Planning for the Unplanned

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How to Prepare for Life Challenges

By Helena Tavares Kennedy, Contributing Writer

planning for the unplannedThere are so many “what-if ” scenarios we play through our minds. What if I lose my job? What if I become disabled?

What if I die and my family can no longer count on my income? Here’s a better question to ask: Am I prepared for these and other worst-case scenarios?

Planning for life challenges can be scary. It makes us think about the unthinkable and admit vulnerability. Yet these types of crises are a reality of life. By overcoming the psychological avoidance barrier to tough conversations and taking action, you can prevent suffering and frustration down the road.

Prince William Living spoke with a number of experts in planning for the unplanned, getting their advice on how to best protect your family and prepare for the inevitable curveballs life throws your way.

Legally Speaking

When death, disability or serious illness come knocking, it’s best to have a will, power of attorney and advanced medical directive already in place. Having these documents prepared in advance makes it as easy as possible to handle these unexpected crises, said Connie Bourne, Esq., owner of Law Offices of Constance S. Bourne in Gainesville. She defined these three key documents:

■     “A legal will designates who will inherit from your estate after your death. Without it, the law will decide and someone that you did not intend to benefit may get a slice of your estate.”

■     “A power of attorney allows someone to manage your financial and family affairs if you are unable to.”

■     “A medical directive tells your family and doctors what medical treatment you would want in the event of a terminal illness. We have all heard of people who were placed on life support and had they been able to speak, they may have expressed other wishes.”

While getting these documents in writing and finalized goes a  long way toward being prepared, it is just as important to make sure a family member or agent is able to locate them, Bourne said.

“If they can’t locate the documents, they may have to go to court to get permission to manage you or your estate, which can be legally expensive and time consuming,” she said. This “only adds to the stress, confusion and fear your family may already be experiencing,” she added.

If you want to go a step farther, Bourne recommended creating a list (in Excel or Word) of your assets, liabilities, ownership and beneficiary designations, account numbers and passwords. Keep a printed copy in a secure, locked place.

It is also helpful to include information on important contacts, such as your lawyer, financial advisor and accountant. This will allow your family or agent to settle your estate or determine your medical wishes as quickly as possible, Bourne said.

Financially Focused

JarsSpeaking of assets, liabilities and estate, there are some relatively simple ways to ensure you are financially prepared for “what-if ” situations. It pays to be ready, according to Bennett Whitlock, private wealth advisor and managing director of Whitlock Wealth Management in Lake Ridge and Leesburg.

“It is almost inevitable that you will have at least one crisis in your lifetime,” said Whitlock, adding, “A period of crisis is a turning point, usually when you have to make sudden and crucial decisions that will affect your future.”

Planning for the certainty of uncertainty is what Whitlock and other financial planners help their clients achieve. To ready yourself financially for a job loss, disability or death,    Whitlock advised:

  1. Act; don’t react.
  2. Organize your records and plan your finances.
  3. Set up and build a cash reserve, enough to cover at least three months’ worth of expenses.
  4. Select long-term disability benefits that can provide income if you become disabled and unable to work.
  5. Purchase life insurance to help your heirs to pay off debts, as well as to provide survivor benefits and settle the estate.
  6. Seek professional advice. While the Internet offers a  wealth of information, consulting a professional can be invaluable in selecting the right coverage and protection for your specific situation, because of the legal complexities and potential financial impact.

Transferring Risk through Insurance

InsuranceTransferring some of the financial risk of disability or death to insurance is a sound option, said Haymarket-based GEICO® insurance agent David Stinson. “Insurance is one product that everyone hopes they never need to use, but if [it’s] needed, they better be sure that they are adequately insured,” he said.

Surprisingly, most people in the United States are either not insured or are underinsured, according to the National Bureau of Economic Research. Based on results of a study conducted a few years ago on the adequacy of life insurance among a sample of 7,500 couples, the bureau reported that a significant proportion of U.S. households don’t have sufficient insurance to protect them if the primary breadwinner died.

The bureau also reported that underinsurance increased exponentially with income levels, according to the study. The more couples earned, the less likely they were to be sufficiently insured. Thee degree of underinsurance exceeded 70 percent for secondary earners in their 40s.

