Financial
Strategies for
Major Life Events GE21622
(10/03) (Exp. 10/05)
The
least favorite time to think about finances is when
you’re in the middle of a major life event.
Whether it’s marriage, having a child, divorce
or death, that’s when you are totally caught up
in the overwhelming detail
of the situation. Yet, that is also
the time when you need to think about the financial
consequences.
Whether
you manage your own finances or have a financial professional
to assist you, certain
major life events call for a re-examination of your
financial strategy. Here are some of
those events.
Marriage
When
you marry, especially if you and your husband already
have your own careers, you have to make some decisions
about your financial futures. Many working spouses keep
separate checking accounts for day-to-day expenses,
sharing the major costs (like mortgage payments) on
an equitable basis. But most married couples invest
for the future together. Saving for children's
college education, retirement, a second
home, or other long-term goals requires planning
and agreement on the best investment tactics.
You and your spouse should determine how much you need
to save, what your investment options are, and how best
to reach your goals.
Having
Children
When
children enter your life—whether through birth,
adoption or step-parenthood—many of your priorities
will change. Having children means setting new
priorities—for example, how
much to save for your child's education vs. how much
to save for your own retirement.
A
financial professional can be particularly helpful at
this time. She can help you by making sure you have
adequate life insurance to support your children until
they are able to support themselves; suggest
methods of addressing your children's college education
expenses; work with your attorney and/or tax
advisor to help you establish and fund an estate plan
that minimizes taxes and makes sure your property is
distributed in the way you desire—for example,
if you wish to have your
estate go to your children by a first marriage rather
than to your spouse.
Divorce
Divorce
is an emotionally chaotic time, but it shouldn't leave
you with financial regrets. You will want to consider
these and other issues:
•
payment of bills for joint
assets (car, mortgage payments, etc.)
•
tax implications of dividing marital property
•
protecting yourself from any possible bankruptcy
of your spouse
•
protecting your assets from your former partner’s
liabilities, including business or tax liabilities
•
college funding for your
children, including setting up an educational trust
•
equitable division of retirement plans and reinvestment
of proceeds to avoid tax liabilities
•
renaming beneficiaries of your and your former
partner’s life insurance policies and revisiting
your estate plan
Death of a Spouse
One
of the most important functions of a financial strategy
is preparing for the event of one partner's death. Insurance,
estate planning and many other issues should be discussed
and understood by both parties so that either is prepared
to carry on alone. Still, the death of a spouse, no
matter how prepared you may be, is overwhelming. Points
to keep in mind when planning your strategy include:
•
making sure you receive
all the life insurance benefits you are entitled to
•
assisting you on transferring ownership of investment
accounts
•
re-examining your investment portfolio in light
of your new situation
•
helping you determine how best to withdraw funds from
your spouse's retirement plans
•
funding a new estate plan
If
you are currently in the middle of one of these major
life changes, you should think about your financial
strategy now. But don’t wait until change occurs—make
sure you are prepared for your financial future.
Lee
Alcorn