By Matthew Gaude & Shawn McGuire
Talking about death is oftentimes a very sad and uncomfortable topic to dig into. Think about it. Who wants to imagine their spouse leaving sooner than expected? Nobody!
Psychological studies have shown that grief profoundly impacts our decision-making skills—and not for the better. (1) However, no matter how hard the conversation may be to have, that should not stop it from happening. The reason for this is because a truly comprehensive financial plan must consider and prepare for losing a loved one. It may not happen to every client, but it is a reality for many. There are certain actions you can take today to plan for the unexpected death of yourself, your spouse, or the both of you. To not think this through would be to neglect your spouse, children, and family.
Creating A Plan
Outside of the emotional loss when a loved one passes, the most impacting loss usually has to do with income. Having a plan for making up the lost income from the unexpected death of a spouse is an important aspect of any financial plan that must be thought through. For most, this income can be made up through a combination of life insurance, existing assets, Social Security, and other survivorship benefits. The purpose of creating a plan that takes into consideration all of your resources is to show you whether or not you will be able to maintain the same lifestyle as before, for how long will your resources last, and where gaps might be.
If you look at potential scenarios in advance, you will be able to think through different strategies that could be options in the event of an unexpected death. For example, if you see a gap exist to cover your mortgage, you may want to purchase an additional policy to make sure you are covered.
In addition, it helps to consider your expenses as it relates to your plan. Understanding your fixed and variable expenses will allow you to be flexible in the future if there is a need to downsize your lifestyle.
Creating A Will
A will is an important tool in estate planning, in which you can outline exactly what is to happen to your property, such as investment accounts, real estate, and other personal belongings. In addition, your will dictates guardianship to your children. By creating a will, you are taking control of your most personal and prized possessions in case you pass away. Without a properly documented will, the State decides what happens to everything mentioned above, which usually leads to hardship and undue stress on your family. It is important to note wills can easily be updated and we recommend doing so from time to time, especially throughout different life transitions.
Naming A Power Of Attorney (POA)
There are a few different flavors of a power of attorney (POA). First, there is what is called a financial power of attorney, who, when named, would be designated to handle your financial affairs upon your death (or if you are deemed incompetent to do so yourself). There is also what is called a durable healthcare power of attorney, which would be someone designated to make decisions you cannot make related to your health and well-being. The durable healthcare POA is typically associated with your advanced healthcare directive, which is a living will stating your wishes for medical care.
Organizing Important Information
Another often overlooked part of preparing for an unexpected death is maintaining all of your important information so someone else can retrieve it someday. Oftentimes, one spouse may handle finances, budgeting, etc., which results in the other spouse being out of the loop. This is a major issue if there is no record or system that maintains a list of important parties, log-in information for accounts, expenses and bills, and other critical items.
Some items that may fall within this category include contact information for your estate planning attorney, financial planner, insurance agent, etc., and inventory of legal documents and assets, with details as to their locations. Finally, we recommend using a password manager to securely keep a record of all of your family’s banking account information, investment account credentials, digital assets, etc.
What To Do Next?
While thinking about a spouse or family member dying unexpectedly is not something anyone looks forward to, the sense of peace you will feel when you have all of the boxes checked may surprise you. If you’d like to start a conversation with us at Live Oak Wealth Management to plan for your future, please call my office at 770-552-5968 or email firstname.lastname@example.org. You can also simply click here to schedule an appointment online.
Matthew Gaude is an *investment advisor representative and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. Working first as a commodity broker and then as a Business Development Manager for a national broker-dealer in previous jobs, he has the insights and experience to help clients understand the complexities of the market and implement strategies to minimize risk. To learn more about Matthew, connect with him on LinkedIn or visit www.liveoakwm.com.
Shawn McGuire is a financial advisor and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. He has worked in financial services since 2002 in positions ranging from financial advisor to stock broker and portfolio manager. As a CERTIFIED FINANCIAL PLANNER™ professional, he is trained to help clients with virtually all their financial needs. To learn more about Shawn, connect with him on LinkedIn or visit www.liveoakwm.com.
Securities offered through American Portfolios Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through *American Portfolio Advisors, Inc., a SEC Registered Investment Advisor. Live Oak Wealth Management, LLC is independently owned and not affiliated with APFS or APA.
Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc. (APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk, and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.