The best financial advisors out there understand the importance of Estate Planning as an essential piece of every family's financial big picture. Just about every goal you have for your family can be destroyed if you are incapacitated (even for a short period of time) or die prematurely. To illustrate this, let us go through some of the main financial objectives that families have, and discuss Estate Planning's role in achieving each goal.
1. Survive & Thrive
Surviving & Thriving is the first goal of all families, financially speaking. When I say "survive," I mean paying the essentials: rent/mortgage, utilities, food, clothing, car expenses, childcare expenses, etc. When I say "thriving," I mean the so-called non-essentials that really make life worth living: experiences (like going to OMSI or the pumpkin patch with the kids), vacations, enjoyable activities (like yoga class or meeting your friends for coffee), enjoyable items (like non-essential clothes) and the like. Most families spend the majority of their income on these Survive & Thrive expenses.
How Estate Planning protects this objective: If you or your spouse are incapacitated or die prematurely, your goal of surviving and thriving can be greatly threatened without proper planning in place. Your family may be unable to access your assets, or income may be lost. There must be a plan to replace income that is lost or delayed, distribute assets in a way that is cost-effective and efficient, and protect children and assets so that these goals can still be achieved. Surviving & thriving is the number one reason that Estate Planning is so important for parents.
2. Eliminating Debt
Eliminating debt is usually the second most important goal for families. Many parents get caught up in keeping up with the Joneses and the consumerism that is often affiliated with becoming new parents. Sometimes a bad situation like job loss, medical emergencies, incapacity, divorce, or death lead to huge debts. Even if you have not gotten into debt these ways, the majority of parents have mortgage debt and student loan debt that they are actively paying off.
How Estate Planning protects this objective: If you or your spouse are incapacitated without a plan in place, it is more than likely that you will get behind on debt payments (as well as racking up new debt paying medical bills and trying to get your legal situation sorted out), which will set you back in achieving your goals. It may even send you into bankruptcy. If you die prematurely without a plan in place, it is likely that your estate will incur a lot of debt wrapping things up, and that much of your estate will be eaten up with repaying debt. You need to get a plan in place that will repay debt while leaving enough to care for your family. Your plan should be one that makes things as easy as possible for your family, financially and time-wise.
3. Prepare Kids for Adulthood
Beyond the basics of Surviving & Thriving and Eliminating Debt, all parents want to make sure that they prepare their kids for adulthood. This includes providing them with the educational and financial resources they need to succeed in this world, as well as the personal loving guidance that only a parent can give. It also includes psychological and mental well-being, which can be greatly affected by a parent's incapacity or death.
How Estate Planning protects this objective: Sadly, the majority of parents do not have a financial plan to help their kids to succeed as adults. Even parents who have begun to save for college usually have not considered how that plan will be affected if a parent is incapacitated or dies prematurely. Every parent needs to have an estate plan that allows them to continue to reach for the goal of helping their child to succeed in life. The plan should also include loving guidance for the kids and their potential guardians and trustees, outlining their financial goals and sharing their wisdom and values.
4. Investing in Your Own Future
Everyone knows how important it is to begin saving for retirement as early as possible. Most working people have dreams and plans for what they are going to do when they are able to retire. What no one wants to be doing at retirement age is struggling financially. We all want to live comfortably, maybe travel and spend time with the grandkids. Some people have big plans, like my parents, who decided to become famers and vintners.
How Estate Planning protects this objective: If you or your spouse are incapacitated without a plan in place, this can greatly set back your retirement goals, because income is lost and debt is incurred (medically and legally). If one spouse dies prematurely, and without a plan in place, the surviving spouse's entire financial future can be greatly altered. It is important to get a plan in place that will allow you to continue to work toward your retirement goals (and those of your spouse) if you are incapacitated or die prematurely.
So now you can see that just about every goal you have for your family can be destroyed if you or your spouse are incapacitated (even for a short period of time) or die prematurely. This outcome is not acceptable to loving and responsible parents. It is essential to get a plan in place that will protect your goals for your family.
To your family's health & prosperity,
P.S. Want to get started on the most important planning you'll ever do for your family? Give our office a call at (503) 235-5150 to get started. You'll be glad you did.