4 Smart Financial Steps to Make Life Easier for Loved Ones When You’re Gone

Andrew Sivertsen, CFP®, EA, CeFT®, Sr Financial Planner

“On a long enough timeline, the survival rate for everyone drops to zero.”

Intellectually, we understand the truth behind the quote from Chuck Palahniuk’s novel, Fight Club – no one lives forever. But emotionally, it’s a different story. Thinking about and preparing for our own death, or the death of those we love is extremely difficult. As a result, we’re often not prepared when it happens – even though we all know it’s going to happen.

In my work as a financial planner, this is something I’ve witnessed many times. I’ve also seen the toll it takes on a family when on top of the emotional loss of a loved one, they’re also burdened by the unnecessary complications of an estate that is not in order.

It doesn’t have to be that way. Being prepared makes life – and death – easier for everyone. All it really takes is some forethought. By planning ahead, we’re in a better position to deal with the emotional loss, which is difficult enough.

The truth is, it’s not that hard to be prepared. Here are a few actions everyone can take now that will avoid huge headaches for your loved ones in the future:

1. Consolidate Your 401Ks

The average person in the U.S. changes jobs  12 times in their lifetime, and when they do, they often neglect to move their 401k. As a result, some people end up with multiple 401K accounts that have never been consolidated. It’s usually several smaller accounts that need to be tracked down and managed. By consolidating all your accounts into one, in addition to paying fewer fees while you’re alive, you’ve made things easier for your heirs.

2. Centralize Estate Planning Info

Your will and information about your financial assets should be collected in one central location. Whether it’s a digital file on your computer or a physical file in your home office, be sure to communicate the location to whomever needs to know, such as your spouse and children. At The Planning Center, we advise clients to give out our contact information since we have all of their relevant information, including the will, financial assets, insurance, etc., and can help guide heirs through the immediate next steps. All financial advisors should be prepared to provide this service.

3. Provide Access to Online Accounts

More and more, our business and bill-paying are conducted online, but if someone doesn’t have access to your passwords, following up with the companies can be excruciatingly difficult. An easy solution to this problem which also increases your online security is to use a password vault software that keeps all of your passwords in a secure digital location. By encrypting the password storage, the vault gives users the ability to use a single master password to access passwords used for different websites or services. The software also prevents users from using weak passwords or replicating them across different websites – which we tend to do when we rely on our memory. Using password vault software improves your cybersecurity while also providing a simple way to securely give access to your online accounts.

4. Have a Will

Young or old, all adults should have a will or a living trust, even if you don’t think you have enough assets to pass on. This is especially important if you are married and it’s essential if you have children. A will allows you to stipulate how all of your belongings will be distributed when you die, whereas if you die without a will, the state decides everything. Wills are not difficult to get, and generally only need to be updated when you have a major life event, such as marriage, divorce, the birth of a child, or the death of a loved one.

Do your loved ones a favor and take actions now that will make their lives easier after you’re gone. If you have questions about how you can make sure your estate plans are in good shape, contact The Planning Center. We have a variety of resources and checklists that simplify the process and guide people through the steps they need to take after the loss of a loved one.