End-of-Life Financial Planning

Did you know that nearly 60% of Americans do not have a will or any estate plan in place? Planning for the inevitable isn't just a task for the elderly—it's a crucial responsibility at any stage of life. End-of-life financial planning ensures your loved ones are cared for and your wishes honored, sparing them confusion and disputes during a difficult time. Whether you're starting your journey or reviewing existing plans, here are some key considerations for optimizing your end-of-life financial plan.  Please note that the suggestions in this article are generalizations. The actual need will vary based on individual situations. Please consult an attorney or tax professional to discuss your situation and which actions are best for your desired outcome. 

1. Create a Will

A will is a legal document that specifies how your assets should be distributed upon your death. It also allows you to name a guardian for minor children and appoint an executor to carry out your wishes. Having a will in place helps to prevent confusion and disputes among your loved ones. Many times, this document will be presented to a court to determine who should manage accounts without any designated beneficiaries. 

• Purpose: Specify how assets are distributed and appoint guardianship for minor children.

• Importance: Clearly outline how assets are to be distributed. 

• Action: Consult a lawyer to draft a legally binding document.

2. Establish a Power of Attorney (POA)

A POA grants someone else the authority to make decisions on your behalf if you become incapacitated. Consider creating a financial POA to handle your affairs if it should ever be needed. It is important to understand that a POA ceases at death, therefore after you pass, the document is void. 

• Purpose: Grant someone the authority to make decisions if you are unable to make them yourself.

• Importance: Ensure your designated POA will make decisions in a way that aligns with your best interest. 

• Clarification: POA ceases at death. Plan accordingly for post-mortem management.

3. Consider the Role of Trusts

A trust is a legal arrangement that allows a third party, called a trustee, to hold assets for the benefit of one or more beneficiaries. It can help protect your family in a long-term situation and manage funds for you well after your are gone. Trusts can be structured in many ways and it might be a good idea to review your assets with an attorney to evaluate whether a trust is ideal for you.

Personally, I have a trust for my children just in case something happens to me. I have a plan laid out for all funds that will be distributed upon my death to be made payable to my trust. I appointed trustees to oversee those funds and, when my children reach a certain age, they can choose to use the money. For example, when they reach 18, they can use the money for college expense. At 21, they can use the funds to purchase a home. Finally, at 24, they can use the money as they wish. I thought it would be a good idea to limit the access and use of the funds because children can make uncalculated decisions. 

• Purpose: Protect assets and manage funds for future generations.

• Action: Consult with an attorney to determine if a trust aligns with your goals. 

4. Plan End-of-Life Care

The cost of hospice care in the United States can easily exceed $10,000 per month. In 2024, the average burial funeral costs between $7,000 and  $12,000; cremation is between $6,000 and $7,000. Is your family prepared for this? Cover the costs of end-of-life care by purchasing long-term care insurance, setting aside funds, or designating a specific person to manage your care. 

• Purpose: Alleviate end-of-life care decision making burdens by preparing ahead of time.

• Consideration: Understand Medicare implications and financial obligations. For example, Medicare may require assets to be used or sold before continuing into a long-term care facility.

5. Review Beneficiaries Regularly

I encourage you to regularly review and update beneficiaries on your accounts and policies. This may include bank accounts, retirement accounts, life insurance, investments, and more. Ensure that your desired inheritors are listed with up-to-date information. By listing your beneficiaries, your wishes are clear. This will also help anyone gain access who needs immediate access to the funds, avoiding the need to petition the court for rights to the funds. 

• Importance: Ensure assets from accounts and policies go to desired inheritors. 

• Action: Update beneficiaries after major life events like marriages, births, or deaths. Our team can help you review and update beneficiaries on your accounts with Osgood Bank.

6. Communicate Your Wishes

End-of-life conversations can be uncomfortable; no one wants to think of losing a loved one. However, sharing your end-of-life plans with loved ones can help prevent misunderstandings or conflicts later. Furthermore, if they know your plans ahead of time, they can advocate for you when or if it becomes necessary. 

• Advice: Share plans openly and discuss preferences for decisions that may need to be made should you become incapacitated or pass. 

• Action: Document your preferences and make them accessible to loved ones. 

7. Address Outstanding Debts

When you expire, your debts do not. Review your outstanding debts, such as mortgages, car loans, and credit card balances. When you plan ahead, you ease your loved ones burdens of trying to figure out what to do. For example, if you share a home with someone, designating a transfer of title upon death for the deed of a home will help your family with the transition of ownership. 

• Purpose: Avoid burdening family members with unresolved financial obligations. 

• Action: Create a plan that addresses debt settlement and asset transfers.

8. Seek Professional Guidance

You may need to seek guidance from multiple places to ensure all of your bases are covered. Your policy makers may be able to set up beneficiaries and your banker can help with beneficiaries on your accounts. For more complex matters, I recommend a financial advisor or attorney. 

• Importance: Navigate complex financial decisions with expert advice.

• Action: Consult a financial advisor, attorney, or estate planner for tailored strategies. 

Conclusion

In preparing for the inevitable, end-of-life financial planning isn't just about managing assets—it's about ensuring your loved ones are cared for and your wishes are honored. By taking proactive steps today, you provide peace of mind for yourself and alleviate potential burdens for those you leave behind. Preparing ahead of time helps give your family and friends the space they need to celebrate your life to the fullest, rather than worry, when their grief is at its peak. 

If you need assistance reviewing your accounts and beneficiaries at Osgood Bank, please reach out. We're here to help.