Late Life Financial Planning Best Practices
We’ve all heard the cliché “if you fail to plan, you are planning to fail”. Many former mountaineers can attribute their unnecessary demise to this simple truth. At Old Forge Wealth Management, we seek to teach investors how to apply financial principles towards effective wealth building, and then help them teach their children how to retain and grow that wealth multi-generationally. While the planning required to accomplish such high goals is noteworthy, it’s also true the consequences of failing to plan rivals those presented to negligent mountaineers, albeit in the financial realm. What are the issues and best practices of late life financial planning, and how might you improve your own family’s financial plan?
Teach your heirs to become wealth builders (see Financial Planning Principles). Test beneficiaries with small advance gifts, use your observations as teaching opportunities, and either control distributions, or allocate small portions to gluttonous individuals. One wealth consumer can devour what it took you a lifetime to build in a few short years, and even destroy them-self in the process. Be careful not to enable this tragedy unwittingly.
Be a meticulous record keeper. Store an updated and comprehensive summary of your financial life (and other important documents) in a safe place, notify executors and trustees of its location, and include a brief mission statement to reiterate purpose. Feel free to request a copy of our Estate Tax Information Checklist here: Jennifer.carreiro@oldforgewealth.com.
Have a formal plan to fund the high expense of late life care. Whether it includes payments to an unskilled healthcare provider while at home, self-funding from your large estate, payments by a Long-Term Care insurance policy or annuity, or devoted care from your loving children, have a specific plan, and share it with immediate family members.
Name primary and contingent beneficiaries on every asset that affords it (cars and homes do not). It’s easy, free, and carries comparable legal authority to an expensive trust. Store a beneficiary list with other important documents, and update it periodically.
Have a specific plan to fund final expenses. Whether it be pre-payment to a funeral home, a small permanent life insurance policy, or a designated portion of your estate, make sure your kids are on board, and that they don’t get stuck with the tab contrary to your wishes!
Plan for the management of your estate in your incapacity or absence. Health proxies, POA’s, and trustees should be selected according to trustworthiness and ability over age or proximity. Make sure they understand what will be required of them and agree to it, and then incorporate them into the process early.
Make sure there is sufficient liquidity immediately accessible to your executors and trustees at your passing, so they can manage the distribution of your estate with your money and not their own, which could greatly complicate matters. The above practices should help in this.
I hope these practices bless your family. Shaun
“A wise man leaves an inheritance to his children’s children.”
~Proverbs 13:22
The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.
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