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How Families Can Financially Prepare for the Unexpected

Posted May 26, 2020 in Articles
Photo of Elle Martinez, Guest Blogger
by Elle Martinez, Guest Blogger
Founder/ Podcaster, Simplify & Enjoy

It’s not an easy topic to talk about, but planning ahead for the unexpected can give you and your family peace of mind should something come up.

Whether it’s getting your life insurance policies, preparing your healthcare documents, or setting up your will, taking these steps now can allow you to make sure your family is taken care.

Today I want to share a few key things you can do to financially prepare.

How Much Life Insurance Coverage Is Enough?

One piece to getting your plan set -up is making sure your family is in a good financial spot. Getting a life insurance policy can be an affordable solution, especially if you go with a term plan.

The question though, how much life insurance is enough?

One rule of thumb when it comes to life insurance is having a policy that covers 10x your annual income. 

However if you want to find the best solution for your family, it’s good to sit down and discuss a few things such as:

  • What assets do we already have?
  • What financial obligations need to be replaced (essential expenses, daycare, debts, etc)?
  • How much of a financial cushion would we like to have in place?

Having those numbers can give you a better idea of what you need. You can then shop around to find a plan within your budget.1 

We were able to find plans that fit our needs for about $25/month.

How Wills and Estate Planning Can Help

Some think that wills are only for those who have many assets or make a certain income, but having a will is necessary if there is anything you would like to pass down. It can be money from your accounts or it can be a sentimental item that you’d like to give to a loved one.

If you’re a parent, you have a huge decision to make - choosing your children’s guardians. Your will would include your choice as well as any trusts or other financial arrangements to make sure your children are taken care of properly so please don’t put off getting it set up.

Depending on your circumstances, your will may be fairly simple or complex. Talking with an attorney can allow you to craft a will that meets your specific needs.

If you don’t have a will, when things are probated, a judge has to appoint someone to handle the executor role.

It may or may not be someone you would choose, so creating a will - even a simple one - can give you some peace of mind that your assets would be handled in the way you’d want.  

Not sure where to start? Coastal’s Wealth management1 team can connect you with the professionals you need.

What to Consider When Choosing a Guardian

Choosing legal guardians is a huge decision, so take the time you need to reflect on what would be in your children’s best interest and would align with your priorities.

Some things you may want to discuss:

  • Moral/Religious Values  – Would you like to have your values passed down? Which of your family or friends would be able to raise them?
  • Parenting Style– Does the guardian(s) have similar ideas when it comes to raising kids?
  • Relationship/Bond – Is your child familiar with them already? Do they get along?
  • Location – Will your child have to move? Will your families be able to visit them or will the distance be a burden?
  • Health – Will the guardian(s) be physically able to handle the responsibilities? Are they in reasonably good health now?

As you narrow down your list, you may decide to have a primary legal guardian and a contingent one should the former not be able to take care of the kids for whatever reason.

Go ahead and talk with the potential guardians to see how they feel and if they accept, go over what you envision so you can make sure you’re on the same page.

Important Healthcare Documents

While having your will prepared is a crucial step, you don’t want to forget about other important documents.

  • Healthcare Proxy: This document will designate who would make decisions for your health care in the case where you are incapacitated and can’t.
  • Advance Healthcare Directive/Living Will: Here you can lay out any wishes about the medical treatment you want or don’t want to receive.

Again, preparing ahead of time can allow your loved ones to make sure your wishes are respected and make a difficult situation a little less stressful.

Talk it over as a family so you can make the best decision for you.

Start Planning Today

If you haven’t already, now is a great time to work with a financial planner or advisor to get a handle of where you are now and move things in the right direction.

Coastal offers trust and estate planning services to members. They would be happy to work with you to craft a plan that fits your family’s specific goals and priorities!

1Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS; are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Coastal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members