“GET YOUR FINANCIAL HOUSE IN ORDER!”
Most people don’t think they have anything in common with celebrities, but I can think of at least two: family and death. When it comes to family, celebrities love and want to take care of theirs just like you do. When it comes to death, stars like Farah Fawcett and Ed McMahon had to reckon with mortality and so will we. Also, the shocking deaths of mega superstar Michael Jackson, and all-star NFL quarterback Steve McNair remind us that no one, not even a celebrity, can predict his departure date.
Why am I bringing up such an unpleasant topic when I’m supposed to be writing about money? Because family and death are the two best reasons to get your financial house (money) in order! If you’ve got debt out the whazoo or never invested in a life insurance policy, then your family could wind up living on the street. Even the Bible is filled with stories of church-going, God-fearing men who leave their spouse and children homeless and penniless. In 2 Kings 4:1-7 the prophet’s widow was left with no money and the creditors threatened to enslave her children in order to work off her debts!
If you passed away before your next birthday would your family suffer like the prophet’s widow? Would your spouse be socked with more FINAL NOTICE bills than sympathy cards? Would the church folk shake their heads and say, “It sure would hurt his heart to see his kids living in the car.” Would your children have to get jobs at a fast food restaurant because the college fund had to be used to pay your debts?
If you answered, “Yes” or, “I don’t know,” then stop playing Russian Roulette with your family’s wellbeing and start changing the situation by doing these four things: 1) estate planning, 2) maintaining organized records, 3) constructing a will, and 4) obtaining life insurance.
Estate Planning Is Not Just For The Rich
The bible teaches that we brought nothing into this world and we will take nothing with us when we die. Estate Planning teaches us that even though we can’t take it with us, we can determine who gets to keep it. You’re probably thinking, “Man I don’t have an estate, I’m broke!” Well, if you died today somebody is probably going to fight over who gets your stuff – the car, flat screen TV, even the sweater you wore yesterday! Everything you own, including your debt is going to be someone’s inheritance or responsibility when you die. Estate Planning essentially means deciding who gets your property after you die, then choosing the wisest legal transfer method(s), for leaving your property to the people you want to receive it.
Organize Your Records
Organize your legal and financial records so the right people - your spouse, executor, trustee, trusted family member, lawyer and/or estate planner, can easily find them. Keep one copy of each document with your estate attorney or planner and one copy at home in a fireproof file. Don’t put wills, living trust or powers of attorney in a safe-deposit box since these are often sealed at death. If critical information is stored on your computer, make a disk copy and a paper copy, and label them.
Where There’s A Will, There’s A Way
Without a well-constructed will, the government can carve up your assets any way they see fit. You might not have much, but I know you don’t want to give it to the government.
A will can spare survivors the nightmare of delays, family battles, and escalating attorney’s fees that often go into settling a will-less estate. In brief, there are three primary reasons you need a will: (1) To determine who will inherit your assets; this person or persons are called beneficiaries. (2) To determine who will manage your estate; this person is called an executor. (3) To determine who inherits the kids, if they’re still minors, or if they have special needs that will continue into adulthood; this person is called the guardian.
While you’re at it, make sure you also have (1) a durable power of attorney, (2) a healthcare proxy, (3) and a living will. The power of attorney assigns someone to handle your finances if you become incapacitated. A health care proxy assigns someone to make medical decisions for you and a living will states whether you want extraordinary means used to prolong your life if you become critically ill.
Don’t Scrimp on Life Insurance
There are five main reasons you need life insurance:
- To cover funeral expenses. Dying is not cheap - even a plain wood box (if you can find one) and an unmarked grave will cost a few bucks.
- To maintain your family’s lifestyle. Life insurance can replace the income your family will lose after you die. Without it, your wife and kids may have to sell the house, the cars and the furniture and move in with your mother. (I don’t know about your mother, but mine ain’t havin’ it!)
- To educate children. Without the benefits of life insurance, your children may not be able to afford a higher education.
- To pay off any outstanding debts. Don’t make your family grieve twice - about your death and about the debt you left them. If planned properly, insurance can pay off the mortgage, the car note, credit card debt and more.
- To pay any estate taxes due. Did you know that your heirs could actually get taxed on the assets you leave them?
I know you’d rather not think about dying, but it happened to the King of Pop, the King of Soul, the King of Rock and Roll, and it will happen to you. So, face the reality of your mortality, and don’t let the fear of dying paralyze you. Start planning NOW!