Saturday, November 21, 2020

Are Your Finances Ready For Disaster? Part 4 - Death, Wills, and Estate Planning

Money on the Twos is a regular feature on Dystopian Survival. Every 2nd, 12th, and 22nd of the month will feature a new article on  Financial Preparedness, one of the most import aspects of modern dystopian survival. 

By Timothy Gamble 

Previous articles of this series:

Part 4 - Death, Wills, and Estate Planning

This is a deeply personal topic for me to discuss. My father passed away suddenly and unexpectedly in 2006. He was just 62 years old. He had no will. He had made no funeral arrangements. He left behind no final instructions. He had handled all the family's finances, and my mother knew nothing beyond the checkbook. His finances were a mess, and he left behind no master list of financial accounts, credit cards, retirement accounts, or other important information. He and my mother had never had a discussion of what to do in the event one of them died. 

We were left scrambling to find a burial plot, and make (and pay for) funeral arrangements. Mom had no idea if he had any life insurance (turns out he had a small policy through his employer) or retirement accounts. She didn't know all the loans or credit cards he had (a lot, it turned out), or even whether or not he had done the taxes yet for that year (no). All of his financial paperwork was literally stuffed in a desk drawer and two cardboard boxes, with no organization whatsoever. 

I don't know why Dad did no planning in the event of death. Maybe he thought he had plenty of time since he was just 62 and seemed in good health. Maybe the topic of death was just uncomfortable or even scary for him. Maybe he didn't want Mom to find out how deeply in debt they really were, and how unprepared for the future. Maybe he didn't want to face those facts himself. Whatever the reason, he left behind a huge mess for his wife and family to deal with, at a time when they were already grieving. Please don't do that to your family, whatever your excuses.

Myth: Wills are only for old people, or those who are sick. I'm young and healthy, so don't need one yet. False. My father was just 62, still working, and seemed healthy. Other people die even younger then him, and not just after some long illness which gives them time to make a will and do estate planning. People can die suddenly and unexpectedly at any ages.   

Myth: Wills and estate planning are just for the wealthy and people who own a lot of property. False. My parents were not rich, nor owned any property other than their house. Having a will and doing some basic preparedness and estate planning would have helped tremendously. Not doing so caused me a lot of time and trouble and my mother a lot of extra worry and grief. Even if you don't have a large estate, you still need a will and need to do some organization and planning now. If you don't have a lot, the good news is that it doesn't have to be a complex and costly thing to do. A simple will is something you can do for yourself. There are various books and kits with forms you can fill out available on Amazon and other places. Just make sure that it is valid in your state, and that you follow your state's rules regarding getting it notarized. And if you do have a large estate that needs more planning, then you can probably afford to pay an attorney to handle it for you. No excuses. 

Myth: The government will just do whatever it wants with my estate, so why bother? Ah, yes... The "blame the government so you don't have to deal with it" excuse. This simply isn't true. Individual states do have certain rules regarding probate, taxes, and distribution that you and your family will have to follow. But within those basic rules, there is a lot you do control. It is actually not having a will that enables the state to do whatever it wants. The fact is that going through the estate planning process, including creating a will, makes it a lot easier on your family and helps you to direct your assets according to your desires as much as possible. You can also take steps that will minimize estate taxes your family will have to pay. An estate attorney and a CPA can help you with this. 

For more on simple wills, see the Dave Ramsey article: What Is a Simple Will? 

In addition to a will, you need to do some other preparations for death, including life insurance, funeral arrangements, and what I call the creation of a Master List for your family after you pass away. 

Life Insurance -  From my previous article on insurance: "Life insurance is important at all stages of life. It can cover funeral costs, pay off medical bills that surviving family members may otherwise be stuck having to pay,  pay off debt owed by the estate, and provide living expenses for a surviving spouse and children. Even young, healthy people may die unexpectedly, which is not only devastating emotionally for surviving family members, but is potentially devastating financially, too.  Making sure you have adequate coverage for your personal circumstances is crucial. Be sure to review your coverage yearly, as your circumstances and needs change throughout life. 

