You are activated and called to active duty…Report in three days! Those were the words I heard in September 1990 as the 130th West Virginia Air National Guard Wing was activated to go support Operation Desert Shield in the Persian Gulf area. The military story could be told in another venue, of course, but what I find more valuable are the lessons I learned that encouraged me to pursue my current career as a financial strategist and wealth management advisor.
Today I enjoy listening and helping individuals and families with their fundamental financial planning concerns. I always tell them that their concerns and worries can be addressed by having coherent conversations as life progresses, planning ahead for life changes, and then acting on those various plans.
This blog is based on a lot of common sense. But simply put, I see a lot of families who initially know that they should do something but don’t. Then they realize they need help from others to prevent future breakdowns.
Flashback to 1990...Knowing that I was leaving the country in three days was difficult enough to prepare for with all the family, business, and personal logistics involved, but it was only compounded by the fact that since I was the CPA/bookkeeper of my family, I had most of the knowledge about the family finances. I soon learned a single financial gatekeeper is not a good idea when the family expects and deserves continuity during a family crisis.
Three days later my wife and children saw me take off on a C-130 to a classified field (at that time) in the Gulf area and I was pretty much out of communication with the family for a month. I was fine, kept busy, flew, and got paid by the USAF and Company. However, the family back home was faced with the logistics of paying bills, acting on various projects that were already in motion, and most importunately, not being used to doing this or knowing where to ask for help.
I often compare my experience to when a spouse dies unexpectedly and leaves the surviving spouse or family members with the task of continuing without them.
After communication was restored and calls could be made, I soon realized how a little planning on my/our part before the activation could have made things a lot easier in what became a very difficult situation. As it turns out, various family friends helped my wife during that 7-month period, but I can attest to the fact that some advance planning could have circumvented much of our mutual stress and worry.
Everyone’s financial situation is different and involves unique circumstances, so I could make this very complicated. But there are eight fundamental areas that must be addressed at a minimum — things that I learned that may help you in your individual situation:
- Have honest conversations in your family about financial situation and obligations. Review household bill procedures, investments, and other financial documents’ locations and uses.
- Understand the sources of your family income and the expenses that are paid on a routine basis.
- Prepare an overview of your finances on a periodic basis (annually at a minimum).
- Does your spouse have credit card in his/her name only? Joint credit cards are automatically closed if one person dies.
- Is a Home Equity Line of Credit (HELOC) available for emergency expenses?
- Is your estate plan current and designed the way you intend things to go? Recent estate tax laws have made some older planning obsolete. I suggest reviewing every 5-10 years or when family life events occur, like marriage, divorce, and change in health conditions.
- Where are your estate planning documents located? Consider where you store your Wills, Revocable Trusts, Medical and Financial Powers of Attorney, Living Wills, family memorandums, etc.
- Who has access to your safe deposit box, if you have one? Keeping an inaccessible medical and financial Power of Attorney in a safe deposit box will not do you much good.
- Are the beneficiary designations on your insurance policies and retirement accounts, such as IRA, 401(k), correct?
- Do you have a professional advisor or trusted friend that can assist you when the unexpected occurs — someone who understands your family situation? Such a person can provide guidance and education about various concerns as well as coordinate the necessary logistics that will occur as part of your “financial life.”
I often reflect on my experience when working with clients and have conversations that start simple but often go down a complex path to take care of their unique situations. What I find interesting is that most prospects and clients have the same basic concerns about money, family, legacy, and career, but each family is unique in how they approach the situation.
I returned to West Virginia in April 1991 and found that my wife had survived my “death” experience but not without a lot of trouble.
Even if you are not in the Military…Will you be ready when you are “called”?