While much is written on how to adequately
protect your family, retirement, and
estate through proper planning, a companion
component to consider is that of the contingency
plan—a type of financial fire drill that's
designed to take care of your loved ones' needs and
simultaneously preserve the integrity of your family
financial picture. The financial fire drill is a proactive
step that can save considerable stress—and dollars—for those administering the family finances.
What's the Plan, Stan?
Bills have to be paid, and big decisions have to be
made about whether to sell the home or refinance the
mortgage. Many of these decisions must be made either
immediately or within a fairly short period, at a time
when financial responsibility and decision-making are
way down on the list of pressing tasks.
In one instance, a physician's wife called me in
profound discomfort over the fact that she had run
out of cash to pay her bills, even with real estate
and investment holdings in a healthy seven-digit
range. The quickest remedy was to guide her on
establishing a home equity line of credit, since there
was a substantial position in unencumbered real
estate. Still, this would involve more paperwork
and processing time.
The following are the fundamental questions to ask
to determine if you have covered all the bases: Will my
spouse know what to do and whom to call if there is a
financial emergency? What will they need to know?
Will there be liquidity, so that assets and investment
strategies won't be disturbed for at least 6 months?
It Will Pay to Know the Details
Specifically, a consolidated registry of need-to-know
data is ideal. Your family will need to know account
numbers, contact information, contact persons, and
passwords for starters. The more they know, the better.
Discussing and training ahead of time—like financial
preparedness—should also be a part of your planning.
Ideally, your partner will have met your team of advisors
and will be comfortable talking with them.
Furthermore, having your financial papers organized
and keeping up-to-date records is critical. Dealing with
the maneuverings required to process an estate is
already a challenge, but when compounded by grief, the
prospect of managing document procurement and
meeting nonuniform identity verification requirements
for accessing the funds can feel insurmountable.
One physician whose husband had managed the filing
system for important documents found that over the
35 years of marriage, they had accumulated five different
insurance policy documents, when in truth there
were only three. Mergers of earlier companies accounted
for the disparity, but this required 3 hours of tracking
account numbers and firm names.
Remember that money doesn't just arrive without
filling out copious amounts of paperwork and
detailed identity verification processes. Always count
on unexpected delays.
The Beneficiary Book
Retirement planning and
estate planning should always
go hand in hand. A great
resource for collecting and
gathering information invaluable
to your surviving heirs is
The Beneficiary Book (www.
active-insights.com). This book can be helpful to virtually
any person who has information that will benefit
those they will leave behind—information typically
only stored in their head that can be lost forever at
death or incapacity. The book comes with a custom,
easy-to-identify, 3-ring binder, complete with tab
divider sections. Each section contains a series of
questions and simple fill-in-the-blank forms.
Teresa Dentino founded theFinancial411 to provide unbiased
financial education through sales-free consultation and guidance.
A 21-year veteran of financial services, she is responsible for
developing the first financial education programs for women in
the United States and lectures frequently on the subject. She welcomes
questions or comments at 650-851-8959 or teresa@thefinancial411.com.
