Contingency Plans

The Sun Doesn’t Always Shine
We now have a solar roof and it takes care of our electrical needs on sunny days but the sun doesn’t always shine. At night, our panels rest. During storms and very cloudy days, the panels aren’t at peak efficiency.

Yet when it comes to personal finances, I generally come across people whose planning assumes that the sun will always shine.

Many of these people are do it your selfers where one partner in a couple handles the finances and does it well. But what happens when that person gets too busy or injured or sick or passes away.

What about when old age and diminished mental capacity don’t permit them to perform in the way they’d like. What happens to a couple who are living together for many years when the storms finally roll in?

Not long ago, someone asked me what happens if the bull market ends? Will the stock market go down?

I told him the question is wrong. We know the market always goes up and down. The long-term trend for a century has been up but we know the market will go down and we need to plan for that.

We enjoy the sunshine and warm weather, the lazy days of summer. But we don’t throw out our umbrellas and raincoats and keep our flashlights handy. We know that the sun doesn’t always shine and we always need to keep in mind the possibility of stormy days ahead and prepare accordingly.


Passing Along Your Assets

Most people devote far too little time to estate planning. It sounds like something only the very rich should do and even they ignore it as much as possible. Everyone should have a will and advanced directives — health care proxy, power of attorney, living will. While seniors are more likely to need these documents, anyone can be the victim of an accident or health emergency. Beneficiaries on IRAs and other retirement accounts and insurance policies should be reviewed periodically. Lacking the planning and documents, one can find his choices constrained or lacking in an emergency. Even with the proper planning and documents, it’s hard enough to handle end of life events or mid-life emergencies. Without the documents, it can be pure misery for caretakers and survivors and the best of intentions can be thwarted. I’ve yet to have a client say he would prefer to pass along extra money to the IRS or state tax departments rather than give the money to his family. But if the right planning doesn’t occur, paying unnecessary taxes happens all too frequently. At the same time, a patient’s wishes for care may not be implemented because the intentions weren’t documented or put in the hands of a trusted family member or friend. While unpleasant to contemplate, avoiding these topics can lead to unpleasant consequences. One recent article touching on end of life care was by Jane Brody in the Feb. 10, 2015 New York Times.