Putting Last Things First: A Case for Priorities

Scott looked down at his cup of coffee, regret and sorrow etched lines deeper into his face. Looking up, he said, “I haven’t seen my brother in 15 years, not since my mother died.”

When I asked him why he said, “We used to be a very close family. On Sunday’s my mother would make dinner for the whole family, and then each of us would take out our instruments, and we’d play and sing for hours. My parents died without a will, and all hell broke loose. Fighting broke out among all the brothers and sisters, and now that the dust has settled, we don’t speak.”

It took years for Scott’s family to come to terms with each other. In truth, some of the siblings also died before peace could be made as Scott observed, “All over stuff.”

As I financial coach, I encourage my clients, as Steven Covey did in his great book The 7 Habits of Highly Successful People, we must “Begin with the end in mind.” In other words we must begin by putting the last things first! That is what our goals are – where we want to end up, so we forge a plan to meet those goals.

There is also one place we will end up, that we don’t like to face, which is the end of our lives.

We don’t know when that will be or how. We hate to face our own mortality, so we push off looking at those issues. But let me ask you this. What do you want for your loved ones after you’re no longer here? Do you want them worried, bickering, fighting – going through legal processes to resolve your estate, and possibly being estranged from each other?

I would guess not.  So, why not put last things first? Why not have a plan – a plan that was shared ahead of time so that strife and struggle can be minimized and your legacy can be enjoyed?

While there are a number of things to be addressed , looking at end of life issues, there are two things, above and beyond all else that should be taken care of immediately.

 Buying Life Insurance

The first order of business is life insurance.

In short, the purpose of life insurance is to provide a way for your family to keep living if you die. It’s about replacing your income or to pay for the the thousand-and-one things that you do to take care of your family when you no longer can.

So, the general recommendation for the person who has the primary employment that supports the family is that they should have a life insurance policy at 10 times their income. This will allow for the family to live and move forward while they get their feet beneath themselves again.

I’ve heard some folks say, “OK, I can understand that, but why do I need insurance on my wife/partner who stays home?” My answer is this. How much are you going to have to pay for:

  1. Cleaning
  2. Cooking
  3. Shopping
  4. Transportation
  5. Child care

Those are the top five, and there may be even more costs than that. The recommended range to cover such costs is $250,000 to $400,000.

What happens if that mom isn’t a stay at home mom? What if she works part time bringing home $50,000 all of which is needed to keep the budget balanced? In that case it might be that more insurance is needed!

As a financial coach, there is only one kind of life insurance that I recommend, and that is term life insurance. My reasons are simple. Term life is exactly what it says it is, coverage of a person’s life for a specific period (term). Moreover, term-life is the least expensive to purchase. Other kinds types of life insurance: Whole Life, Universal Life, and the variations in between, promise a cash value, and the ability to either cash it in or borrow against it. Here’s the thing… No cash value life insurance will ever have the cash value equal to the face value of the policy, and if you ever borrow against it, you’ll have to pay that money back (to yourself) with interest. If you should die before that “loan” is paid off, the amount borrowed is taken off the top of the face value…And, if you thought that the cash value that is “growing” gets added to your face value, you’d be mistaken. If you die without borrowing anything against the policy, your beneficiaries only get the face value – not the cash value as well. Who gets that? The insurance company does.

There are many good insurance companies out there. My recommendation is that you speak with the folks At Zander to meet your life insurance needs.

 Making a Will

Having a will is essential.

Through your will, you express your final instructions for all kinds of things from your funeral desires to directions for child care and the disposition of your property. As you saw in Scott’s story, his parents’ having died intestate (the term for without a will), was disastrous to the family. Who wants that for their loved ones?

What if there were little ones in the mix? What would you do then? Where would they go? With whom?

These things need to be sorted out. The good news is that wills can be amended and updated fairly easily.

By following the links below you can access:

  1. A document about wills in Connecticut
  2. Advice on picking an executor
  3. A company that provides templates for legal forms, including wills, that are customized for each state.

You will find that writing a will is fairly easy (after you decide what’s going to happen). Here in Connecticut, all that is required is that two witnesses sign the will. However, if you wish to avoid probate, then you and your witnesses should sign the will in front of a notary public. This will make your will a “proven will.” With a proven will must of the time and cost of probate will be eliminated. Most importantly, don’t wait for your attorney or the executor to reach out to your family to share your plans, especially not if it includes provision for children. Talk to your family now so they know your plans in advance…and perhaps even why you made these decisions. It will bring peace to the family in a time of turmoil. If you live outside of Connecticut, each state has its own resources for what is required for a valid will. I recommend you check with your local probate court for that information.

 

I’m begging you for the love of your family to take the big step of protecting them now. Use the information here to get the right kind and amount of coverage, and then, write a will. They will thank you for thinking about the unthinkable.

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