2013 New Year’s Resolution Follow-Up

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It’s time to check up on our 2013 New Year’s Resolutions, which I gave the eloquent theme “Get our crap together” (in case one or both of us dies). I will roughly follow this GYST checklist.

Will and trusts. We are fortunate to have a family friend who is an estate lawyer, and she was able to assist us with creating all of these legal documents. They included:

  • Designating a Durable Power of Attorney for financial and medical decisions, including backups.
  • Designating who would take care of our children, including backups
  • Distribution of assets and personal items. Mostly the money will go into a trust for the kid(s).

Living Will. In case one or both of us are incapacitated, this included:

  • Medical power of Attorney and backup in case of being physical incapacitated
  • Advanced directives
  • Discussions of our wishes with family.

If you can find a good estate lawyer, I would recommend that route as they should have the experience to explain all of the potential issues in your state including being prepared for future law changes. I may try to write about the general issues later once I learn more. I also meant to compare my documents with those produced by services like Legalzoom, but haven’t gotten around to that. As for costs, it will vary depending on how complicated your situation is and how many additional documents you need prepared and reviewed (power of attorney, trust, etc.).

Life insurance. We each have a $1,000,000 term life insurance policy. We think this number is more than adequate given our future expected needs and our existing savings. If one of us dies, the other will ideally not have to work anymore. If both of us die, there should be enough to cover all living expenses plus any educational expenses. To get an idea of cost, try Term4Sale.com.

Short-term disability. We both have short-term disability through our employers. I don’t feel it is necessary to buy an additional individual policy as we have sizable cash reserves.

Long-term disability. Mrs. MMB obtained an individual long-term disability insurance tailored to her profession. This was done through a recommended local insurance broker. I did not pursue buying a long-term disability plan. This is due to the fact that I felt our portfolio is large enough to provide a substantial cushion, and also due to the fact that the physical demands of my job aren’t very high and thus I worried it would be hard to qualify for benefits. Upon further thought, however, I do think I should at least price it out. Another thing to do in 2014.

Financial Education

  • Passwords. All major passwords are stored in an encrypted password manager, with most sites having a unique complex password such that one hacked database won’t affect the security of other accounts. My wife uses it all the time now and is familiar with it.
  • Cash reserves. We have one year of expenses in cash held in an FDIC-insured bank account. This will provide a cushion so that nobody will have to worry about money until life insurance proceeds arrive.
  • Spousal budget education. We did have a few discussions about our current monthly cashflow situation (income and expenses) and what spending levels could be supported with our current portfolio and with the addition of any life insurance proceeds.
  • Spousal investor education. Can my spouse manage the finances without me? Probably, but not as optimally as I’d like. I did very little in this area, and this will be the focus on our 2014 resolutions.

I think we did pretty good in terms of estate planning, but for 2014 I’ll need to be much more proactive in sharing my investing knowledge. I’d like to learn how to make some simple videos and share them on Youtube.

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  1. Contact khan academy and team up with them to make videos.

  2. Good job. Thanks for the update. I have an appointment with an estate lawyer this very morning to start getting our own stuff in order.

  3. Hi,

    I have been a silent reader of your website from past one year. Your website educated me so much, Thanks for your wonderful work. Can you please share more info about trust and wills. I have done wills. But not trust. Do I really need trust.


  4. Buy & Hold Blog says

    Great job Jonathan. This item was also on my todo list for this year. I may go for an online version. You’ve inspired me to get it done in the next few days.

  5. If you don’t mind saying, with whom did you go for your term policy, and for what term?

    • I did State Farm for 30-year Level Term Life. It wasn’t the cheapest for me although it was relatively cheap for my wife. It was the highest rated safety-wise and my family has a good claim experience with State Farm, but part of it was that I was in a hurry and just wanted coverage. I would probably recommend for others to shop around more for price.

  6. What encryption/password manager do you use? I have been thinking of getting one.

  7. Jonathan, You plan to respond to the questions on this article. I have been checking this for quite sometime. I am also interested in which term insurance provider you happen to use and the password manager that passed your screening. Thanks for sharing.

  8. Thanks for this post. I am using it to do my own to do list with a new baby just arrived.

    What sort of term did you use for the life insurance? I see 20 year is cheaper at ~$20 per month vs 30 year guaranteed at $80+.

    Thank you.

    • I did the 30-year term, but if I could do it over I think I would pick the 20-year; it is cheaper and within 20 years I should have enough saved up outside of life insurance to cover my dependents’ needs.

  9. Do you recommend availing of employer’s Accidental Death & Dismemberment policy in addition to LT disability and life insurance?

    Or is that duplicative?

    • AD&D is usually really cheap, but also has a lot of restrictions. I’d probably recommend just sticking to disability and life insurance. I think in the past I’ve bought AD&D when we got a benefits credit that we had to use up after picking the basic HMO plan.

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