Get started with this article on DaveRamsey.com: What Is Life Insurance and How Does It Work? It explains what life insurance is, and how it works. The article also goes into the different types of life insurance, who needs insurance, and how to decide how much insurance you need."

Funeral Arrangements - One of the difficulties we ran into when my father passed away was finding somewhere to bury him on short notice. We didn't have time to "shop around" to find the best location or the best deal. Same goes for finding a funeral home, a coffin, and arranging the other aspects of a funeral. It didn't help that my parents had never had a conversation about funeral arrangements, which caused Mom additional worry over what kind of funeral Dad would want. In the end, everything came together, but it wasn't easy or cheap. 

Funerals are expensive, potentially very expensive. There is no standard pricing. Prices for burial plots, coffins, and funeral home services vary widely. And these things all have to be done immediately upon death, during a time of high emotion and grieving. It would be much easier if this process could be done beforehand. The good news is that it can be. Pre-paid funeral plans are the way to go, in my opinion. Just make sure the plan you buy is transferable (some are, some aren't) in case the funeral home you buy it from goes out of business. We have done this with my mother. Her funeral, which hopefully she won't need for many years yet, is fully paid, and we know it is the funeral she wants because she helped design it. There will be no last minute scramble to figure it all out when she passes. 

For more, check out the Complete Guide to Pre-Paid Funerals: Plans, Costs, Pros & Cons (article on another website). 

My suggestion: Master Lists - Here is something that would have helped me if my parents had created them before Dad passed away: Master Lists of useful information for those left behind. 

The first master list I suggest is a list with updated contact information for all the people that will need to be contacted upon your death. In today's world, we all have friends, relatives, business associates, and various acquaintances scattered all over the place. Some we see on a regular basis. Others we haven't talked to in years. Mom had an address book with the contact info for most of our relatives, but there were several former business associates and a couple of Dad's old army buddies that we weren't able to contact before the funeral. 

The second master list I suggest, and I really needed this one in the months following 
Dad's death, was a list of all bank accounts, credit card accounts, retirement accounts, investment accounts, monthly bills, debts, and other financial information. Be sure to include account numbers, pin numbers, website login names and passwords, and so forth. I had NONE of this information, which caused much difficulty and wasted time. 

Keep these two master lists with your other important documents (see part 2 of this series).  

 Don’t wait—do it now! 

Now is the best time to create your financial emergency plan and to put it into action.  Its not easy. Its not fun. There is a lot to do. It may seem overwhelming. Just take a deep breath, and take baby steps every day. Eventually it will all come together. The peace of mind from knowing you and your family are prepared for any financial emergency will be worth it.

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1 comment:

  1. And when you have done all the things in this post, go through your stuff - all your stuff and make sure you consolidate things your family may want. We have put all money, all little treasures, a copy of the will, jewellery, passports,etc in the safe. All family paperwork - citizenship, hard copies of all the genealogy we have done plus certificates we've earned, photograph albums, etc in one cupboard. The family knows that at a pinch they don't have to go through everything, just take the stuff from the safe and one set of cupboards. And if we ever have to leave the house in a hurry we have only 2 places to collect our things we would hate to lose.

    We have also gone through ALL our clutter and reduced our stuff by half so if we both go at once its again easier on our family.

    One friend had a father die who collected both antiques worth many thousands AND a lot of nick nacks worth nothing. Plus put hundred pound notes in lots of books so every bookshelf, every drawer, every cupboard had thousands of stuff in value. It took 6 weeks of 12 hour days to go through his stuff and the family had to fly in from the other side of the world and take time off work to deal with it.

    Another was a family member whose father collected stuff. It took them 3 years to go through his stuff and sell things through the internet in small amounts in order not to flood the market. Selling things at $US30 for a bulk lot or $150 per item, one at a time.

    So think of your family. Do it now.

    ReplyDelete

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