Planning Ahead: Looking After Your Loved Ones
If something happened to you tomorrow, would the people you love be protected? It’s a conversation that came up in the office a few days ago. Some of the team admitted they didn’t have a Will. Others admitted there are many things they haven’t considered. Randall and I would have said the same three years ago too, but not anymore!
Now we have something Randall cheekily calls a ‘Treasure Map’ – It contains all the information I, and the kids (if I’m not around either) would need in order to keep life running. Information like everyday money management, mortgages, wills, power of attorney, insurance, superannuation, taxation, professional advisors and a few added extras…
We bought a safe.
For anyone who is old enough to remember, it is not the type of safe that would have been cracked by the bank crook or swum in by Scrooge McDuck.
No, this is a document safe from Bunnings that cost us $69, like a small metal brief case promising to be waterproof and fireproof. It has been a consistent recommendation from Scott Pape, the Barefoot Investor, who had the misfortune to lose his home in a bush fire some years back.
By now, you will have figured out that Randall and I have really taken onboard Scott’s financial guidance through his easy to read, easy to implement book, The Barefoot Investor (which you can still pick up for $19 at Target). If we are ever fortunate to meet him in person, we really need to shout him a beer for the positive impact he has had on our lives.
For a start, following his advice, we sit down over a sandwich at the local lunch spot here in Samford once a month and review our finances – together.
Over the course of our marriage, Randall long carried the financial responsibility solo. A few years ago, I stepped up to take an equal role in staring down the numbers and planning for them. Financial numbers used to stress me out – drawing up a budget with every bill entered and watching the expected weekly wage disappear before my eyes was guaranteed to give me sleepless nights. I was happier with my head firmly planted in the sand whilst Randall paid the bills.
A couple of things happened to change that mindset.
The first was that we went through some tough times – and came through the other side. In the process, I had to stare down numbers and I realised that facing the truth was always better than hiding from it. Those times also helped me see Randall and me as a strong team who, together, could work our way through life’s problems. Slowly, I began to fear less and focus more on being a stronger team player.
The second was that in a brief time span, two men we knew died suddenly and tragically. It left their wives reeling … yes, there was the grief of their loss but there were also the confronting realities of not having a handle on their financial situation.
I went to Randall and asked him to create a document with all the information he knew about our bank accounts, insurance policies, superannuation – a document he cheekily titled “The Treasure Map.”
And then I pulled Scott Pape’s book off the shelf and began reading. I had bought it several months before but done nothing with it. Now was the time to change that. To my relief, Scott’s book did not advocate a line-by-line budget. He takes a much simpler approach to budgeting; working on a bucket model and paying down debt.
Interestingly, in the beginning of my newfound financial responsibility, Randall was less than impressed. For a start, it involved changing bank accounts and Randall is very much a creature of habit right down to his porridge every morning for breakfast. He also took it as a sign that I had not thought he was doing an excellent job with our finances.
Once I had assured him that I would help with the accounts and that I thought he had been outstanding in taking care of our family financially, but I wanted to be a true partner in this respect, he was onboard.
We have spent the last three years making sure that we have ticked all the practical boxes so that if something were to happen to one or both of us, our family is in an outstanding position.
It is a conversation that was had in the office with the Churchill team, and they suggested we share our plans with you all.
We are not offering financial or legal advice – just some practical strategies we have used to put us in a better position.
You may take one, you may take them all or you may take none of our suggestions … but whatever you do, take the time to look at your own situation and ask yourself, “if something happened to me tomorrow, would the people I love be protected as best as I am able right now?”
Here is what you will find recorded on our Treasure Map and tucked away in our safe.
Now, if you are thinking that our treasure map has tattered edges and a giant X on it to mark the gold, well, you are going to be disappointed.
The Treasure Map is a simple Word document that starts with a contents page and works its way through these topics:
- Current Financial Monthly Management – what are our financial responsibilities and how do we break this up monthly?
- Bank accounts – where is our money?
- Mortgage details – along with the account details, it is easy to see how much do we owe and to who?
- Insurance – the types of insurance policies, broken down by policy numbers, amounts covered and how to reach the contacts for each organisation
- Superannuation funds
- Tax details
- Professional Advisers – the law firm who holds our wills and Enduring Power of Attorney, our Accountant and Insurance broker
- Company details
Along with the Treasure Map is a document titled, “What To Do If We Are No Longer Here” addressed to our children.
Randall wrote this letter to our children. Whilst I knew about it, I have only recently read it for the first time and honestly, reading it reduced me to tears.
He is a good man, my husband. He recognises that in a time of loss or crisis, someone needs to lead – and the best leaders produce a plan. So, he leads our children through a plan of what to do next clearly and lovingly. This is a gift to them that if ever needed would hopefully reflect the depth of love that we have for all four of them. And goodness, I hope it is not needed for another 40 years.
