“A bad medical diagnosis can make a person realize that he suddenly has far less time to get his affairs in order. What’s the best way to leave assets to your heirs? Should you pay off your mortgage?”
Receiving a terrifying medical diagnosis of a fatal illness can leave you and your loved ones stunned and afraid. Once the initial shock has subsided and you have put the emotional and medical resources in place, it will be necessary to address the legal aspects according to a recent article from CNBC titled “When end-of-life planning is suddenly a lot closer than you thought.”
Start by assembling all your financial information in one place. An old-school loose-leaf binder may be easiest for your family, depending on their comfort level with technology. If your family is accustomed to online portals where information is stored, consider the emotional state of shock they will be in. Make it as easy and accessible as possible for you and them.
The information should include your Social Security benefits and pension information. There may be survivor benefits that your family will need to know about.
Include the prior year’s tax returns and a note as to where your other tax returns can be found and contact information for your CPA if you use one.
If you don’t have a will, power of attorney, healthcare surrogate designation or any estate planning documents in place, it is now the time to make an appointment with an estate planning attorney.
Another task will be to designate beneficiaries for any financial accounts and insurance policies. Depending on your brokerage house, you may be able to attach a transfer-on-death instruction to your non-retirement accounts.
You can do the same thing with real estate in 27 states. Unfortunately, Florida is not one of the states, but there may be alternatives to use.
Next, make a list of your liabilities. It should include your mortgage, car loans and credit card debt.
Create a contact list for your family that includes your estate planning attorney, CPA, financial advisor and insurance agent.
Should you pay off your mortgage? This might not always be the best move. Consider the funds available, your tax bracket and the current mortgage. Do you want a family member to be able to live in the house? Your estate planning attorney will be able to run through different scenarios and strategies.
Write a legacy letter. This is not a legal document but a letter that will express your intentions for your will and your wishes for personal property. If it’s not too hard, it is also a place where you can share your wishes for your funeral arrangements.
Reference: CNBC (July 18, 2018) “When end-of-life planning is suddenly a lot closer than you thought.”
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