• About
  • $40K Challenge
  • Aunt Doris
  • Grandfather Says
  • Privacy
  • Archives
  • Disclaimer

Len Penzo dot Com

The offbeat personal finance blog for responsible people.

bullion star banner

8 Moves That Will Protect Your Family from Financial Chaos If You Die

By Enero Febrero

When it comes to protecting your family from any financial disputes in the event that you die, there’s a lot you need to consider. In fact, you need to plan everything accordingly and early enough so that you don’t leave your loved ones having to deal with all your financial affairs during such an emotionally charged time.

People who die unexpectedly without having their financial affairs in order usually end up putting their family through tremendous financial turmoil. This is especially true for those who have dozens of estates that need to be managed after they die. With that in mind, here is a list of what you can do to ensure that doesn’t happen in the event that you die unexpectedly:

Draft a will

Studies have found that more than half of all Americans currently don’t have a will. That’s a very big mistake, especially if you own estates or properties. Someone will need to handle and manage the assets you leave behind; that’s one of the main purposes of a will — to set your records straight and avoid disputes after your death.

Seek trusts

A trust is used to manage your financial affairs, estates, and/or property after you die. You should also include this in your will. In most cases, people opt for trusts if they still have minor kids who they feel may not be able to handle the finances you leave behind — or if you have adult children but you believe they aren’t up to the task of maintaining what you have already built. Trusts usually include an attorney’s will-creation fee.

Assign a power of attorney

By assigning a power-of-attorney, you authorize someone else to act in your place to handle your business affairs if you are incapacitated or can’t manage to do so personally.

Set an advance directive

This is a document which usually lays out your end-of-life preferences. The document also can incorporate a living will, medical power-of-attorney, and even “Do Not Resuscitate” orders. You don’t necessarily need an attorney to create this document. But other states require that the document be witnessed as you write it.

Have enough life insurance

Life insurance can help provide coverage for things like lost income after your death in case you have children who are dependent on you financially.

Update your beneficiaries

It is extremely important to ensure that the beneficiaries on your insurance policies, 401(k), investments, and retirement accounts are included in your will. Don’t let someone from your past relationship end up inheriting your financial assets simply because you failed to specify your intended beneficiaries.

Organize your paperwork

It is also important to ensure that your tax returns, 401(k), insurance policies, and brokerage statements are properly organized and paid up. And be sure to notify your closest friend or family member where the paperwork is so that they can access it in the event of your death.

Keep everything accessible

Never keep your wills and important financial documents them in a safety deposit box; some estates seal these deposit boxes when the owners die. As a result, the survivors may have a hard time settling an estate. While it is important to keep these relevant documents safe, it is just as important to keep them easily accessible after you die; this is very important especially if you have quick loans or any form of credit. Keeping everything accessible makes it easier for your family members to manage your credits and assets more smoothly in your absence.

Photo Credit: rawdonfox

July 19, 2018

Question of the Week

What's your retirement magic number?
VoteResults

Comments

  1. 1

    Warren says

    Trusts are rarely worth creating: the legal and financial overhead doesn’t even start to make sense until your net worth is well into the upper 7 digits range.

    • 2

      Len Penzo says

      Have to disagree with you, Warren. There are lots of good reasons to have a trust (see RD’s comments below for just one example). I have had a family trust set up when I was in my 30s and I am glad I did; best of all, the cost of implementing it was very reasonable.

  2. 3

    RD Blakeslee says

    Trusts are not neccessarily about shielding large estates.

    For example, they are useful to provide for the continuing care of an incompetent heir.

  3. 4

    Michael Clark says

    I thought that the beneficiaries on a retirement account took precedence over what is stated in a will. So yes make sure your will is up to date. but also make sure the beneficiary is up to date on the account itself as well.

Copyright © 2025 Len Penzo dot Com · All Rights Reserved · Designed by Nuts and Bolts Media

© Len Penzo dot Com 2008–2025

Get Len Penzo dot Com delivered weekly!

Join our family of more than 40,000 happy subscribers!

Invalid email address
We promise we'll never spam you. You can unsubscribe at any time. 
Thanks for subscribing!