Financial Smarts

“Financial fitness is not pipe dream or a state of mind it's a reality if you are willing to pursue it and embrace it.” ― Will Robinson

Each day we hurry about working to provide for our family and to get ahead in life. We worry about our teenage children driving, the frightening drug use trying to lure them away and all of the possibilities of what could happen. Yet an article I read asks, "do we worry about what if something happens to you...what will happen to those around you?"

You are probably the most careful person around. You buckle your seat belt, eat all of the right foods and exercise is part of your daily routine.

But as the saying goes, "stuff happens."

Financial experts estimate that nearly 70% of men have not taken the needed steps to secure their family's finances. Heaven forbid you end up getting hit by a car. But it happens and all too often without warning. It is natural as human beings not to think about dying.

Heck, who wants to think about that stuff?

But it is relatively easy to take a few steps and ensure some 'after-you' stability. Those steps you can take are;

1. Get yourself together - put together a document listing details of your finances, investments, bank account, insurance policies and any financial advisers. Then ask around for an attorney to draft a will for you.

2. Replace your salary - employer-sponsored life insurance policies will normally cover two times your annual salary. This is much less than your family needs. So buy a term life insurance policy to cover you until the kids have graduated and moved away. From that point on, the kids are less dependent upon you. Notice I didn't say they are totally independent.

3. Pay your family, not Uncle Sam - when you die and leave everything to your wife, your children lose something many of us didn't know we had: a $2 million exemption from the estate tax. Upon your wife's death, your kids benefit from her $2 million exemption, but yours would be lost. For your kids to get the combined $4 million exemption, the attorney can set up a credit shelter. Transfer $2 million in assets (or up to this amount as all of us do not necessarily have that much) into the trust, including your house and enable your wife to access the funds, but name your kids the beneficiaries upon her death. What happens is eventually the kids will inherit your $2 million and her $2 million...all estate tax free.

4. Protect your legacy - remember to update and keep updated all beneficiary forms for 401(k)s, IRAs and other retirement accounts as these override your will. Just make sure they are current. Ensure that your will includes instructions including specific instructions about how your assets should be handled.

5. Hire your replacement - when you and your wife are travelling, there is that underlying thought of, "what if the plane goes down?" Assign the jobs of executor and guardian to different people. Divide the power by giving control of your kid's inheritance to one person while someone else takes them in. "The best person to raise your kids may not be the best one to handle finances," says Lisa Osofsky, a tax advisor in New York. Think of things like, what if the guardians divorce? Name one person in a couple as the guardian...and name backups.

It is also important to educate yourself on financial matters not only in case you should die but also in case you continue to live a long and happy life. Having a sound financial plan will make that life even happier.

Stay inspired my friends.