Recs

9

10 Tips for Covering Your Assets

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Look at the front page of any newspaper on any day, and you'll see stories about events (often unexpected) that changed peoples' lives. Some of these are happy events -- for example, winning a lottery, placing first in the national spelling bee, or being reunited with your long-lost quadruplet.

But many of life's surprises aren't so happy: death, disability, and job loss, just to name a few. Whether a life change is good or bad, expected or not, you can do something now to lessen the fallout and enhance the benefits.

1. We can't stress enough the importance of keeping your beneficiary and emergency contacts up-to-date. You don't want your employer to call your ex-boyfriend when you break your arm on the photocopy machine. And in case of your untimely demise in the aforementioned office-equipment mishap, you sure as heck don't want your lemonade-stand fortunes to go to your ex-husband, leaving your current shmoopy-woogums with only your loving memory and 93 nylon bags of lemons in the garage. To make sure you do it right, avoid these "Top 5 Beneficiary Form Boo-Boos."

2. Which brings us to getting -- and regularly updating -- your will. If you don't spell out who you want to get what, someone else will decide how your possessions will be dispersed -- at great cost and anguish to your family. Hiring an attorney to write a will, staying on top of changing tax rules, and letting a few special people know where you keep your important paperwork are three estate must-dos. (Here are the 10 must-have documents, while you're at it.)

3. When you add to your family -- through marriage, babies, or live-in parents -- remember to adjust your life and disability insurance. After all, you want to protect everyone who depends on your income (and your annual karaoke concert).

4. Do not buy life insurance for your kids. Unless Junior contributes significantly to the family income with his movie career as a midget stand-in, there's no reason for him to be insured. Instead, invest that money you would have spent on a policy in his college fund.

5. When you leave a place of employment, roll over and play Buffett. The assets in your 401(k), 403(b), 457, SARSEP, or SIMPLE plan no longer have to be handled by your company's plan administrator. Have your dough transferred directly from your old company plan to an IRA (here's how). Then start making your own investment decisions!

6. It's worth a separate tip to note that to avoid hefty taxes on your old employer-sponsored retirement funds, do not cash out your plan, or take even temporary possession of the money. Your new broker (ideally, a discount broker) can take care of all the paperwork for a swift and simple rollover.

7. If you need some cash in a crunch, try to avoid tapping into your retirement funds. Some employers let you borrow against your 401(k) and pay it back on a regular schedule. But should you lose or leave your job, you'll owe all the money back in one lump sum.

8. There are some life events you can see coming a mile away. If you're nearing retirement, prepare your finances for that banner day by moving some of your assets into investments that will preserve your principal. If you know you're expecting a child (and we hope it's kind of obvious), ready your revised paperwork before rushing to the delivery room.

9. At some point in your life, you may become unable to run your domestic (and perhaps professional) empire. That's why you need to create a durable power of attorney, giving someone the power to pay your bills and manage your assets if you become incapacitated. And a living will is a good idea as well, letting the world know how long you'd like to be kept on life support -- and other such unpleasant yet real-life dilemmas. In other words, don't die before reading this.

10. Getting hitched has its obvious perks. Take advantage of the one insurance companies offer, by getting lower rates for being paired up. While you're at it, see whether your insurer offers other kinds of policies, such as renters or homeowners insurance. Combining your policies can shave dollars off the bottom line. Our 60-Second Guide to Cashing In on Coupledom will show you ways to save some extra dough.

For more Foolishness:

This article originally ran in February 2004. It has been updated by Dayana Yochim. The Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1047911, ~/Articles/ArticleHandler.aspx, 4/18/2014 2:54:33 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Robert Brokamp
TMFBro

Today's Market

updated 5 hours ago Sponsored by:
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASD 4,095.52 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes


Special Offer for Savvy Investors Like You!

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut semper dui vitae molestie venenatis. Suspendisse.

Enter Email Address:



Privacy / Legal Information
Advertisement