Though the pandemic has forced households to focus more attention on their financial futures, many couples are reporting that conversations around wills, life insurance and other estate planning issues are still some of the most difficult to have.
To those couples, personal finance celebrity Suze Orman has a not-so subtle message: “If you agree with that, I have to share something with you, that I say with love, and empathy: you are nuts.”
Why you shouldn’t avoid estate planning
Orman says estate planning shouldn’t be hard or avoided — especially considering the alternative. Dying without the right documents in place will make life a lot more difficult for your loved ones.
There’s also the scary possibility that a severe illness, an accident or dementia could hinder your ability to handle your finances on your own.
“You owe it to yourself, and your loved ones, to create a road map for who will handle your affairs if you are incapacitated,” Orman writes in her blog. “Right now, when you are clear as a bell and very capable, is when you spell out exactly what that care should look like.”
Estate planning, which includes designating beneficiaries for life insurance and retirement accounts, naming a guardian for your children and writing a will, isn’t as hard as people make it out to be, the author and TV personality says.
Still, just under half of U.S. adults (46%) have wills, according to the latest polling from Gallup. If you die without a will, that’s likely to cause even more stress for your relatives who will already be grieving your loss.
Remember all the commotion after pop legend Prince died? In addition to the millions of fans grieving his death, the megastar died “intestate” — meaning he didn’t have a will.
He’s not the only high-profile example. Aretha Franklin, Nirvana’s Kurt Cobain and many other celebrities also passed away without plans for their sizable assets.
A few documents can make the world of difference
Now that wedding bells are chiming again after more than a year of nuptials postponed by the pandemic, a new report from Fidelity Investments that Orman references in her blog reveals concerning trends around couples and their ability to communicate about financial matters.
Money matters involving debt, careers and estate planning are more difficult than others to discuss and the hardest to initiate, according to the study.
Orman believes couples are overthinking the issue. “What is hard about talking through and making plans to protect each other and your loved ones? That’s all estate planning is,” she says.
“It is neither hard nor expensive to create the handful of documents you need,” Orman says.
Those documents include:
A will detailing who gets what after you die. But if you have only a will, your loved ones will likely be required to go through the court process of probate.
A revocable living trust allowing your family to avoid probate after your death and putting someone (of your choice) in charge to handle your affairs should you become unable to do so while still alive.
A financial power of attorney appointing someone to act on your behalf to handle your finances.
A durable power of attorney for health care laying out all your medical care wishes should you become too sick to discuss them with a doctor.
“Step back for a sec and think about what those four documents deliver. Peace of mind,” Orman says in the blog post. “Again, how is that a difficult conversation?”
Communicate like a team player
Fidelity’s advice for couples is that they should approach money management as they would a team sport.
“Openly discussing financial matters helps people feel more confident, more closely aligned and better equipped to take on the future,” says Stacey Watson, senior vice president of life event planning at Fidelity. “For all couples, the best advice for money conversations is that it’s not a competition, so stick with it and keep the dialogue going.”
For some, a financial professional can help. Today, financial planning services are conveniently available online, and at a low cost.
But that, too, should be a team decision. This year, 47% of couples working with an adviser say they hired their financial professional together, up from 45% in 2018, according to the Fidelity study.
Planning for the future also often includes owning life insurance to make sure your family is financially provided for when you’re gone.
Yet only just over half of U.S. adults (52%) own some form of life insurance, down 2 percentage points from last year, according to a 2021 study, conducted jointly by industry nonprofits LIMRA and Life Happens.
So if you haven’t already, consider locking in a life insurance policy. The pandemic has made the process easier. More than a third of life insurers have expanded their policies that are available through accelerated underwriting, according to the Society of Actuaries.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.