Q: I know it’s important to have my financial affairs in order, especially when approaching an advanced age, but it’s all so overwhelming. How do I go about this task?
A: No one knows when their time will come, so, it’s best to be prepared at any age. Also, a debilitating illness or car accident can incapacitate anyone without warning, leaving a person unable to manage their finances or express their needs. Establishing a clear protocol for the distribution of assets and for medical preferences will ease a painful time for family members while ensuring that your instructions are carried out.
Fortunately, this is not as overwhelming as it sounds. Here are nine steps you can take to make sure you’re fully prepared for any eventuality:
1. Take inventory of all your items of value
List every item you own that’s worth $100 or more. First, list all physical items like your TV, jewelry collection, vehicles, and computers. Next, list all non-physical assets, including 401(k) plans, IRA assets, and all existing insurance policies, such as homeowners, auto and health insurance.
Be sure to list all open accounts in your name with SouthPoint Financial Credit Union and any other financial institution. While completing this step, check that all beneficiaries listed on these accounts are the ones you want and that all other information is correct.
2. Assemble a list of all your credit cards and debts
Create a list of your open credit cards and other debts. Include auto loans, existing mortgages, home equity lines of credit, student loans and any other debts you may have. It’s a good idea to run a free credit report once a year; this will remind you about any open credit cards you may have forgotten.
3. Select an estate administrator
Choose someone you trust completely to be responsible for executing your will. Think carefully before choosing your administrator and bear in mind that emotions accompanying your death may impair this person’s decision-making ability.
4. Send a copy of your assets list to your estate administrator
When you’ve completed your lists, date and sign them. Make at least three copies of each list; give the original to your estate administrator and, if you’re married, give another copy to your spouse. Have your spouse place the list in a safe-deposit box and keep another copy in a safe place at home.
5. Review all retirement accounts, life insurance policies and annuities
Every account in which you list beneficiaries will be bequeathed to the person(s) or entity designated on the actual account upon your death, regardless of how you list these accounts in your will. Take the time now to review all such accounts, policies and annuities to be sure they list your chosen beneficiaries.
6. Assign TOD designations
Prevent your assets from being distributed in an expensive court process by simply assigning them a TOD, or transfer-on-death, beneficiary. Most accounts can easily be set up with a TOD. Call, click or stop by SouthPoint Financial Credit Union to find out how you can set up a TOD beneficiary on your accounts.
7. Create a will
Wills are not just for senior citizens — everyone over the age of 18 should have one. This document will serve as the guide for the distribution of your assets upon your death, preventing thorny family feuds and expensive court proceedings.
While creating your will, be sure to assign power of attorney to a designated lawyer, choose a health-care surrogate and select guardians for your kids and pets.
Sign and date your will, have two witnesses sign it, and obtain a notarization on the final draft. Give one copy to your designated estate administrator, keep another copy in a safe place at home and give your spouse a third copy to be kept in a safe-deposit box.
8. Create a living will
You may be strong and healthy now, but there’s no guarantee you’ll always be that way. A debilitating disease or a car accident can incapacitate you, leaving you unable to care for yourself or to express your needs. At that point, having a living will, or a medical power of attorney, will be a true life-saver. This document will stipulate who you’ve chosen for the responsibility of making medical decisions on your behalf. It will also specify whether you’d like to be resuscitated, put on life support and have other invasive procedures done on your behalf. Having a living will takes a tremendous burden off your family during an already trying time.
9. Create an estate-information packet
Now that you’ve gathered all your financial information and created your wills, it’s time to organize them. While you may know where all important documents are kept, it can be difficult for someone else to locate them when circumstances make it necessary. By creating one master document containing all important information, you’ll save your loved ones hours of work.
Your estate-information packet should include details like your Social Security number, the location of your living will, your designated estate administrator, a list of all accounts you own and a list of your investments.
Now that you’ve taken care of the hard work, you can get back to your bucket list of things to do before you die. Do you want to swim with dolphins? Visit the Alps? Go for it — the sky’s the limit!
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*Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither Cetera Advisors Networks LLC nor any of its representative may give legal or tax advice. **Securities and investment advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC, a Broker-Dealer and a Registered Investment Advisor. Cetera is under separate ownership from any other named entity.