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Seriously? You Don’t Have a Will?

January 08, 2016

Seriously? You Don’t Have a Will? And Other Must-Haves for Executive Families

I work with clients on financial planning and investment management. Unfortunately, most people think they are the same thing. Financial planning is identifying goals and putting a plan in place to achieve those goals. Investment management is choosing the right asset allocation for your timeframe and risk tolerance. If any of that sounded boring to you, keep reading. I’m talking to you.

I often get this question from friends or colleagues who know I am a financial planner but are not clients: “So what happens to this investment/real estate / bank account if I die?”

My response is always the same: “What does your Will say?”

(Insert blank stare here, awkward silence, and me trying not to act incredulous that a really smart professional with children has no Will.)

Me: “Your Will. The document that tells your loved ones (and perhaps more importantly your executor and the Probate Court Judge) who shall take care of your children and who will receive the fruits of your life’s work.”

Colleague: “I know, I know. I am aware of what a Will is. I just haven’t gotten around to it.”

Me: Launch into a speech about whether or not my colleague’s possessions and family mean anything to him/her at all if he/she hasn’t even taken the time to put in writing who should take care of those things if he/she should die.

I will save you the speech, but I will offer you the following list of “must-haves” for executive families:

Will and Powers of Attorney: The Power of Attorney authorizes someone to work on your behalf for both financial and medical purposes while you are living, and the Will instructs an executor on how you want them to work after you die. See an estate attorney for help with these documents. Mind you, I did not say an attorney, I said an estate attorney. Each spouse should have a separate set of documents.

A Plan: You are making money, but you are spending money. You have a mortgage, life expenses, kids to educate and a retirement to fund. You’re making good money, but a lot of it seems to go away each month. If you make a plan and stay focused on the path to achieving those goals, you can measure your success year by year. Time will pass regardless of whether you plan or not, so take advantage of today and put your goals in writing.

Education Funding: Education can be funded using myriad investment programs, in both tax-protected and taxable accounts, with varying degrees of risk. Don’t get hung up in which plan is perfect for your situation. Instead, set a goal (i.e. we want to fund 50% of a public school education for each child), and start working towards that goal.

Emergency Funds: Choose a level of cash you will keep in the bank. It should be a level that honestly takes care of emergencies (roof needs repair, air conditioner breaks, spouse loses a job). It should also be enough to give both spouses confidence to invest for longer term goals such as retirement and education funding.

Insurance: Insurance is designed to protect against “what if” scenarios before people have amassed enough capital to guard against those scenarios. Seasoned financial planners recommend insurance because we have worked with so many families that have faced these “what if” scenarios and know how they play out in real life. Life insurance is the primary insurance, but you also may want to consider disability insurance (which is commonly offered through your employer) and long-term care insurance.

These recommendations are the baseline for what executive families should have in place, and are the foundation of my financial planning practice. Working with new clients to evaluate and prepare each of the above is as important as the investment management that I do after the goals are set. Each family is unique, and no financial plan should be “cookie cutter.” Your family financial plan should be crafted around your needs and goals, as well as your own resources, assets, timelines, and markers of success. And remember – take advantage of today.

This material is intended for informational purposes only and is not intended to be a substitute for specific individualized advice. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.