When I was in the financial planning world, one conversation I had with all couples who had children was death. It isn’t a fun discussion, but definitely a must have conversation because most couples won’t discuss the topic on their own.
As parents and spouses, we have many responsibilities – Dead or Alive. We have a responsibility to ensure our spouse has money to pay off debt and an ongoing income. That our children don’t have to suffer monetarily if anything happens to us. We also must ensure we have chosen who has legal guardianship over our children if something happens to both of us or the court may make that decision!
Additionally, we should ensure our spouse knows what to do and how to access all accounts. If you have never thought about this, then here are 4 tips that will ensure your family is taken care of in the event you unexpectedly pass away.
1) Have Life Insurance
As parents, it is our responsibility to have adequate life insurance to protect our family. I know all the money gurus tell you to pay down debt or open up a ROTH IRA before anything else, but life insurance is the most important thing you can do for your family.
My thoughts are if you start to pay down $80,000 in debt and die with $70,000 unpaid, how is your spouse going to pay that off?
Make sure you have enough insurance to pay off debts (mortgages, loans, lines, and credit cards), provide income for your family, and anything else you feel is important like college tuition, retirement income, ect.
2) Create a Will
Again, as a parent,…a Will is more important than investments and debt reduction.
Without a Will, your state can decide who gets your money, who raises your children (if you both pass away), how your estate is divided, and pretty much anything else. It is a long process that goes through the court system.
If you create Will, then you get to decide. You can spell out everything you want to happen and keep some control if though you passed away. You can decide who raises the children, how your children are raised, where your children live, and much more.
(Also…your life insurance policy can help to ensure the guardians of your children have enough money to raise your children)
3) Up To Date Beneficiares
When I was a financial advisor, I had a recent widow come to my office. She was in her mid 30s and she had been married to her husband for about 6 years. They had two children.
He had enough life insurance, lots of money in his retirement account, and even a business that was being bought out by the partners, but HE HAD NEVER UPDATED HIS BENEFICIARIES!!!!!!!! HIS MOTHER WAS THE BENEFICIARY OF EVERYTHING!
I would love to tell you the wife got everything, but she didn’t! This is why you must make sure your retirement accounts, businesses, savings accounts, and life insurance policies have the proper beneficiaries!
4) Information in One Place
One thing you can do for your spouse is create a list of all accounts, account numbers, phone numbers to important people (i.e. attorney, life insurance company, ect), and beneficiary forms.
Put all of this in an envelope for your spouse and keep it in a safe place. This makes everything easy and reduces unneeded stress.
I know we don’t like to think of death, but unfortunately it will happen to all of us (hopefully later, than sooner). However, if you implement these four rules you can be assured your family will be taken care of!