Only When The Tide Goes Out Do You Discover Who Is Swimming Naked...

Cartoon pg2.jpg

Warren Buffet likes this line. For him it means it is easy to make money in a Bull market, the hard part is buying things which will survive Bear Markets. The same thing goes for natural disasters. Who was prepared and protected when bad things happened to good people in Hurricanes Harvey and Irma?

The storms got us thinking about Personal Finance and some things you might want totake care of.

1.  Home and auto insurance.  

Most all of us have this but only a few of us know the details. Are you sure your house is insured for full replacement value, not just what you paid for it or some form of cash value? Another thing to consider is making sure you cover your most expensive possessions like jewelry, paintings, rugs, etc. A typical home insurance policy might only cover up to $5,000 in jewelry. Get a personal property floater for the rest. And don’t forget to photograph everything just to be safe. 

With auto insurance, it is scary to think that maybe 15-20% of drivers on the road either don’t have insurance or don’t have a valid license.  Good insurance to cover yourself in the event of a liability claim against you, or to cover you in the event of an accident with someone with no insurance, is a must. Don’t even consider the low state minimums for coverage. Get good full coverage

Those with significant financial assets (I am talking to you here) should consider an umbrella policy. It gives you extra insurance over and above home and auto. Coverage starts at $1 million and is surprisingly cheap. In this litigious age, better to be safe than sorry.

  2.  Think of your demise.  

Ugh, I know this is not fun but it is certainly important. We see a lot (and I mean a lot) of smart, successful people who sheepishly admit to not having a Will and if they do have a Will, they can’t remember who drew it or when. Was it before or after my last divorce?

So get your Will looked at periodically, maybe every five years and remember there could well be tax consequences. The Federal Gift and Estate Tax Credit is $5.49 million per person. Many folks don’t think they have any Estate tax to pay. But many States also have a tax and this starts at much smaller amounts (Vermont Estate Tax starts at $2.75 million).

3.  Think of your kids and your parents.  

When your child turns 18, as one Estate planning Attorney says, she “is legally a stranger to you.” With Medical privacy laws, when your 18-year old child gets in an accident (hope, hope against this) and is unable to speak for herself, a parent might not be able to get any medical information from doctors or hospitals unless a HIPAA Release has been filled out.  So get this done! It is equally important to get a release and perhaps a financial Power of Attorney signed by a parent who is showing signs of slipping and may soon not be able to make decisions for themselves. Better to get things in order now, otherwise you might have to petition a Court for the authority.

Thinking about all these things means thinking about all the bad things that could or will happen to you in the future. Not a fun exercise. But as someone once said, ‘take care of what is difficult while it is still easy.’ It will only get more difficult the longer you wait.