A recent survey revealed more than 40 percent of U.S. adults with living mothers do not know if their mothers have life insurance, while those who do know about their moms' coverage do not know the details. Life insurance professionals believe it is best for adult children and beneficiaries to have a conversation with their mothers and parents about their coverage so they know what the financial plan is in the event of sickness or death.
The survey showed 37 percent of U.S. adults who know their mothers have life insurance are not sure if they are listed as beneficiaries. Of the adults listed as beneficiaries on their mothers' policies, 38 percent do not know how to claim the death benefits. Further, 33 percent of adults who are mothers but do not have life insurance have not even considered the coverage as a source for financial security.
In a piece for Daily News, Alyssa Harvey said it is important for adult children and beneficiaries to understand the financial plans and last wishes of their parents so they can complete all documentation accurately in the event of an illness or death. Many people choose to purchase estate planning organizers that separate all papers and documents into categories so information can be easily accessed when needed. The organizers can file items by categories, such as homeownership, checking or savings accounts, life insurance or pensions, and end of life wishes. There are also sections where beneficiaries can write down questions to ask their financial planners later so as to understand the financial products and documentation.
In addition, many consumers invest in living wills which give people the right to make decisions for their own healthcare such as refusing life-prolonging drugs or deciding on participating in organ donation. A living will can insure the client's wishes are followed in the event of an illness or disability leaving them incapacitated, Harvey reported.
Further, some consumers pick a power of attorney to act on half of themselves in financial and legal matters if they are disabled, sick or injured; or they can draw up a trust, to name someone a trustee over their money or property. For standard wills, the owner names an executor and decides how his or her assets are to be divided up when they pass away. Consumers who do not have a will leave the distribution of their assets up to the state if they were to die unexpectedly, Harvey reported.
In an interview with the Daily News, attorney Dan Rudloff suggests people name a first and second person to handle their home and estate to avoid confusion or conflict. Most spouses name each other as the first proposed distributors of the assets, and then select an older child, relative or family friend as the second distributor.
There is a difference between a will and a trust. When working on a will, Rudloff recommends reviewing the document annually so all information is accurate and ready for the worst case scenario. Many consumers will try to treat all their children fairly and name them co-executors of the will. However, this can cause conflict if the children do not agree on how best to handle assets. Instead one or two people should be tasked with distributing assets so decisions are faster and easier.
What should be avoided, according to Rudloff, is leaving the preparation of a will to the last minute when the consumer may be frail or under medication. In these scenarios, people creating their wills are often not thinking clearly and will leave their assets to their nurses rather than their children. Thus, wills should be prepared early and updated regularly.