photo taken through life preserver

Trying on the Life Vests

If you have ever taken a cruise, you probably remember that the first ship-wide activity is to meet on deck for an orientation to lifeboats, personal flotation devices, and what will happen if there is an emergency on board. The cruise line wants to make sure that everyone will be okay no matter what happens. That’s the plan single philosophy.

While the plan is that you sail through life happy, healthy and active to 95, Plan Single is about ensuring you can weather a financial storm should one hit.  It’s all about anticipating the “what if?” Like the orientation on the cruise ship, it is an exercise of stepping through what would have to happen if you (or your spouse if you have one) had suddenly passed away yesterday.

If you are married, walk through the scenario if one partner passes away and then go back to the beginning and do it again assuming the other goes first. Are there adequate resources for either survivor?

Walk-through the estate documents step-by-step and map out where the assets go. Confirm beneficiaries. What benefits will change and which will end? Which streams of income will stop? And once that all happens will the survivors be okay? Determine how much cash will be available in the short term to cover immediate expenses and a few month’s bills and how much ongoing income there will be. Analyze whether there is enough income to cover expenses long term.

If you are married, walk through the scenario if one partner passes away and then go back to the beginning and do it again assuming the other goes first. Are there adequate resources for either survivor?  Will they be able to remain financially comfortable on their own?

Beyond making sure both partners and any children are provided for, the exercise is helpful to remind you where everything goes according to your estate plan. Some accounts, like insurance policies, go directly to beneficiaries without going through the will first. So even if you have updated your will there can be surprises. With the passage of time and gradual accumulation of assets, you may find that priorities change. Setting aside money to provide for young children may evolve into different choices once those kids have become successful adults. With more assets to distribute, you may decide to include charitable organizations or causes in your plans.

Regularly stepping through your estate plans can also help ease the emotional burdens of losing a spouse. Understanding the process will help avoid adding unnecessary financial burden to an already emotionally difficult time. As with the cruise ship example, just knowing what is going to happen makes it easier to do. Practicing can also help avoid bad decisions that can easily happen in times of emotional stress. It is easy to make mistakes when you are grieving or overwhelmed..

Periodically doing a lifeboat drill enables you to determine whether additional planning is necessary. It may be as simple as updating beneficiaries or it may involve additional steps like adjusting insurance policies, wills or trust documents.

If your advisor provides insight and planning beyond recommending investments, meet with them and step through the scenario of putting your estate plan into action. Working with a knowledgeable advisor can c confirm that everything will happen the way you would want, identify strategies to better help achieve what it is you would want to happen or point out issues you may not have thought about.  The goal is to ensure that a personal loss does not become a financial tragedy. It’s what plan single is all about.

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