There is then another document entitled Business Continuity Plan which gives authority to a trusted and talented friend to lead Churchill should we no longer be here. We understand that Churchill provides for our family and the families of each of our team. It is important that we have thought of protecting all these families if needed.
Now, with an overview of what is covered in the Treasure Map, let us dive a bit deeper into what we included and why.
Everyday Money Management
Whilst people think about the idea of someone dying and an inheritance being covered in a will, often we do not stop to think about what are the bills that need to be covered in the short term?
In times of grief or loss, it can be hard to know where to start so it helps to know what are the immediate commitments and current financial position?
For us, we still have four children living at home. There are school bills to pay and shoes they keep growing out of. We have a home they all live in, and we have discussed with our children’s guardians moving in for a little while if they were needed which means paying to keep the fridge full and the power on. Imagine if the kids lost us and the WIFI?
Keeping the financial commitments up to date is a simple check over once a month.
Record your bank accounts here too. Many of us have more than one account so it helps to know where to begin by listing your account details in one main place.
For many Australians, our home is our largest single asset. We work hard to save for a deposit for a mortgage and then we spend years working hard to pay off that mortgage. And when we finally make the last payment to the bank, we hope that the home is worth more than we paid for it.
As such a significant investment, it is worthwhile including the details of the mortgage in your treasure map:
- Who is the mortgage with?
- What is the length of the mortgage?
- How much is it for?
- What are the repayments and when do they fall due?
- What is the current interest rate?
- Is the mortgage fixed or variable?
When you pay out the mortgage, you will have one more fee to pay – and it will both annoy us and make us happy. There is a fee to get the deed to your property out of the bank’s vaults and back into your hands.
Make sure you put that hard-earned, special title document in your safe!
Wills & Power of Attorney
You may remember that in another time of my life, I was a practising lawyer. I had to study the law about wills and estates. I do not remember much of the technical aspects, but I remember enough to know two things:
- Dying without a will in place can lead to a whole lot of extra pressure on your family.
- The technical rules around making a will valid mean that it is best to use a lawyer to draw up a will.
(And for a handy third tip: a lawyer (even a retired one) who represents herself has a fool for a client.)
So, Randall and I paid a lawyer to draw up our Wills and Enduring Power of Attorney.
We have had two Wills drafted during our marriage – an earlier version for when the children were all small, and more recently, an updated version after our eldest son turned 18.
Having a current Will means that dividing up your estate (the property or valuables you leave behind) is much more straight forward, avoids unnecessary delays and your property can be distributed in line with your wishes.
I also found it really advantageous to clear thinking to have someone completely independent and experienced to help me think about various aspects of what should be covered in our wills. I believe strongly that a will should be clear and simple – so everyone can understand what we intended to happen with our estate. It should achieve this in a way that minimises the chance of damaging family relationships. A well drafted will also recognises that I am no longer here so I should not be trying to reach from the grave and control the lives of those still walking the earth.
For example, we have set our will up so that the estate is divided equally between our four children from the outset. That way, each child can choose to do with their share as they decide best without negatively impacting the interests of another child. It gives them independence and protects their relationship – which is far more important than any financial benefit.
A Will can be straight forward or complex, depending upon your individual situation. Remember, it is always a good idea to get some legal advice in drafting Wills. There are local solicitors who can assist or government bodies across Australia offer services to help prepare Wills. For example, in Queensland, the Public Trustee has a free service to draft your Will.
In thinking about your Will, you will want to put some time into thinking about these key responsibilities
- Executors – who will you trust to administer your wishes (set out in your Will)? We chose a couple of people, a mix of family and friend, who have a calm approach to life and a good head for finances.
- Guardians – who will you place in the position of trust and responsibility for your children? Importantly, if you have younger children, a Will can also set out who will be the guardian/s of your children if you are no longer here to raise them. This was a big one for us. We wanted to ensure that if something happened to us, our children had absolute certainty about who was going to be their guardians. We had conversations with our family members to ask them to be the children’s guardians. When I told my brother that we had life insurance in place to make sure the children would be financially provided for in their growing up years, he joked that he felt like he would be winning the lottery! Remember, these are tough subjects, but it is okay to have a laugh along the way.
Our Wills are now in set and forget mode. Short of something major happening, we have prepared Wills that can now last for the rest of our days.
Enduring Power of Attorney
The laws around Enduring Power of Attorney vary across Australia (another good reason to seek legal advice) but in a nutshell, this is an authority for someone to act in your best interests if you are not able to do so.
It can give someone else authority to make decisions about your property, finances and even some health decisions for you while you are still alive.
Given how significant these responsibilities are, I thought long and hard about who to give my Power of Attorney to. Randall was easy but from there I needed another person in case Randall was not around anymore too.
Randall had to make the same decisions and decided his number 2 spot would go to his best mate, Tony. Of course, Tony negotiated hard before saying yes, demanding he have his parking paid for if he had to duck up to the hospital and pull the plug on his old best mate. Have I mentioned that our go to strategy with these hard conversations is to make sure we remember to laugh about it? Tony certainly delivered that day.
