As holistic wealth planners, we help our clients craft financial plans that can withstand life’s changes—good or bad. We take pride in helping them put strategies in place that will allow them to live the life they desire. But no matter how proactive we may be, no one can predict when a tragic event might occur.
Unforeseen death or illness can have an extreme impact on your income and your family’s financial security. Failure to plan ahead could result in confusion and conflict amongst your loved ones in addition to the emotional stress from loss or injury. Thankfully, there are many things you can do now to help protect your legacy should you become incapacitated.
- Organize all financial documents and passwords
Are all of your important documents organized and stored securely? Does your family know where you keep these documents, or would they be left to figure out how to access your accounts? Take the time to get organized and let a trustworthy person know where these documents are saved. You should also write down usernames, passwords, unique URL codes, and answers to personal identity questions for your online accounts, and make sure someone else can access your safe deposit box or in-home safe.
- Take inventory of your assets
Have you determined how you will divide your assets? This includes personal property, like jewelry and collectibles, real property, and any businesses you own. You need a clear plan of how assets will be divided amongst your family members and/or other organizations, should you so choose. You should also let your family know the reasoning behind your decisions. Failure to have this conversation could result in resentment or conflict between family members who feel deserving of specific items.
Many parents dream of leaving residential properties or businesses to their children, but not many consider the cost associated with owning an additional home or their heir’s level of interest or desire to assume ownership of family businesses. Discussing your intentions with your family in advance can help make sure your plan doesn’t become a burden on those left behind.
- Consider creating a revocable living trust
Revocable living trusts aren’t just for avoiding the probate process. You can also use this tool for incapacity planning, and you can have one in addition to your will. You’ll maintain complete control of the trust while you’re alive and well, but you can also name a successor trustee who will become responsible for the property the trust owns in the event that something happens to you.
- Communicate with your family
If you haven’t already, it is recommended that you name a Power of Attorney who will manage your affairs should you become unable to do so. This is in addition to the named trustee of your estate, but it could be the same person. You should also name a Medical Power of Attorney who can make healthcare decisions on your behalf, such as what surgeries a doctor can perform or how aggressively you should go through treatment.
It’s wise to have a conversation with the appointed family members so they understand your wishes and can carry them out as you’ve requested. Another potentially wise decision would be to name multiple family members as co-trustees or co-agents. Although successor trustees and Powers of Attorney are held to the fiduciary standard, meaning they’re legally required to act in your best interest, you can’t predict how someone might act when you aren’t able to speak up for yourself. By dividing this power amongst multiple people, you’ll be creating a system of checks and balances that can ensure your legacy’s safety.
Proactive preparation and communication are key to reducing your family’s anxiety should something happen to you, but you can’t put these plans in place and forget about them. Along with your retirement plans, insurance benefits, and financial profile, you should review these contingency arrangements annually with your wealth advisor.
Though they are tough things to think about, your family will appreciate your thoughtful planning should they need to rely on it. Connect with an NNP advisor today for assistance with planning for the unexpected.