Most of us have installed a smoke or burglar alarm at home to protect the safety of our loved ones, right? And yet when it comes to protecting the financial future of our families, although we know it makes sense, we never seem to get round to it. Life always has a habit of interfering. The consequences, however, of not adequately planning for our family’s financial future in the event of some catastrophe are almost too great to contemplate. Financial hardship, legal wrangling and unnecessary costs at what will be a very difficult time could be in store for your family if you don’t plan and make adequate preparations now. In this article we identify the three essential steps you need to take to safeguard your family’s future.
Protect your assets
You don’t need to be fabulously wealthy to protect your assets. All of us want to see our accumulated wealth go to those we love when we die rather than creditors. And so you may want to consider setting up a family home trust. This will ensure that any creditors will not be able to claim against your home. Another possibility is to place tangible assets such as your car or jewellery as well as any funds in the shape of retirement accounts, life insurance and so on into a trust. In this way you will be avoiding probate costs as well as minimising the possibility of legal disputes.
Provision for funeral expenses
None of us like to think about it too much, but leaving your family to face significant funeral expenses on your death and at a time when they will be grieving your loss is not ideal. It’s far better to make provision for your own funeral in advance which will leave your family with one less stress to worry about. There are a range of options available including funeral insurance, pre-payment arrangements or funeral trusts. Some families simply have a rainy day fund that a partner or child can draw on in an emergency.
Covering lost income
Do you know what would happen if you were no longer able to work? How would you cover the mortgage or put food on the table? If the answer to these questions is don’t know then you really need to seriously think about making provisions. It may be an unlikely scenario but sadly for many Kiwis life-limiting disability and sickness are a reality. Protect your family by setting up a family trust or taking out life insurance (or both). In this way you can have peace of mind that should the worst happen your family will be able to manage financially.
Don’t leave the future of your family finances to chance. Make adequate plans and preparations now so that your loved ones will not be burdened by money worries if something were to happen to you.