The Best Gift for Your Family

The holidays provide an opportunity to spend quality time with family and friends. As you enjoy the company of your loved ones this holiday season, take a moment to reflect on the planning that should be done to prepare for the unexpected and protect your family.family dinner table

If something happened to you, would your loved ones be taken care of? Have you had open family discussions about income protection in the event of job loss, disability, or death? Do you plan to leave an inheritance, and who will be in charge of the execution of your estate? What if you have a health issue, do you have proper Health Care Powers of Attorney in place, and is your family aware of what role they have been designated to play?

Remember, part of the process of implementing your financial plan involves informing your loved ones of your decisions to ensure proper execution of your wishes and avoid family turmoil in the future. What better time than when surrounded by family and friends to remind us to review our coverages/documents and to have appropriate conversations with those we care about most.

These can be very delicate conversations. While having these discussions around the Thanksgiving dinner table is not the ideal time to bring up such emotional topics, you might use this time to ponder the following “what-if” scenarios. Then set a designated date and time during the holiday season to have these essential conversations with your family members in a relaxed, nonthreatening atmosphere. Because these conversations can be difficult, it may even be helpful to bring in a trusted third party to help you facilitate.

Consider the following:

If you lose your job…

  • Are all of your assets tied up in your company? Have you put too much of your family’s financial security in one basket? One of the largest risks that many overlook is the trust most of us place in our job security. Your income, your retirement, and your insurance coverages are likely all (or mostly) tied to your employer. Anyone who has been through a major company stock decline or a layoff knows the importance of being prepared for the unexpected. If you have many years to continue working it’s likely you would be re-employed fairly quickly (opportunities permitting), but do you have enough in emergency savings to cover the next three to six months of living expenses? Are your retirement assets diversified or have you place too much trust in your company stock? Talk through this scenario with your spouse or significant other to assess where you would be if this situation became a reality. If you find that your emergency savings are lacking or you are placing too much of your retirement nest egg in your company’s stock, discuss a game plan to proactively address this potential stumbling block.

If you or your spouse becomes disabled…

  • Do you have the right coverage(s) in place to make sure you can still support your family? Retirement, college and other savings goals become much more difficult to accomplish when your income stream is greatly reduced or eliminated entirely. Proper disability insurance can help supplement the loss of income associated with a long term disability. It may be important to consider individual coverage as a supplement to your group disability through work. Each situation is unique – discuss the coverage you need to accomplish the goals you have for you and your family.

If you or your spouse experiences a significant health event and need skilled nursing care…

  • Do you have Long Term Care insurance or adequate additional resources in place to cover in-home care or a skilled nursing facility? Equally as important – have you had those conversations with your family members (adult children, spouse, and/or siblings) so they know what type of care you desire in the event a long term care need arises? It is important to have these discussions before an issue becomes reality.

If you or your spouse passes away unexpectedly…

  • Do you have the right life insurance in place to support your family? Depending on your family and financial situation, you may or may not need life insurance coverage. It is important to understand both the amount and type of life insurance you need, in order to assess whether any adjustment is necessary. Work with a financial professional who knows you and thoroughly understands your needs and your goals when assessing your family’s needs.
  • Do you have up to date estate planning documents in place and have you communicated your wishes to your family? It is imperative to have the essential legal documents in place to protect against the unexpected. In order to avoid family turmoil once you are no longer living, it is also helpful if you have discussed your wishes with the friends and family members involved. While these conversations can be difficult to initiate, they can bring clarity to a situation and help reduce family conflict once you are gone. If the conversations are too difficult to have in person, a hand-written letter or video can accompany the Last Will and Testament explaining your decisions. If you are unsure if your documents are still adequate, consult your estate attorney to see if you need to establish new estate documents or update your existing documents.

The holidays present opportunities for family members to spend quality time together and create lasting memories. Show your gratitude this season by making sure your loved ones are properly protected financially and by having open, honest conversations before issues arise. Being proactive for the benefit of those you love is the best gift you can give this season.