This is a hard subject for me to talk about. Yet, I feel like it’s really important and something I can’t simply ignore. I hope you will receive my message in the spirit in which it is intended: ideas to provide comfort to your family and loved ones should something tragic take place.

I started thinking about this topic recently because a friend of mine passed away. He was young, only in his 30s. He was in the prime of his life and had so much to look forward to. But in an instant, his life was over. His premature passing was completely unexpected and it devastated his family. I grew up with this guy and know his family really well. It has been very hard to watch them suffer.

My friend did not have a wife, children or major financial commitments. He also did not have a will or an estate plan. This means his family will have to figure everything out concerning his finances. I see this more often than you might realize.

However, it is not only premature passing that has the potential to wreak financial havoc on a family. Long-term disability can have the same effect. My point is simply this. None of us are promised tomorrow or even a healthy tomorrow. But there are steps you can take to protect the ones you love from financial devastation. Here are my ideas to help you prepare for the unexpected. 

profile picture for Craig Janus
"There are many investment options today for affluent families. I enjoy digging in, doing the research and bringing solutions to the table."


In Case Of Premature Passing

Life insurance is a crucial and fairly obvious step that most people take who have loved ones they want to protect. I recommend that you size your policy, and update it when significant life changes occur, in consultation with your Whitnell financial advisor and a life insurance expert.

Here are some things that are not particularly obvious and that might require some further research on your part.

Some younger people, those under 40 years of age, don’t create a will because they’re not entirely sure how they want things to happen. They’re also often concerned about the costs of the will creation process. This is a mistake. You can always update your will as your priorities change. Having a will that is not perfect is probably better than having no will at all, especially for loved ones.

The other reason some people put off the will creation process is because they think they don’t have enough wealth to justify the need for a will. I believe this is also not accurate, especially if you have children. One of the primary reasons to establish a will is to make clear your intent regarding guardianship of children. If you have not made this clear in your will, the courts might appoint someone of their choosing or family members might engage in an ugly custody battle. A will brings clarity to an otherwise very difficult situation.

Once you create a will, that’s a great start. But you shouldn’t just forget about it over time. Big life events typically spur the need for a review of your documents and your wishes:

  • Passing of a loved one, often a parent where wealth inheritance is involved.
  • Birth of a child or grandchild.
  • Graduation.
  • Marriage.
  • Divorce.

If you’ve not updated your will, estate plan, life insurance beneficiaries or other documents since you or someone you love went through one of these major life events, it’s a good idea to schedule a review.

During the review, I recommend that you have an expert look closely at the details of your documents. You want to make sure that your estate plan and will reflect your wishes. Be sure to review the beneficiary designations on your insurance documents, IRA and 401k. While this sounds obvious, it is an area where we’ve helped clients discover some unexpected surprises.

For instance, we recently built out a balance sheet and reviewed beneficiary designations for a client. 
This man had been married and then divorced. He re-married and had children with his new spouse. A review of his beneficiary designations revealed that his former spouse was due to inherit almost all of his assets.

In other words, his beneficiary designations had not been updated. His will had been updated to name his current wife. But the beneficiary designations reflected his wishes from many years before. Had we not caught this and had he passed away suddenly, he would have accidentally disinherited his children from his second marriage and his current wife.

This is just one reason that you need someone to be looking carefully at the details of your financial life to align it with your desires. Whitnell can be a partner to you and your estate attorney to help advise about the best financial outcomes for complex decisions.


In Case Of Long-Term Disability

In some ways, long-term disability can be more financially devastating than premature passing. When a person experiences a tragic event that debilitates them but does not end their life, their need for income will probably be greater than before the event. This is especially true in cases where expensive long-term care is required. All the while, the financial needs of their loved ones will not abate.

Most younger people buy life insurance, especially those with children. Very few young people buy disability insurance, often because it’s not affordable and because it’s difficult to understand. This may or may not be right for you. But you need to find your risk factors and mitigate those risks as best as possible.

People who are more mature and have a stronger financial portfolio, no children and a working spouse may not need disability insurance. People in this situation in life sometimes choose to self-insure. Even if you choose not to acquire disability insurance, there are steps you can take to protect your loved ones.

For instance, power of attorney for healthcare and property allow others to manage your affairs, should you become incapacitated. Power of attorney for health care indicates who can make health decisions if you cannot make them. This might be a spouse, children, parents or someone else. This makes it clear who you trust to make decisions. This can greatly reduce stress at an otherwise difficult time.

Power of attorney for property is similar to power of attorney for healthcare. But this does not mean that they have to be the same people. The person you trust to make healthcare decisions may not be the same person you trust to make financial decisions.

Power of attorney for property and healthcare prevent confusion about who has the right to do what. This means you don’t have to go to the courts to get these decisions made. These documents make it clear, should family members not agree, what you desire. This also ensures that your affairs are handled quickly and efficiently, without having to rely on the courts.


Some Other Suggestions

While insurance, estate plans, wills and powers of attorney can help protect your loves ones, they are not the only steps to consider. Many adults today over the age of 40 have complex financial lives that only they fully understand. This makes it very challenging for others who might need to take over at a moment’s notice.

This is why I recommend that you simplify your financial life. Organize your accounts and document them so others can follow the bread crumbs. Reduce the number of credit cards and credit sources you draw upon. The more you simplify your financial life, the easier it will be for someone else to step in and manage your financial affairs, should you pass away unexpectedly or become incapacitated.

For instance, I recently worked with a client whose mother had passed away. Her mother had $100,000 in CDs in 20 different banks. She named her daughters co-executors, which meant that they had to agree on everything and sign everything together. This took weeks to resolve. Each bank required several hours to execute the documents. This was a significant burden on her children, all while they were dealing with her passing.


Time For A Conversation?

If you are not sure where you stand on these topics, the best place to start is by contacting your Whitnell financial advisor. We’ll be happy to review your documents with you and your estate attorney, CPA, insurance specialist or other professional advisors. By preparing now for the unexpected, you can bring comfort and financial peace of mind to those you love.


The information contained in this article is provided for informational purposes only. No illustration or content in it should be construed as a substitute for informed professional tax, legal, and/or financial advice.