No one likes to think about their own mortality. However, death is one thing no one can avoid. And while everyone hopes to live long and healthy lives, the unfortunate reality is that accidents and other unforeseen circumstances can lead to an untimely death.
This is why it’s essential to have your finances in order in case of your untimely death. By taking some simple steps now, you can ensure that your loved ones are taken care of financially if something happens to you. Here are some tips to help you prepare yourself and your family financially for the worst.
Make a Will
A will is a legally binding document that outlines the distribution of your assets after your death. If you die without a will, your state’s laws of intestate succession will take care of asset distribution, which may not align with your wishes.
Creating a will is one of the most crucial things you can do to financially protect your loved ones after your death. It allows you to state who you want to inherit your assets. You can also use this to appoint a guardian for minor children or pets.
While you can create a will yourself, it’s always best to consult with an attorney to ensure everything is correct and in accordance with your state’s laws. You can turn an ordinary written will into an attested written will and have two witnesses sign it to make it legally binding.
Take Care of Your Financial Documents
Most people have chaotic financial lives with pertinent documents scattered everywhere. This can make it very difficult for your loved ones to deal with your finances after death.
To make things easier on them, take some time to organize all of your financial documents. This includes bank statements, tax returns, insurance policy information, investment account statements, and mortgage documents. Doing this will give your loved ones a much better understanding of your financial situation and make it easier for them to take care of your finances.
You should also make sure they have access to any online accounts you may have, such as email, social media, and online banking. This will allow them to easily keep track of your finances and make necessary changes.
Get Life Insurance
Studies show that three in five Americans don’t have enough life insurance. This is a mistake. Without life insurance, your loved ones could be left with a significant financial burden in the event of your death.
There are two basic types of life insurance. Whole life insurance covers you for your entire life. It builds cash value that you can access while you’re alive. On the other hand, term life insurance is temporary and only covers you for a specific period, usually 10-30 years.
The type of life insurance you need will depend on your age, health, financial situation, and other factors. Consulting with an insurance agent can help you determine the right type and amount of coverage. Don’t forget to name a beneficiary for your life insurance policy, which is the person who will receive the death benefit payout in the event of your death.
For example, suppose you have young children. In that case, you may want to name your spouse as the primary beneficiary and your children as contingent beneficiaries. This ensures that your spouse will receive the death benefit payout if you die first, but your children will receive it if both you and your spouse die.
Save for Retirement
You may not want to think about it now, but your retirement years will come eventually if you don’t die before your senior years. Saving for your retirement now will help you prepare for the future, even if you won’t be the one who will benefit from it directly.
In case of your death, your loved ones can use your retirement savings to help them cover the costs of your funeral and any other expenses they may incur. You can name a beneficiary for these accounts if you have a 401(k) or IRA. This allows your loved ones to avoid paying taxes on the money when they receive it.
The earlier you save for retirement, the more time your money has to grow. So, even if you’re young, it’s never too early to start saving. Contributing to a 401(k) or IRA can help you reach your retirement goals and secure the finances of your loved ones.
Invest in Trust Administration Services
A trust is a legal entity that allows you to control how and when your loved ones receive your assets and minimize taxes and avoid probate. However, creating a trust is only half the battle. The other half is administering the trust after your death.
This can be a complex and time-consuming process, so investing in trust administration services is vital. These services can help your loved ones manage the trust, distribute assets according to your wishes, and take care of all the necessary paperwork.
Hiring a reliable attorney specializing in trust administration is the best way to ensure that your loved ones are taken care of after you’re gone. Find one with the right certifications and years of experience winning cases, and come highly recommended. This will ensure that your trust is in good hands.
The last thing you want is for your loved ones to deal with the stress and hassle of managing your assets after your death. By taking care of these things ahead of time, you can rest assured that their financial future won’t be jeopardized.
