Unfortunately, one of my best friends, growing up, lost his father to a car accident when he was 16 years old. The emotional and financial impact was devastating to his family. What’s more, when something tragic like an unexpected death happens, creditors don't just forgive outstanding bills. That burden transfers to the surviving spouse, and in some cases, children are forced to take on adult roles. I know many families are faced with emotional challenges associated with death that cannot be avoided, but negative financial outcomes can! If you are already a parent or plan to become a parent, here are three financial tips to help you protect your children and loved ones from the financial tragedies that come with unexpected deaths.
Emergency savings fund or a life insurance plan
If you do not have an emergency savings fund, then buy a life insurance plan. Even something small can act as a buffer to allow your loved ones to grieve and pick themselves up without being forced to sell their assets. The biggest misconception many individuals believe is that life insurance is too expensive, or they don't need it, which is a misjudgment. Depending on your age and health, a death benefit of $25,000 can cost less than your daily coffee cup. Yes, that is a true statement! It has never been more comfortable with technology to get a low-cost life insurance plan to ensure that your family has some financial protection if something permanent were to happen to the household’s financial head. It is a simple, easy solution to ensure your family is protected.
Draft a Living Will
According to the 2020 Estate planning survey by Caring.com, only 23% of U.S adults have a Living Will, and just 6% have an advanced health-care directive. Why is a Living Will necessary? A Living Will is a legal document that communicates your wishes and gives your loved one's directions in making tough decisions. Here is an excellent article from CNBC in respect to the Importance of a Living Will.
As coronavirus continues to spread, doctors urge Americans to get a living will
As the coronavirus pandemic continues to escalate, doctors around the U.S. are joining lawyers and financial advisors in urging Americans to create the essential documents necessary to help medical providers better coordinate care.
Draft a last will and testament
Sometimes people are told they need a Will, however, no specifications as to which type. A Last Will and Testament is a legal document by which you designate who is to receive your estate upon your death. By definition, "Estate" is all of an individual's property, financial assets, and liabilities at the time of his or her death. Without a Last Will and Testament, your wishes will be irrelevant, and if you were to pass away without a Last Will and Testament, the state in which you reside would decide how to distribute your precious hard-earned assets. This can cause a host of problems for your loved ones that can result in home foreclosure, heirlooms being auctioned off to pay back debts, family members arguing and turning hostile towards one another over claims to specific assets, and additional legal expenses associated with the probate process. This can all be avoided by proper planning and is much less intimidating than most would think. To get started, download your Free Last Will and Testament template here.
In conclusion, these three simple tips will have a significant positive impact on your loved ones. If you feel confused by any of the terms discussed or have any questions, please don't hesitate to reach out to an Inszu specialist, and we will be happy to assist you.