When dealing with the loss of a spouse, the crisis of dealing with a valued homed suddenly takes on more than just a numbers game on your balance sheet. Life instantly complicates and a new norm for the surviving spouse and sometimes children is now being ushered in. The bills don’t stop and the note holder on your home loan is still expecting timely payments.
The survivor is looking for resources to meet the challenge and in many cases, amidst ugly complicated family relationships. The unexpected enters in and complicates an already frantic and emotionally challenging time. At risk is that untouchable money for your future retirement.
Because of the lack of good planning for many, those dollars suddenly become the primary source to keeping the mortgage current in good standing with the lender. A domino effect is now in motion and the future financial security of the family and even you is at risk. But there are steps you can take today to minimize these threats and create a more secure future.
Hopefully this article becomes the catalyst for you to understand the problems coming and to take decisive action to implement a number of very useful steps and financial tools to protect you. Taking action today puts your future on more stable ground and in a more prepared state to meet the challenges which are certainly heading your way.
Planned Mortgage Insurance Protection (PMIP)
These plans can do for you what virtually no other instrument can and that is provide financial stability and face the threat that is looking to undermine your future and security and they do it for pennies on the dollar.
PMIP can also provide crucial dollars in the event you are stricken with illnesses such as heart attacks, stroke, cancer and many other severe illnesses that can take away your ability to work, earn a living and keep current on your mortgage.
On such occasions when financial chaos enters and threatens to reduce or completely eliminate your income, PMIP will help avoid the loss of property, reduce the chance of bankruptcy and help prevent broken families. PIMP can put up a financial firewall around your mortgage and your family by accelerating up to 90% of your stated coverage. Typically benefits reach your bank account within 30-45 days.
Critical Period Planning (CCP)
Older people who become new homeowners or refinance their homes face health challenges that can affect mortgage protection. Surveys have shown that most surviving spouses have a preference to move into a new location with the intent of reducing the space and expenses. Moving closer to family also plays a big part in their decisions.
CCP could become the best financial tool in addressing these situations. The goal is to provide funding to take care of the monthly mortgage payments for a specified period of time. This enables the surviving spouse time to put the house onto the market and get the best possible outcome. This becomes a far better alternative than face stress sales especially in challenging economic conditions which could result in a substantial loss.
Don’t let the judge decide
We are not attorneys, nor do we play ones on TV and we certainly don’t give legal advice. But what we can say is many surviving spouses are ill prepared for the event of a spouse passing away. AARP reports that 6 out of 10 Americans have not prepared wills. 81% of Americans over age 71 have constructed wills which still leaves a substantial gap.
Updating wills should be considered especially if you have experienced substantial changes in your net worth, marriage or relationship with other family members and business partners. In the event that there are no wills, the judge decides the fate. If there are questions about the will, again the judge decides. Remove the judge’s influence as much as you can by ensuring your instructions are clear.
Revocable Trust can be an important tool in preserving the net asset value of the entire estate. Even if a person dies testate (with a will) the surviving family could be faced with a substantial bill related to state, court and attorney fees. When considering that the entire probated estate can be assessed, with an average of 3% of its stated value, the loss can be substantial.
For example, an estate worth $500,000 could stand to lose around $15,000. Considering that, having a Revocable Trust will help you avoid that as well as keep family business private. There are reasonably priced plans that can easily put together this or other estate planning instruments to protect the family. These are choices available that everyone should consider especially if you don’t want to hand your family’s inheritance to attorneys and the court systems.
They can’t find it!
I have helped many families deal with grief and the process of locating important documents and the process of helping them move as quickly through the transition. One of the greatest challenges family members face is simply just trying to locate important information that will be needed in the probate process.
Let’s face it, many spouses don’t exactly do a good job in communicating where important documents, insurance policies, retirement accounts, passwords, or explaining how the surviving members are to follow their wishes. Often times family members and friends spend week and even months trying to track everything down and when attorneys and the courts get involved, the cost to settling everything goes up.
It’s important also to state that situations arise where some homeowner’s family members may be challenged by other family members and that may think they are entitled to certain things within the estate whether warranted or not. There seems to be little shame at times with them knocking on the door and justifying their demands. This speaks to why a good legal structure can help protect your family and give them an easy way to execute your wishes.
Online systems are also available to help you organize, direct and expound on the who, what, when and where of your succession planning. They just lost an important and loved family member. The last thing they need is go on a treasure hunt to track all of this down. We offer such a plan here for free that will allow you to do just that.
In summary, putting together a plan and the action steps may not be as hard or arduous as you may think. With some direction and effort on your part, you can certainly complete this and feel better knowing that you are literally handing the keys to everything to your surviving family with good directions. They will certainly be thankful for your forethought and consideration.