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How many children are really prepared for that phone call from one of their parents that will turn their lives upside down?

If you are the parent, are you prepared and have you talked with your children about what you want to happen if something should happen to you and you need assistance? Kick this year into high gear by designing a plan of action for yourself or your parent(s) so that, if something should happen, everyone understands what’s expected. As a Certified Financial Planner (CFP) for the past 18 years, I’ve created a four-step program, which will enable you to make smart choices now that can benefit everyone involved in the future. So remove all the “what if” scenarios that keep you up at night and get prepared. And don’t forget to review your system on a regular basis for changes.

Step One~ Get Organized!

You’ll need to gather together the following: One filing cabinet, complete with hanging file and manila folders; a copy of all important documents; a large three-ring binder with big tab dividers; and a colored marker.

Use the binder to store copies of important documents. Label the document title on the tab divider. This will come in handy should you need to transport documents. Using your marker, write on the back of each document where the original is stored (i.e. Will stored in safe deposit box and son John has the key.) Have a section on beneficiaries that lists all documents with appointed beneficiaries. Always keep this section current.

Next, organize your file cabinet. If you don’t want to store original documents in your file cabinet, note the original’s location in the appropriate file. Create the following titles for your hanging files and store items under each category in labeled manila folders.

Important Information

1. Location of safe deposit box and key
2. Passwords for debit card, online accounts, computer, and voicemail
3. Armed forces documents
4. Birth and marriage certificates
5. Names and phone numbers of your attorney, CPA, financial planner, broker, and insurance agents
6. Copy of tax returns and winter/summer tax assessments
7. Copy of Social Security Estimate Statement

Legal Planning

1. Copy of will and trusts
2. Copy of life and unemployment insurance policies
3. Durable Power of Attorney (DPOA) documents
4. Prepaid funeral and burial arrangements/plan for pet relocation and expenses

Banking/Investments

1. Copy of each credit card with contact phone number
2. Divide out by financial institution a copy of bank statements, brokerage accounts, annuities, IRA’s, stock/bond certificates, and dividend reinvestment plans (DRIP)
3. Copy of retirement plans and investment real estate documents
4. Copy of “Survivor’s” Pension Benefit (what will surviving spouse receive after the retiree dies?)

Medical

1. Name and phone numbers of physicians, dentist, and pharmacy (list prescriptions)
2. Copy of medical insurance card and benefits guidebook.
3. Long term care and disability insurance policies
4. Patient Advocate Designation document. Give primary care physician a copy
5. Copy of Medicare card and account number

Household

1. Copy of home deed, homeowners insurance (umbrella policies)
2. Copy of mortgage and home equity loan statements
3. Copy of auto title, loan/lease, and insurance documents
4. Copy of statements for gas, electric, water, waste management, telephone/cell/pager, etc. 
5. Home maintenance file to include repair receipts, phone number of repairmen,
   warrantees, and appliance insurance

Step Two ~ Discovery

Your documentation is organized. Breathe a sigh of relief! Next, you’ll need to assemble a team of people who can manage things if you’re unable to do so. Create a list of family members and evaluate the following:

1. Their role in the family, strengths, weaknesses, worries, living situation, income, monthly and annual expenses, insurance (including long-term care), emotional and physical health, goals and values.
2. How long will their money last if the family situation changes?
3. How do they feel about taking on a new role?

Now you’re ready to select individuals you want on your team. Include family members, doctors, home care specialists, CPAs, attorneys, certified elder law specialists, insurance agents, brokers, caregivers, certified financial planners, therapists, etc. Many of these professionals are trained to help families deal with health, financial, and social issues in a holistic way.

Step Three~ Create a Financial Plan

Sit down with a certified financial planner and develop a financial plan that addresses the following:

Financial Position:

• Create a cash flow statement which breaks down income and expenses.
• Determine your net worth by listing assets and liabilities.

Income Taxes:

• Review tax situation for capital gains/losses with real estate or stocks.
• Discuss inherited IRA status -vs- pension /profit sharing plans.

Investments:

• Analyze investments for quality, safety, income needs, tax situation, etc.
• Are investments manageable, properly diversified, or all over the place?

Retirement:

• Establish amount of assets necessary to meet your lifetime income needs.
• Project retirement income needs in several situations (i.e. home care/assisted living, utilizing long-term care insurance benefits if applicable.

Estate:

• Review documents and analyze current estate plan.
• Verify beneficiaries on life insurance, annuities, retirement plans, & 401K
• Decide what you need and desire for financial independence. How much will you leave for a family legacy? How will you allocate your social legacy regarding gift and tax?

Protection:

• Assess cash flow projections and alternate scenarios regarding disability, long-term care, and premature death.

Step Four ~ Meet with Your Team

Now that you’ve got everything in place, sit down with your team members and develop a plan of action that satisfies your goals, values, and objectives. The final product should enable you to maintain your dignity, lifestyle, and assets. In addition, the plan should be clear, concise, easy to manage, and tax efficient. It should also acknowledge the needs of whoever becomes the caregiver. The end result…everyone involved is able to sleep at night knowing all concerns have been addressed and a plan is in place to accommodate all those what if’s.