir would make me want to haunt her in my afterlife.
If you want to leave a gift to your alma mater or favorite charitable institution, there are life insurance options that can help you do so. Regardless of how much you make, insurance can be a tool to help you stabilize your future and leave a lasting legacy for your heirs and organizations you support.
Unfortunately, people still avoid this discussion like it is the "mystery meat" at the lunchroom cafeteria. A friend mentioned that her parents did not have a will and it concerned her because she came from a large family and the siblings did not get along. She knew that if there was no will in place that it would be an ugly battle between the siblings.
To avoid having her siblings accuse her of influencing her parents, at a family holiday she brought a video camera and made the discussion on record. Her parents stated their wishes for the division of family land and what they wanted each child to inherit. Afterwards, the siblings picked who should take the parents to a lawyer to have the will drafted that honored their parents’ wishes.
I have experienced this unpleasant conversation with my own family. After the death of my father, I told my mom she needed to have a will. She said that she trusted my siblings and I to do the right thing. She did not want to talk about it as if we were anticipating her death.
I assured her that we wanted her to be around for a very long time, but to avoid the stress we experienced after my father’s death, she needed a will. I had to be firm: "We do not live in the same city. Who do you want to have power of attorney for health care in case you cannot communicate wishes to the doctor? Who do you want to manage your finances if you're incapacitated?" I told her that putting it in writing made sure that we honored her wishes.I printed out forms for her to look over so that she understood what it meant. Eventually, she looked into different insurance policies and choose one that fits her needs and wants.
Now is the time to review your finances and talk about long term planning for the life you want now and in your retirement. Here are the three steps you need to take immediately:
A good wealth/financial planner will analyze your debts and assets. Based on your risk level and the stage of life you are in, they will suggest ways to achieve your short and long term goals through financial products like life insurance, stocks, and mutual funds.
Finding a financial planner is much like finding a doctor. It is a personal experience and journey. It took time before I found someone that I trust. If you are new to the process, you may want someone that has good "bedside" manner to explain the process. Or, maybe you prefer someone that will handle it all for you. Start with referrals from friends just like you would for a dentist or pediatrician. You need to trust your financial planner. Get a referral from your accountant. Ask your bank or credit union about their wealth planning services. If there is a graduate business school in your vicinity, see if they provide financial planning services. Some have programs in partnership with state organizations to help small businesses and individuals.
If you have children, property, or other assets, a legal professional (specifically a wills and estates attorney) is useful. States have different laws when it comes to estates and trusts. An estates attorney can assist in drafting a guardianship for your children, power of attorney, and choosing the type of trust that is best for you, especially if you care for an elderly or disabled loved one. Many bar associations offer attorney referral services and some offer pro bono seminars on wills and estates taught by legal professionals. If there is a law school nearby, check to see if their legal clinic offers estate planning services.
Power of attorney for health care, also known as "health care proxy," is specific to healthcare and is separate from your will. If you are incapacitated, the person you appoint as your health care proxy makes medical decisions on your behalf. This person does not have to be the same person that handles your finances or is your will executor.
An attorney can draft a healthcare proxy for you. However, most states’ health departments have these forms available online. A simple internet search for "power of attorney health care " or "health care proxy form " should help you locate those forms.
Whether you are beginning your life with a special someone, welcoming a new addition to your family, starting over, or just moving out of your parents home, estate planning is essential to preserve the lifestyle you enjoy or to attain the lifestyle you desire.
Despite the resistance most people have to it, it is simple to do. Remember, "failure to plan is planning to fail." At a minimum you should review your financial plan and options annually. However, major life changes (birth of a child, job loss or promotion, illness or an inheritance) are always a reason to revisit, revamp, and revise your planning.
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