Many financial issues have changed recently due to inflation, rising interest rates, and crashing stock market.
One basic area that many people don’t deal with adequately is estate planning. This is a subject that many people are reluctant to discuss. They don’t like to deal with death and all the ramifications that come with it.
It is important to have careful planning in place before someone dies and to have an effective communication plan. A plan is useless if no one knows about it or who is making the necessary decisions. There are big changes for many family members both financially and emotionally with any death. Typically, incomes go down and taxes go up. The chief financial decision maker may need to be replaced. Communication and financial education are essential.
It is important to put your documents in order. This can include a will, trust documents, financial power of attorney, and advance directives/health care power of attorney. It is also important to organize life insurance, pension documents and information about other financial assets.
It is equally important to have a plan for family members who are seriously ill or disabled. Things can happen very quickly, so it may be a good idea to create a take-home package, which lists all medications, personal information, emergency contacts, legal documents and other similar information in an envelope to get to the hospital. with the patient. . Many people have a contact phone number in their cell phone labeled ICE. Medical personnel know this means “In case of emergency”.
Although hospitals generally listen to the wishes of a spouse, the power of attorney is very important when adult children have to make decisions. Have a single designated primary person. There may be a backup person if the main person cannot be reached quickly. Some people are reconsidering health care guidelines because while you may not want to be on a ventilator all the time, some covid patients have survived after being placed on one. Ask your attorney if your power of attorney needs to be durable to stay in effect if you become mentally incompetent.
Be sure to update these legal documents if you move to another state, as the laws are often different. Some families have major problems if their college-aged children become seriously ill. If the child is over 18, parents must have a signed HIPAA Authorization, Health Care Power of Attorney, and Enduring Power of Attorney. Without these documents, parents may not be able to help their child.
Make sure key people know where your health insurance documents are and that health savings accounts are funded. Update beneficiaries and include potential beneficiaries. Things change and if you wanted to include someone new or remove someone, it should be done while you have the capacity. The designation of a beneficiary takes precedence over the provisions of your will. Remember that the changes made by the SECURE Act may require a different allocation of assets between your high-income and low-income beneficiaries due to differences in tax rates.
Make sure you communicate your plan to those who need to know and that everything is organized. Don’t forget to include a list of passwords to access your various online accounts. Make sure your family is prepared.
Your Financial Future is authored by Certified Financial Planner Gary W. Boatman, MBA and CFP, who also wrote the book Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility. If there is an area you would like to see covered in the column, send your suggestions to [email protected]