Marriage and divorce.
The birth of a new child or the death of a loved one.
Starting a new job or perhaps losing one.
Buying a new home.
These are major life events that can significantly change our lives. Many of these events also can have financial implications, but whether it is through the joy we share in a new marriage or the birth of a child, or the debilitating grief we feel after the death of a loved one, it is easy to forget about the things we need to take care of.
The saddest stories are the wife that finds out after her husband’s passing that his first wife gets the life insurance proceeds because he forgot to change the beneficiaries or the brothers who haven’t spoken in 10 years because of hard feelings caused by a surprise in their mom’s will that she hadn’t shared, or a host of other possibilities that can occur when we don’t take care of details.
If you have recently had a major life changing event whether happy or sad, consider whether there are any of these items you need to review.
This is so important. Have you checked your beneficiaries lately? Who will benefit if you pass away? Has anything changed that would require you to adjust your beneficiaries?
Another important consideration is the amount of life insurance you have. You should have enough life insurance to make sure your family’s needs are taken care of if something should happen to you. This should be at least 10-12 times your income plus enough to cover things like possibly paying off your mortgage or funding your children’s college. You need to periodically consider, especially after a major life event, if you still have the right amount of insurance.
Do you have the right coverage? If you have recently gotten married or had children, did you make sure you took care of whatever paperwork was necessary to have them added to your policy?
When you buy a new home, your mortgage holder will require that you have insurance coverage on the home, but those coverage needs can change over time. Have you made significant upgrades that would change the value of the home? Do you still have sufficient replacement coverage in the event of a disaster? Most policies no longer offer full replacement coverage, so you need to review your policy to make sure you have enough insurance.
Do you have retirement accounts either at your workplace like a 401K or 403B or outside of work like an IRA or perhaps an annuity? Like life insurance, it is critical you regularly review your beneficiaries, especially if you have recently experienced one of the life events mentioned above.
If you have started a new job recently, have you investigated what workplace retirement account options your new employer provides? Especially if your employer provides matching funds, workplace retirement accounts can be great ways to save for retirement because the money generally comes out of your check before you ever see it.
If you have recently lost a job or changed jobs, don’t forget about those old retirement accounts. In all but very rare cases you should roll those old retirement accounts into an IRA that you control. An IRA gives you much more flexibility in how you can invest the money and it also simplifies your life. If you have changed jobs frequently, the last thing you want is to have a dozen different retirement accounts to try to keep track of. By rolling them into a single IRA you will be able to manage them better and will reduce the chance of forgetting about money that you should have coming to you.
Wills and trusts
A 2007 study by Harris Interactive showed that 55% of Americans had no will. While death is not something we like to think about, the truth is the mortality rate for humans is pretty close to 100%. If you die without a will, there are state laws that will determine what happens with the things you leave behind, but do you want a state law making those determinations?
If you have recently married or divorced, you need to review your will to make sure it accurately reflects your wishes.
Perhaps most importantly if you have recently had children, you need to make sure you have a will! I can’t stress that enough. If you die without having a will, a judge will likely determine who will raise your children. You don’t want to leave such a critical decision to the courts.
If you have young children you may want to look into having a trust created with any life insurance proceeds or other money that you leave to them. By having a trust you can make plans for when they receive the money and/or what it can be used for.
Review who you have named as the executor of your will and who you have placed in charge of any trusts you may have set up. Our relationships change over the years. People move into and out of our lives. It is important to review who you have named to these important positions occasionally just to make sure it still reflects your desires.
Lastly, I will strongly urge you to make sure your loved ones know the contents of you will while you are still alive. Too often family relationships are damaged or destroyed because of misunderstandings or unfulfilled expectations on what will happen after you pass. Love your family well enough to makes sure your “stuff” doesn’t destroy them.
Your legacy drawer
Lastly, you really should have a place where you keep all of your important records, insurance policies, account information, etc. Some people call this a legacy drawer. By having this information laid out for your loved ones, you make a difficult time a little easier, as they will know where to find critical information.
Many of these key life events may affect the information that you save in that legacy drawer. While you are reviewing these other items, take a few moments to review what you have documented in your legacy drawer.
A part of loving your family
Part of loving your family well is making sure you take care of the details. When we go through those major events of life like marriage and children, job changes, and other life changing events, often those details change. As you experience the joys and sorrows that these events bring, make sure you don’t forget to take care of the changes they bring.