How safe is your financial future? You might have the best lifestyle and health, but a slight change in either personal or financial circumstances could turn the tables.
In the case of an accident or terminal illness, who would take care of your family? Some life changes happen unannounced; it is always good to be prepared.
The following strategies will help you and your family manage finances in the case of sickness:
1. Have your financial affairs in place.
Can your family access your finances when you are not in a position to do so? Having your money in order will make it easy for your family to manage it in case you become incapacitated.
You do not need to spell out every single detail about your finances. All you need is to keep the documents simple and in a place that somebody else can access.
Be sure to mention all your sources of income, debts and investments.
2. Prepare a legal arrangement.
Who will take over your financial responsibilities when you are too sick to do so? It is important to have a legal plan of who will take over when you are not in a position to manage your money.
This person can be a member of the family or a friend. Seek professional help to get advice on how to hand over these responsibilities legally.
3. File a will.
Who will inherit your properties when you die? A will indicates who gets what share of your property.
Failure to make a will means the court will decide who inherits your property and how much. Make a will to guarantee your family financial security even after your death.
4. Open a dialogue with your family.
When you are old or sick, you might not be able to work the same way as before. Therefore you will need to subsist on a reduced income.
Your family members might not understand the changes that come with reduced income, especially if they are young. Talk to them and explain the need to cut expenses.
5. Plan for funeral expenses.
It is never easy to plan for your funeral, especially when you are in good health. However, it is important!
Holding a funeral is a bit expensive; thus getting a funeral savings account will help you cut the funeral burden to your family after you pass.
Alternatively, you can opt for insurance coverage with funeral costs benefits.
6. Reduce the inheritance tax.
During old age or sickness, you might not be able to take care of your properties and need to hand them over.
You can avoid inheritance tax by either gifting away the properties, changing your will or creating a trust.
7. Create a budget.
Sickness, death or old age will most likely cause a drop in your family’s income. No need to panic over the change.
The sooner you accept the situation and plan to survive with the new income, the better. Adjust your family’s lifestyle to cater for necessary expenditures.
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