Advanced Care Planning

How much time have you spent thinking about your future death? If you’re like most people, probably not much. Thinking about your death or that of a loved one can bring up plenty of unpleasant emotions, but having a plan to take care of the details can ease some of the stress in a time of grieving. So if you’ve lost someone close to you or just want to create a plan for the future, follow this checklist to help you deal with the financial side of an unexpected death.

Organize Documents

In the aftermath of a loved one’s passing, his or her will is not the only document you will need. In order to do things like request benefits or change the name on car titles, you will also need copies of the following:

Birth certificate

Death certificate

Marriage certificate

Social Security card

Automobile titles

Property Deeds

Insurance policies

Bank, investments, and retirement account statements

If you want to plan ahead, ask yourself: Do you have an organized filing system, or are all your important documents strewn about in different places? As you organize your family’s documents, make sure the appropriate people have access to the information they will need in the event of an unexpected death.

Notify The Appropriate Contacts

There are a few people you will need to contact who will be able to help you through the process of taking care of the deceased’s finances. As soon as you are able, reach out to their financial advisor, insurance agent, attorney, and accountant. These professionals are trained to know how to handle an unexpected death, and they will be able to direct you to the right sources of information and help you make the best decisions possible.

Take Care Of Immediate Financial Needs

When someone close to you dies, there are many time-sensitive tasks that need to be taken care of. These tasks often have a financial element involved. For example, when making funeral arrangements and covering burial expenses, be sure to review life insurance policies and look for any pre-arrangement details or last wishes the deceased may have left. Some expenses may be covered, which will save you a financial headache. Speak to the deceased’s financial advisor to see if there are any easily accessible funds set aside for bills or debt payments that cannot be deferred.

Review Benefits

Surviving family members may be entitled to certain benefits, such as Social Security benefits and perhaps pension benefits, life insurance, and annuities. Contact the human resources department of the deceased’s employer, who can explain and document the following benefits that may be available to you, including:

Life insurance

Healthcare, or extended healthcare coverage through COBRA

Compensation due, such as stick options or unused vacation pay

401(k) or pension

Depending on your relationship to the deceased, you may need to apply for Social Security survivor benefits, update insurance beneficiaries, and apply for settlement.

Manage Their Estate

Finances can get messy when someone dies. Our financial lives can be complicated, so use this list as a starting point for closing accounts, updating information, and taking care of the countless details. Look into whether the deceased had any of the following accounts and contact the institution:

Checking Account

Savings Account

Brokerage Account

IRA

401(k)

403(b)

Health Savings Account

Flexible Spending Account

College Funds

Don’t forget about debts. Debts don’t disappear when someone passes away. Investigate the following and make sure those who are now responsible for these debts are aware of the creditor’s name, outstanding balance, name on the debt, loan terms, and the amount, timing, and method of payments.

Mortgage

Home Equity Line of Credit

Automobile Loans

Personal Loans

Student Loans

Credit Cards

Make sure you don’t forget about recurring household expenses, such as utilities, and how and when to pay them: .

Property Taxes

Electricity

Sewer

Water

Natural Gas

Garbage

Telephone

Cable TV

Internet Service

Landscaping

House Cleaning

Homeowners Association Dues

Other organization membership dues

Work With A Trusted Advisor

Handling the details after the death of a loved one can be overwhelming, but you don’t have to do it alone. Financial professionals are experienced with these situations and can guide you through the steps that apply to your unique circumstances. They will not only help you take care of pressing problems and concerns, but can also help you feel more secure in a time of financial change. A financial advisor can make sure your affairs are in order, update your financial plan, and implement appropriate strategies to help you stay on track financially.

If you're one of the millions of Americans who received, or are expecting to receive, a tax refund, you are probably trying to decide how to spend it. The average refund this year is around $3,000, a nice chunk of change to throw at one of your goals. Rather than impulse buying that new Apple iWatch or splurging at Sephora, make the best use of this windfall by putting it towards improving your financial situation.

Build Up An Emergency Fund

Some very good friends of mine woke up recently to find that their downstairs had flooded from a burst pipe on the second level. They had to rip up their hard wood floors, replace furniture, and even replace some of the walls. Luckily, their bedroom and their child's nursery was spared, but THIS type of unexpected event is exactly why you need an emergency fund. If they didn't have cash readily available in a savings account, they might have been tempted to put charges for repairs and replacements on a high-interest credit card. Depending on your situation, you should ideally have 3-6 months of regular expenses in the bank. Use your tax refund to start, or top off, your rainy day fund.

Pay Off Debt

The power of compounding interest can work in your favor when investing, but it can also cause debt to grow faster than you might think. Credit card companies apply their interest fees to the amount that you owe initially. But every month (and sometimes every DAY!) after that, the compounding interest will apply to the principal, as well as the previous month's interest. If you want to apply the snowball method, apply your refund to the smallest account you can close out. Alternatively, you can use the “Avalanche” method, and put your refund towards the card with the highest interest rate. Paying off the smallest account might feel good, but if you have double digit interest accruing on a card, get that debt paid off as fast as you can. Take the windfall from your refund and put it towards cleaning up your personal balance sheet.

Fund an Individual Retirement Account

IRAs are one of the greatest savings vehicles you can have for retirement. These vehicles allow you to invest in the market outside of any employer-sponsored plans (like a 401K) with tax-free growth (no capital gains!) until retirement. There are two types of IRAs that are available to the general public: Roth IRAs and Traditional IRAs. With a Roth, you contribute post-tax dollars and don't have to pay income taxes on any distributions in retirement. There is, however, a phase-out limit based on income. With a traditional IRA, you do pay income taxes on distributions in retirement. However, contributions made could be tax-deductible for that tax year (contributions made from January 1st of the current year through April 15th of the following year). As of now, individuals can contribute up to $5,500 per year ($6,500 if you’re age 50 or older), or your taxable compensation for the year, if your compensation was less than this dollar limit.

Monetize Other Financial Goals

Planning to take a big family vacation to Disneyland in 5 years? Dreaming of owning a house but need to build up a sizable down payment? Wondering how you are going to pay for your pre-teen's college tuition? If you have any intermediate goals (prior to retirement), consider opening a brokerage account to help your money grow more efficiently. Statistically, the stock market has more up years than down, and historically, has recovered from those down years relatively quickly. If you have time on you side, consider monetizing these goals by participating in the market at a level that is in line with your risk tolerance.

But If You Must, Splurge…A Little

If you just can't help it, take a small percentage of your refund to treat yourself. Whether it's a nice dinner, a manicure, or checking out a movie with your spouse, take a minute to blow off some steam. Keep this amount small though as the path to wealth is paved with good decisions. Start making good habits today to delay gratification and secure a financial safety net in your future.