This is timely or more like a timeless and important question you can ask yourself. Now that you’re of legal age, and over the course of your life, you may have earned money, made investments, filed loans or did any other activities involving your finances. We may think that we are at our prime, and there’s still so much we can do, and we take for granted the preparations we need in case we pass away. Not all debts are cleared when we die, and most of them are passed on to our surviving family members and loved ones. As a responsible adult, we need to get our finances in order and have a backup plan as early as today.
Settle Your Debts Early
The earlier you settle your debts, the more secure you will feel about leaving behind something for your surviving family members and beneficiaries. As mentioned earlier, debts can either be passed on to surviving family members or will scrape off a significant portion of the assets you set aside as an inheritance for your loved ones. If you are familiar with how does the probate process work, then you know that debts from all your creditors will have to be paid off using your estate, and the remainder will be distributed among your beneficiaries. Even if you prepared your last will and testament, there will be a lot of things that happen after you die, before your intended beneficiaries receive their share of your assets. Being responsible for your debts is a good way of securing your finances and not to burden the loved ones you leave behind. Also, if your loans have a cosigner or co-maker, it is imperative that you have it paid off fully, in order not to burden the other person of taking over your unsettled balances.
Disclose Your Bank Accounts
One of the common problems beneficiaries face, especially when the decedent died suddenly and did not leave a last will and testament, is the lack of information about the decedent’s financial situation. As early as now, you need to be open to your spouse or next of kin about crucial details about your financial situation. You don’t have to disclose everything, but you at least let them know how many accounts you have, where you are keeping your accounts, what is your current debt situation, what are your current investments and many other aspects. This way, the bereaved or the beneficiaries will know where to access the money. To make it easier for your spouse, open a joint account to prepare for this possibility. Because of the survivorship clause, your surviving spouse can be given access to the money without restrictions days or weeks following your death.
Get a Life Insurance
Again, prompt action is needed when it comes to securing your finances through insurance. The earlier you purchase an insurance policy, the earlier will be the maturity date, and you may be able to fully pay, if not, pay most of the premium. This way, you can guarantee the finances of your beneficiaries. The payouts of life insurance are generally not taxable, which can be financially assuring for survivors. Another advantage of life insurance is that it can’t be touched or taken by creditors in case you still have unsettled loans or debts. You can put your mind at ease that your beneficiaries will have money that they can use after you pass away. If you have a lot of financial obligations at present, you can choose a term life insurance policy to provide a death benefit for a set number of years at an affordable cost.
By now, you may have realized how important it is to secure your finances in case you pass away. You have to think about the welfare of your loved ones and make sure to reduce their stress when that difficult time arrives. All that depends on the steps you take today. There are many steps to do so, and having a life insurance policy is one of them. Clearing your debts also helps ease the burden not just for yourself, but also for your surviving loved ones. Think of them when you sort out your finances.