A heart attack, a stroke, or a cancer diagnosis can change our lives and the lives of our loved ones in an instant. For many people, a health scare is a wake-up call. It can diminish their capacity, with no guarantee that life will return to the way it was. We had a health scare in our family last year when, a week after giving birth to our daughter, I was rushed back to the hospital with a life-threatening complication. Fortunately, the quick medical attention I received meant a fast recovery, but that is not always the case.
If you are responsible for your family’s finances, this adds another layer of complexity. In many families, one person is primarily responsible for managing the finances, and their partner may not have all the details. How do you make sure your loved ones are going to be okay in case of incapacity, or if you suddenly pass away? In my family, that role falls to me, and my spouse and I had put together a plan in preparation for parenthood. Having a clear plan in place is a way to look out for your family’s financial well-being.
Getting Organized
When you are ready to create a plan, the first step is to put all your information in one place. Gather bank, investment, retirement, mortgage, and credit card account statements. Create a summary of key information, such as the financial institutions, account numbers, contact information, and account balances, in a Word document or a piece of paper.
Next, gather information about your income and expenses. Where does your monthly income come from, and where does it typically go? Look through checking and credit card statements and list all recurring expenses. Some bills occur monthly, such as internet and electricity, and some are paid less often, like insurance and property taxes.
Now that you have all the details collected, explore ways to make things simpler. If you have multiple checking or investment accounts, now is a good time to consolidate them. If you pay for subscriptions that you no longer use, this is an opportunity to cancel them. Simplifying makes it easier to manage your finances going forward.
It is also helpful to gather all your important documents in one place, such as in a binder or a folder. As you populate it, include your insurance policies and their declaration pages. Add your estate planning documents, including your will, trust, and powers of attorney, as well as your tax return. Most importantly, make sure to let your spouse or close family member know where they can find them. They may need access to these documents quickly if something happens to you.
Seeking Help
Having gone through the exercise of organization and simplification, you may find areas of your finances where you need extra support. A tax preparer can support you with tax filing. A bookkeeper can help with day-to-day cash flow. An estate planning attorney can create and update legal documents for your unique situation. A financial advisor can coordinate between professionals in your team, in addition to managing your investments and mapping out a financial plan for your family.
This list is by no means exhaustive, and professional help can go beyond financial matters. For example, there are a variety of specialists focused on the medical world, such as care managers, health aides, and healthcare advocates
If you already have a team in place, consider introducing them to your loved ones sooner rather than later so they can start to develop their own relationships. At a minimum, including contact information in the binder will give your family a place to start. Even if you can still manage your affairs yourself, putting a team in place now is another way to support your loved ones when they need to take over.
Seeking help may also mean accepting that your capacity to manage finances will change over time. While the team of professionals can support you, you may also need to think about when to hand over the reins to a loved one or a professional fiduciary. For example, naming a child as co-trustee can help provide a thought partner for major decisions, while also lightening your load by delegating certain day-to-day tasks to them. The earlier you include your successors in financial decision-making, the smoother the transition may be if they need to take over completely.
An Act of Love
A health scare can be a powerful motivator to make changes. Getting organized and seeking help makes life easier not only for you, but for the people who may someday need to step in. It’s about creating peace of mind for yourself and for the people who matter most. While dealing with our own health scare, I was grateful that my spouse and I had taken the time to go through this process. This kind of planning goes beyond the numbers; it’s an act of love.
At North Berkeley Wealth Management, we support our clients during important life events, creating a sense of calm for them and their families. Providing clarity is one of the greatest gifts we can give to our loved ones, and a heartfelt way to show how much we care.
