Throughout our lives, we take on many responsibilities as we care for our loved ones. Whether it’s raising children, supporting aging parents, buying a home with a spouse, or saving for retirement, life moves from milestone to milestone, often surprising us with how quickly time passes. As we navigate this journey, there comes a time when we must consider how to continue providing for our loved ones even after we’re gone. While estate planning is often the first thing that comes to mind when preparing for the future, there’s more you can do. End-of-life planning goes beyond the important documents in your estate plan, helping to ensure that nothing is left to chance and that your family is financially protected and supported. When you’re ready to approach end-of-life planning, organizing your finances will allow you to create a more comprehensive plan. But where should you begin?
Do I need to have an estate plan before I begin end-of-life planning?
Estate planning is a key component of end-of-life planning. The documents that are contained in a comprehensive estate plan allow you to dictate how your assets will be transferred, how your loved ones will be taken care of in the event of your passing, and how your medical care will be handled if you become incapable of making decisions for yourself. These documents can be created as early as your 18th birthday, but as any major life events such as marriage, divorce, births of children or grandchildren, purchase of real estate, etc. occur, estate plans should be revisited and updated to accurately reflect your current wishes. If you are among the majority of Americans who do not already have an estate plan, it’s not too late. Estate planning documents can be created, or updated, while you are addressing end-of-life planning, and a financial advisor can work with you to determine which ones are most suitable for your needs.
What steps should I take to organize my finances for end-of-life planning?
- Make a list of your assets. Include bank accounts, retirement accounts, real estate, vehicles, investments, business interests, valuable personal property and any other assets.
- Make a list of your liabilities. Include mortgages, loans, credit card debt, and any other financial obligations you may have.
- Gather your important documents. This will include any personal, financial, and legal documents you may already have. It can be helpful to create a secure list of all your logins and passwords to access your online accounts.
- Personal Documents: Birth certificate, Social Security card, marriage/divorce certificates, military service records, etc.
- Financial Documents: Bank statements, investment accounts, retirement accounts, insurance policies, deeds, vehicle titles, etc.
- Legal Documents: Wills, trusts, power of attorney, health care directives, etc.
- Create or update your estate planning documents. If you already have an estate plan, it should be reviewed to ensure that it is current. Otherwise, a financial advisor can help you to assess which documents you may need. Original documents can be stored at home or in a safe deposit box at a bank, but you can use secure online technology to store digital versions of these documents, so that you can remotely access them at any time you may need them. If you choose, you can provide login information to family members who may need to assist you. The documents in your estate plan may include:
- Last Will and Testament. This allows you to designate beneficiaries who will inherit your assets and state how those assets will be distributed. You will also choose an executor who will manage your estate according to your wishes, and if you have minor children, you can designate a guardian in your will.
- A Trust or Trusts. There are many different types of trusts that can help to protect assets, minimize tax implications, transfer wealth to heirs, and avoid what can be a long and expensive probate process. A financial advisor can identify what trusts might be best for your personal circumstances.
- Financial Power of Attorney. You can designate someone to handle your financial affairs if you become unable to do so.
- Healthcare Proxy. You can appoint someone you trust to make health care decisions for you if you lose the ability to make decisions yourself.
- Living Will. This health care directive allows you to express your wishes regarding your medical care in the event you cannot speak for yourself. You can address things such as heroic measures, pain management and organ donation.
- Letter of Intent. While this is not a legally binding document, this statement allows you to offer clarification or more personalized instructions about your last wishes.
- Review Beneficiary Designations. You may have beneficiaries designated in your will, on retirement accounts, life insurance policies, and other financial accounts. You will want to ensure that these are up to date.
- What are your health care planning needs? Do you have long-term care insurance or funds set aside for future health care costs? There are many variables involved in end-of-life medical needs and the coverage that is available to pay for it. A financial advisor can review any policies you may have and help you determine if there are more suitable options for your health and financial needs.
- Consider planning for funeral costs. There are many options for funeral and burial services. You may want to prepay these expenses or set aside funds specifically for this purpose.
- Contact a financial advisor who is experienced in end-of-life planning. Starting this process can feel overwhelming, but a financial advisor who takes a holistic approach to end-of-life planning can guide you and your family through it. They can review all of the information you have gathered and help you to create a plan that is best for you and your family.
Other Things to Consider When You’re Getting Organized for End-of-Life Planning
End-of-life financial planning is an important step to ensure that your assets are managed according to your wishes and to ease the burden on your loved ones, but it can be a very difficult topic to address. Everyone reacts differently to conversations surrounding estate planning and end-of-life planning. The thought of losing a loved one is hard for all of us to think about. Yet, if you can find ways to openly discuss the plans you have to provide for your family and your feelings about your final wishes, it may help to alleviate some stress and avoid misunderstandings.
When you work with a financial advisor who has experience in end-of-life planning, they can help you and your family to work through these difficult conversations and decisions. A financial advisor can be a compassionate guide who takes into account all aspects of your life, your financial resources, and your family dynamics when helping you through this process. They can ensure that your financial plans are designed to accomplish the goals that are important to you. They can help reassure your family that they will receive the financial education and support they will need moving forward. And most importantly, when you work with a financial advisor who is a fiduciary, you can rely on their guidance to always be in your best interest.
When you begin organizing your finances for end-of-life planning, you may find that you have many questions. The best thing you can do to start is to gather all your information and reach out to a professional. A financial advisor can help you to review everything you have and make a plan to move forward. If necessary, they can connect you with other specialized professionals such as a tax accountant or an estate attorney. By organizing your finances and partnering with a financial advisor who specializes in end-of-life planning, you can create a comprehensive plan that reflects your wishes and provides peace of mind for you and your loved ones. If you have any questions, please contact us.
