One becomes conservative when one has something to conserve. We spend time building valued assets and gifts (including children). But where is that essential step in protecting these assets estate planning?
It is not just for the senior population, though obviously those folks might better realize end of life. But everybody has something to conserve beginning around age 25 to 30, be it children, work pension, assets and even his or her own body.
Estate planning includes knowing and documenting key trackers (account numbers, passwords, contact information for financial resources); advance directives for loved ones but more importantly determining who will make necessary decisions if one is incapable of doing so (mentally or physically); and finally, a document that details where assets are to go (including responsibility for children younger than 18).
The process is relatively simple, but we put it off or dont keep it current until it is too late. Estate planning is a bit time-consuming to get relevant documents in order. But the real hesitation is twofold. Gathering the information is emotionally grueling as couples deal with emotions and relationships intermingling with finances. Yes, everyones busy dealing with children, work and life, which sets this on the back burner. Tomorrow something happens, and we realize we should have dealt with this yesterday. Unfortunately, when we realize this, we are an emotional basket case.
The second concern is that it means facing reality a spouse will pass on, or a marriage could end. It becomes financially devastating, particularly for women. According to the U.S. Census, 9 percent of men older than 55 are widowed vs. one third of women in the same age group. Becoming suddenly single, women remain unmarried for an average of 14 years and income immediately drops (often more than half). Within two years, finances are in crisis as a result of less income, less money management skills and lack of true understanding of monthly needs.
Some basic steps are critical now:
1. Have the discussion of knowing (and creating a secure list) where all the financial documents are, including account numbers or passwords.
2. Ask questions lots of questions of many different knowledgeable individuals. Women, in particular, tend to be financially illiterate. Learn the terminology. Set an annual time to have a family discussion.
3. Know where your money is going. Everything from the $3 coffee to the $100 investment is important. If you were suddenly single (widowed or divorced), do you know how much you would receive from Social Security? From a pension or insurance policy? From work? Where does the fill-in come from? What would be the best use of that money?
4. And finally, plan for the loss of a spouse as harsh as this might sound. When looking at obituaries, its clear that, sadly, many die at a variety of ages. Ask how you would afford your basic needs if a sudden loss is experienced.
firstname.lastname@example.org or 247-4355. Wendy Rice is family and consumer science agent for the La Plata County Extension Office.