You'd do anything to protect your family—but have you prepared your adult kids for how to attend to your (and their) financial affairs if you and your spouse should die unexpectedly? Do they know what important first steps they'd need to take?
SEE ALSO: Most-Overlooked Tax Breaks for the Newly Widowed
You need to help them be prepared for the worst. It's a different kind of emergency preparedness. When your kids were young, you no doubt discussed how they should handle all sorts of unusual and potentially threatening situations. Now they're adults. But are they still financially dependent on you for college or other support? If so, then losing you would also mean they'd need to deal with added stress over how they're going to meet financial commitments such as tuition or rent.
Fatal accidents are not likely of course. But think of this process as a form of insurance. Here at Halbert Hargrove, it's a step that has often been overlooked by our clients—before we call attention to its importance. In my experience of advising others on financial matters, making these preparations, and having this conversation with their adult children, has been an act of love and caring. It has also served as important milestone in their own financial and estate planning.
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If you've lost one or both of your own parents, you already know how meaningful conversations and thoughtful end-of-life preparations can lighten the burdens that come with that loss.
Is Your Estate Planning in Order?
First, several essentials that you'll need to have in place before you communicate to your kids:
Have you reviewed your estate plan lately?
You need to have an estate plan drawn up, as well as a process in place for regular review to ensure that it remains current with your changing circumstances.
Is your estate information organized and accessible?
The key to keeping things manageable is to have a written guide to your estate information in one place and to let your adult children know where they can find it. Keep it simple. If you've got your estate plan set up and an executor appointed, your children don't need to know every last item and how to manage these. That's the executor's job.
Determine What You'd Like to Happen
Next, decide what crucial things your kids would need to know and do.
Who is the go-to person your kids should call first?
You doubtless have assigned a person whom you trust to serve as the executor of your estate. Much will depend on the executor should he or she need to act in this role. Your adult kids should, at the very least, know this person—and they ideally have met in person.
Where should your kids be directed to look for information?
Choose a place in your home where you've housed a folder that contains the key information concerning your finances your kids will need in the event of your death. Again, keep it simple. Here's my suggestion: Two names and two phone numbers. Your kids should notify your estate attorney and your executor. Those two calls will set in motion the protections you've set in place.
What else is in that emergency folder?
This folder should also let your kids know where they can find your financial statements and other key information. Do you have a safe? A safety deposit box? If they don't know how to access these, this folder should contain codes, keys and instructions. Have you set up automated payments for tuition and rent for your college-attending children? How about health insurance payments?
Ultimately, you know best what should be in that folder, what your kids will need and what will help ease the transition should the worst happen to you.
It's a Caring Conversation
Sharing all of this is a conversation that many parents will find uncomfortable, and many young adults will resist. They don't want to hear about potential accidents, death and misfortune. The advantage is that you can keep this conversation relatively short, since you'll have prepared a clear and streamlined emergency response plan to make it more manageable.
If tragedy does strike, you'll have helped alleviate one source of pain by removing immediate financial concerns. You've made a plan, and your kids know where to retrieve it. It's a point of reassurance—and if it's ever needed, it could end up protecting them from a world of worry and anxiety.
See Also: 4 Key End-of-Life Documents to Get in Order
Russ Hill CFP®, AIFA® is CEO and Chairman of Halbert Hargrove, based in Long Beach, CA. Russ specializes in investing, financial planning and longevity-awareness solutions.
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