Working for ourselves, we decided from the outset that some insurance would be important for a back-up plan in the event of illness or trauma.
We have both have life insurance policies in place and we are planning to keep it until our youngest children, Amelia and Will, finish school. After that, we will drop it from the budget because as we get older, the costs of life insurance will outweigh the potential benefits.
Trauma insurance covers serious illness and pays out a lump sum designed to help with medical expenses. For example, if Randall survived a heart attack trauma insurance would be there to assist with his recovery. I do not have a separate policy for trauma protection because it comes under my Superannuation policy.
Earlier in our business days, we also had Income Protection Insurance for Randall. As the children hit school, we let that one go too. It represented peace of mind when we had a young family of four children, and we thought it would be important to give some allowance for focusing on recovery if Randall became unwell because in those years, he was the one in the Churchill office every day.
Like many Australians, as a family we have two more common insurances: health insurance and home/contents insurance.
For a start, we have four children – all requiring orthodontic work. We are still in denial about that one! One thing we learned is to shop around for the right health insurance policy for your needs at the best price. Last year, we moved to Police Health. The premiums were a little higher for us but the amount they pay out was a lot higher and so the maths worked out in our favour.
We also have heard Scott Pape’s story of when his house burnt down, and he lost everything. The trauma of that experience is one thing, not having the money to get a replacement family home is another.
It is great to have these insurances in place. Only problem is we had not necessarily told anyone about them. So, there are now records of these policies in the safe and the contact details for our insurance broker (thanks, Trent, for all the patience you have shown us in working through this over the years.)
Earlier this year, there was $13.8 billion dollars in unclaimed superannuation in Australia.
That is a staggering amount.
I was one of these people.
When I started in the Queensland public service many years ago, I had a superannuation policy with QSuper. Then I moved to another department and somehow another superannuation policy began – also with QSuper. It took many years to identify I had two policies. Once I did, I merged the funds in that Superannuation policy into my main fund. I updated the beneficiaries of this fund if I died because I had put the superannuation fund together many years ago. I even saved money because I was paying an insurance policy within each superannuation fund.
And yes, we updated these changes to the details of our Superannuation funds in the Treasure Map.
Choosing your Superannuation fund is a personal decision. I like to keep an eye on a fund that has low fees and reasonable returns. As we get older, Randall and I are more risk adverse and more protective of our Superannuation funds. Reading some of the articles the Barefoot Investor has written on superannuation funds certainly got my brain ticking and it may help you too.
Remember, there are only two certainties in life, aren’t there? Death and taxes.
We included our Tax File Numbers on the Treasure Map.
If you have not lodged your tax returns for a while or you are paying off a debt to the Australian Government, then it would be a clever idea to include this too. No-one likes surprises when it comes to the Tax Man!
Under this heading, you could also record if you have a HELP / HECS debt – the loans that the Australian Government gives to people studying to cover tuition fees. At this stage, the debt dies with the person but sometimes, tax rules change so it is a good idea to include all the information you can here.
When it comes to Recognition of Prior Learning (RPL), we know what we are talking about.
When it comes to drafting wills, sorting out our tax, getting insurances or applying for a mortgage, we go to people who know what they are talking about.
These are professionals who we have built a relationship with over time, and we have come to trust their advice and expertise.
We know that these people understand our accounts, our assets, our liabilities, our policies, our legal responsibilities and documents, and our business.
We do not want to risk a “Where’s Wally” situation of our executors trying to find our accountant or lawyer from the many accountants and lawyers out there. Instead, we have recorded all their contact details and areas of responsibility and knowledge in the Treasure Map. No guesswork required!
A Few Added Extras
We have room in the safe for a few extras:
- birth certificates (which previously I was notorious for storing somewhere extra safe and then not being able to remember where that may be);
- marriage certificate or divorce documents;
- qualifications (remember, Churchill always keeps a copy of any qualifications we issue you on file too so we can help you out if you lose your hard copies);
- admission certificates or special licences (for example, my certificate of admission as a Barrister of the Supreme Court of Queensland);
- sentimental printed photographs for pre-digital images; and
- If you really wanted to, you could copy important documents or files onto USB and throw them in the safe too.
Keep the Safe, Safe
All this organisation means nothing if no-one knows it exists, where to find it and how to access it.
Our children know where the safe it, when to look for it (preferably not for a dramatic reading with friends when we have headed out for a child-free evening) and how to get into it. The same goes for our trusted advisors.
Here’s Cheers to a Long and Happy Life
When we updated our wills recently, we took the Treasure Map and all these documents with us to our solicitor.
He was excited to see this degree of organisation and order – and we were happy to hear him say, “This is outstanding. And it is always the people that are organised like this who never pass away too early in life.”
If being organised gives us some superpower to hang around for some extra decades, we are onboard!
Feel free to join us! Here’s a Treasure Map template to get you started.