By: Austin Colby, CFP®, MBA
What happens if your financial world was turned upside down tomorrow? Are you prepared?
I often make clients sit down to run through what I call a “lifeboat drill.” Although not a fun exercise, it is a very practical and powerful one to practice NOW to bring you peace LATER.
It works simply like this: What exactly do I/does my spouse do in the event of the other’s death?
The point of this drill is to create a simple one-page “how-to” list for each other’s financial tasks. For starters, both spouses are properly covered with life insurance. If so, the bullet-point steps on the “If My Spouse Dies…” document should look like this:
Call Office to process life insurance proceeds
Online banking information
Add any needed security details, and list all financial institutions with a backup phone number
Online mortgage information
Add any needed security details
If you have other debt (which you are working steadfastly to eliminate) add those details here also
How to process any bills…
How to pay off mortgage…
How to fund children’s college accounts…
How to beef up bank savings as a cushion…
How to plan for cash-flow from portfolio…
Finally, after those half a dozen or so bullet-points, you leave space for bigger, longer decisions like where to live, who to have help with the family, and any other of the unique things that apply to your situation.
Creating this simple one-page document will alleviate mountains of potential stress, worry, and fear from the surviving spouse.
Dealing with these situations is never fun, and the conversations are never easy.
However, by having the conversations well in advance of needing to, you will greatly improve your long-term probability of success.
Because The Wealth Group, Austin B. Colby & Associates is independent of Raymond James, the expressed written opinions above are our own and not necessarily reflective of Raymond James’ opinions.