The first part of 2023 has not been fun. I’ve had an unusual number of clients experience a death in the family, a medical diagnosis, a change in their immediate health situation, etc. These unexpected events can have a devastating emotional impact on families and also trigger a long list of action items to deal with the after effects. What we don't want to happen is for an unexpected life event to create an unexpected and devastating impact on the finances of the survivor and family. This is where the Financial Safety Net comes into play. Having core documents setup and decisions made ahead of time simplifies things for the family members tasked with stepping in.
For my practice, I have embarked on a project to re-review and update the Financial Safety Net of every client household. I can help with the assets my clients hold with me, but this review also asks clients to check assets, accounts and policies that are held with their employer or other providers. The following list is a starting point for checking the core of your Financial Safety Net. Not all these items will apply to every situation and if you have any questions about what something means, just ask!
- Is your Will up to date and still reflect your wishes?
- Is your Medical Directive up to date and still reflect your wishes?
- Is your General, Durable Power of Attorney up to date and activated on your accounts?
- Are the Beneficiaries on your accounts (including employer retirement accounts, insurance policies, annuity contracts, etc.) up to date and still reflect your wishes?
- Are the Beneficiaries on your pension and other income sources up to date and still reflect your wishes?
- Does your account and beneficiary setup match your Estate Planning Funding Instructions?
- Do you have a Trusted Contact assigned on your accounts?
- Are all your Property & Casualty Insurance Policies up to date and have appropriate coverage?
- Are all your Life & Health Insurance Policies up to date and have appropriate coverage?
- Have you updated your Estate Information Document and provided it to your named executor, successor trustee, etc.?
I always tell my clients that these types of things don’t have a deadline until they do. In the same way you cannot buy car insurance after the accident, you must have critical aspects of your Financial Safety Net in place before they are needed. Putting things in place after the fact is either impossible or exponentially more difficult. So, take just a few minutes to verify your own Financial Safety Net using the checklist; it will give you peace of mind that unexpected changes to your personal situation will not derail your and your loved ones' financial plans.
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