Stinson said the reason people don’t have life insurance, or not enough, is they are often too busy to think about it, or they do not want to think about it because it forces them to look at potential risks.

He added that the challenge for many people is understanding the value of life insurance since what it insures is not a tangible   object. People can understand the need to insure their new car or to purchase homeowners’ insurance on their beautiful new home, but they have a hard time grasping the need for insurance in the event of disability or death, he said.

He said they also don’t set aside time to research insurance, avoiding the subject altogether or getting advice from people who may be misinformed, such as family and friends. Stinson said it is crucial to consult licensed insurance professionals to get educated on insurance products available and to obtain advice for your stage in life to ensure you are adequately insured.

“Speaking with a good agent should cost nothing more than time,” said Stinson. “Every type of insurance serves a purpose. Priorities of insurance will change due to age, events in life and specific family needs. For example, life insurance is critical to young families with children. As we get older, in many cases, we don’t have the same financial responsibilities. So we then look at long-term care and disability insurance.”

Stinson recommended purchasing life insurance before investing in retirement, stocks and other financial vehicles. He said the time to buy it is when you are healthy, young and don’t need it; premiums will be lower and you’re more likely to be able to obtain coverage. So the earlier you buy insurance, the better.

If a crisis hits, you may be at an age or suffer health problems that make life insurance premiums too expensive to afford or coverage unavailable, Stinson said. Keeping policies in force continuously without lapses also helps keep coverage prices low, he added.

Another vital component to having sufficient coverage is communicating clearly to your family where to find your policies, Stinson said.

Preparing for the End

FileFoldersWhile it is not the most pleasant thought, have you considered what to do to prepare for your ending? In addition to getting plans in place to protect your family financially, details such as burial wishes should be discussed and written down in advance.

Though it may seem relatively taboo to talk openly about what you want your funeral service to include, the conversation is worth having, according to Adriane Miller, owner of family- owned Miller Funeral Home and Crematory in Woodbridge. If you don’t do anything else to prepare for your funeral and service, you should at least talk about it with family or friends, she said.

However, many people avoid the topic, Miller said. Then if they die unexpectedly, loved ones who may have little time to plan a service are left lost and unsure of final wishes.

If you’re up for it, go as far as picking out a casket, plot, cremation vessel and service specifics, Miller recommended. She said some people plan every detail, such as who will read at the service, what selections will be read and who is invited (or  not  invited).

Miller said that despite her advice, she finds that people are more likely to do little or no planning, leaving this task for family to deal with in the midst of their grief. Miller said this makes it extremely difficult for the family, who may only have a day or two to plan the entire service and funeral, without knowing what the deceased would have wanted. “It’s like [the stress of ]planning a wedding, but in a few days,” she said.

Another advantage of preplanning is the potential to decrease costs compared to last-minute planning by loved ones, especially if you have any unusual requests, Miller said. “If you want to bring a ton of Harley motorcycles into the chapel to celebrate the deceased’s love for Harleys, then it can be preplanned and easier to implement when the day comes,” she explained.

Miller gave an example from her past of a special request that almost didn’t happen because it was not planned beforehand.

A service for a horticulturalist involved bringing hundreds of trees, shrubs and plants into the chapel. To do this meant removing all the furniture, finding enough trees and shrubs at local nurseries and, within a tight timeframe, completing other details that involved much more planning, time and cost than for standard services.

With little time to handle this special request, many family members had to run around to local garden shops to find enough trees and plants in time for the ceremony, said Miller, adding that planning the service in advance would have saved the family a lot of stress, time and money.

Additionally, burial insurance is an option many people don’t know about, she said. How it works, according to Miller: First, you plan your funeral and service and get a cost estimate. You then purchase burial insurance, which covers and guarantees the price of the funeral and service, protecting against inflation.

Gaining Control

You can’t ignore or stop the fact that crises can happen to you or a loved one. Some, such as death, are inevitable. However, this doesn’t mean that you have no control of their impact. Using the information here as a starting point, you can control how well you prepare for these life events.

A nonprofit marketing director, who prefers not to think about these what-ifs and has lots of work to do to plan for the unplanned, Helena Tavares Kennedy also enjoys freelance writing in her spare time. She has lived in Manassas with her husband and children for 12 years and  can  be  reached  at  hkennedy@princewilliamliving.com.

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