Malia Jacobson
Your Post-Kid Checklist for Financial Health
If the idea of getting your estate documents in order sends you into an anxiety sinkhole, you’re not alone. Lots of new parents are too overwhelmed to make a plan, or worse, they postpone estate and financial planning because they feel strapped.
The good news is that a little effort goes a long way. And the peace-of-mind payoff is priceless. Here’s an easy checklist with tips from local professionals to help you get all your docs in a row.
Estate Planning
After the arrival of a little bundle of bills, there are some important must-dos for new parents. First, parents need to establish their estate-planning documents (that includes a will, power of attorney and health care directives) or update the documents they have.
These documents are usually drafted by an attorney. There are a few important reasons to go to attorney for this service rather than trying to download forms from the Internet. Jodie E. Murphy, Esq. of Murphy & Berglund, PLLC in Altamonte Springs says, “Every state law is different, and often online forms are not specific for the state you live in, or they may not be updated with the current statutory language, which changes every few years.” There may also be specific questions that you have or alternate planning strategies that you never considered, so talking to someone who specializes in estate planning may end up saving you a lot of time, money and hassles down the road. Murphy recommends that you meet with your attorney every 3 to 5 years or any time you have a major life event (birth, death, marriage, divorce, or move to another state).
Life Insurance
If you don’t already have life insurance, it’s time to start shopping. Life insurance pays cash to your surviving spouse and/or children if you die during the policy’s term and comes in two basic varieties: term, a policy that ends after a pre-set term and pays nothing thereafter, and permanent, a policy that pays your survivors after you die, no matter how long you live.
Term life insurance is a solid, straightforward and (yay!) cheap choice for new parents; in most cases, coverage worth up to five times your annual income (at minimum, experts say) costs less than a meal out. Gathering quotes from an independent agent is a great place to start because they can shop all of the highest rated companies with the lowest cost per month, helping you secure the most affordable rate in the industry.
Jessica Ventura, an independent life insurance agent in Orlando, says, “Some coverage is better than no coverage. Get a policy as soon as you start your family so you can lock yourself into a rate for your current age. You can always add more coverage down the road as your family grows.”
To determine how much coverage you need, think of your individual family’s needs. Ventura explains, “The industry standard is 7 to 10 times your annual salary, and a term policy is the most popular because of its low monthly costs. A 20-year term will cover the family through the adolescent years (through or up to college).” Families with a child who may need long-term care may want to consider a permanent policy, which costs more but may provide more long-term security.
Update Your Beneficiaries
If you’ve already got life insurance, check the beneficiaries on the policies. Also, check the beneficiaries on retirement savings accounts while you’re at it. You may want all or a portion of the moolah to go into a trust that your child will inherit as an adult or to the person you’ve selected as your child’s legal guardian. These payouts are some of the biggest assets parents should consider, and the recipient is determined by the beneficiary designation—not, as many assume, by your will.
You don’t need an attorney to make changes to your beneficiary designation; it’s usually just a phone call to the financial institution or insurance company where the account is held. However, an estate-planning attorney can help make sure you get this done. “Unfortunately, with estate planning, you never really know that your plan is not valid or complete until you need to use it, and often by that point, it is too late to fix anything!” says Murphy.
Time to Budget
And you can’t escape the B word — it’s time for a budget. Jessica Reuss, financial advisor for Cook Dusey & Reuss Wealth Management in Winter Park, says, “To build a strong foundation on which to manage your wealth, it is important to establish a clear picture of your monthly and annual spending.”
Reuss says, “To get started, first identify your current income and your current expenses. To get a clear picture, keep track of everything you spend money on for one month, both large purchases and small. Use whatever method works for you; there are lots of apps out there that can help.”
“Mint.com is the app we recommend to our clients. For online tools, BetterMoneyHabits.com has lots of great information and resources, as does mymoney.gov. On Merrill’s Personal Financial Journey website (go.ml.com/pfjtool), you can find budget worksheets, spending analysis tools, videos and other insightful information on setting and sticking to a budget,” says Reuss.
If you cringe at the thought of tracking every penny, take heart. After a quick ramp-on period where you input your info and link your bank accounts, budgeting software streamlines month-to-month planning, giving you a quick, at-a-glance snapshot of your spending and highlighting opportunities to pocket extra savings (such as acorns.com).
Feel Financially Stable
Getting your finances in shape isn’t as scary as people think. Think about small steps and what you can do every month to get it all done. And really, there is no excuse not to take the steps to secure a sound financial future for your family.
Estate Planning: What to Know
Confused about estate planning? Join the club. Here’s what new parents need to know.
What: Your “estate planning package” is legal-speak for the documents dictating your health care directives and defining what happens to your children and assets if you die or become incapacitated due to illness or injury. Murphy says, “The basic estate planning package includes your Last Will & Testament (which can establish guardianship for minor children), Durable Power of Attorney for financial decisions, Health Care Surrogate for medical decisions, HIPAA release, and Living Will to address end of life wishes.”
Where: Consult an attorney. Beware of do-it-yourself online wills, they’re often cookie-cutter forms that don’t represent your state’s specific laws. For example, Murphy says, “Florida law specifies that the will must be signed in front of two witnesses and a notary. Also, the ‘executor’ must be either a close relative or a resident of Florida.” Skip this step or another one of your state’s legal requirements, and the court won’t uphold your will, no matter how comprehensive.
When: Update your estate planning documents after any major life change (the arrival of a new baby, a death in the family, or divorce or remarriage) or every 5 years. If you’re creating a new estate plan with an attorney’s help, expect the process to take anywhere from a few weeks to a few months, from initial call to the final signing.
Cost: Attorney’s fees for an estate planning package start at approximately $500. For example, Murphy & Berglund charges $550 for an individual basic estate planning package and $750 for a married couple. Trust-based packages can range from $2,000–$10,000 based on complexity and needs. A trust is designed to avoid probate and can be structured to minimize taxes and expedite distribution of assets. An estate planning attorney can help you decide if you need a trust or just a Last Will & Testament.
Meet the experts
Jessica Reuss, CFA, CFP®
With over 22 years of investment experience, Jessica is a partner at Merrill Lynch Wealth Management/Cook, Dusey & Reuss Wealth Management. Her business is built on integrity and cultivating long-lasting relationships by providing exceptional service, customized advice and a disciplined approach to managing wealth.
400 South Park Ave. Winter Park 407-646-6734
Greg Dusey, Resident Director fa.ml.com/florida/winter-park/cook-dusey-reuss
Jodi E. Murphy, Esquire
Murphy & Berglund
is a law firm established by Jodi E. Murphy, Esquire and Michelle A. Berglund-Harper, Esquire with the purpose of helping families plan for life, address the unexpected, deal with death, resolve conflict and preserve legacies for future generations.
1101 Douglas Ave. Altamonte Springs
407-865-9553 murphyberglund.com
Jessica Ventura
Jessica Ventura is a Florida native who has lived in Orlando for over 20 years. She has been a Certified Independent Life Insurance Agent for over 5 years, helping people identify the best policy to adequately protect their families.
JMV Consulting Orlando
407-353-5923 jmv11909@gmail.com
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