Personal Tragedy and the Financial Plan

As a financial adviser, it has been an honor for me to help some of my clients through some of the most difficult times in their lives.  Today, I’m going to talk about death.

Death is something that we don’t want to face, and yet it is one of the two certainties in life.  Having a proper plan in place will make life after your death much easier for those who you care about.

On average, it takes about seven years for my clients to put all the legal documents that they need in place.  This is due to many things – not wanting to face that they are going to die, needing to make decisions on hard items like who they want to get our money when they are gone, not having people who they feel they want to make decisions in their place after death as executors or trustees of trusts.  One of my favorite sayings is progress, not perfection.  These documents can be changed, in fact I recommend that you review them every three to five years.  Just get the bones in place.  Also, don’t forget to check your beneficiaries.  I had a client die.  She and her husband were sure that he was the beneficiary on her life insurance policies.  Unfortunately, she had forgot that twenty years prior she had made their children 50% beneficiaries on the policies.  This had an impact on her widower’s financial future moving forward.  When it comes to legal documents, get something in place as soon as possible and review and amend as needed on a regular basis.

Be able to answer the question for the surviving spouse – “Will I be okay?”  Here I am specifically talking about life insurance.  When your spouse dies and the rug is pulled out from underneath of you, you want to know that you are going to be financially okay.  While human life is priceless, it is crucial to know the dollar amount it will take to replace the economic impact that you make on your family.  If you don’t know the amount, there are lots of calculators out there that will help you find out.  As a financial adviser, I am usually called within hours of the death of one of my clients.  I will never forget a call that I received from a client in July of 2007.  I was sitting on my back deck enjoying the early morning hours.  My client let me know that her husband had passed completely unexpectedly during the previous night.  After she had let me know what had happened, her very first question was “Will I be okay?”  As I was very familiar with their financial plan, I was able to answer immediately that yes, she would be okay.

Be organized.  While this is a good life practice, it is especially important when you are dealing with a death.  A good financial plan will consolidate your information into one place.  We keep all documents in an electronic vault for our clients.  The last thing that you want your beneficiaries to have to do is chase down all your documents to figure out where you had money or insurance policies.  It is important to have an actual copy of an insurance policy or an up to date statement with these documents.  I had a client die about eight years ago who had given me insurance amounts and premiums, but not actual copies of statements.  Unfortunately, these notes were vague enough that his widow had to wait three months for a bill to come for the insurance policy in order to claim the death benefit.  This was not ideal.

Death is not fun.  Having the proper legal documents, knowing how much life insurance you need and being organized helps your loved ones through very trying times.  Not sure where to start?  I know a financial planner that can help point the way.