3 WAYS TO PROTECT YOUR FAMILY DURING JOB LOSS
If you've recently lost your job, you're not alone! Many small businesses haven't been able to survive the skyrocketing inflation. Also, large companies have started laying off employees as our country looks towards a possible recession. We get it, losing your job feels like a crisis. But, you can turn this crisis into an opportunity as long as you take steps to protect yourself and your family. Don't panic. Here are three things you can do to stay afloat during this in between stage:
Inventory your assets
Take a hard look at your debts and expenses
Update or create an estate plan
Inventory Your Assets
Try not to dwell on the loss; rather, focus on planning for the future. Address both the immediate crisis and your long-term financial wellbeing. Do everything you can to maximize your resources and minimize your expenses.
If you were laid off due to no fault of your own, resources may be available to you. Some employers may provide a severance package. Also, you'll likely have unemployment benefits available to you for a period of time. If you have accrued vacation and/or sick leave, reach out to your former employer to see if you can cash out.
You'll want to create a list of your assets and their values. This list should include your bank accounts, investment accounts, retirement accounts, cars, RVs, boats, real estate, etc. Some things, such as a car, house, or invest account, are more easily converted to cash than others. As a last resort, you can liquidate those assets to pay for living expenses. If you have an emergency fund, you can rely on those monies first. Keep in mind that unlike retirement accounts, and some investment accounts, withdrawing from checking and savings accounts have no tax consequences. If you need to liquidate an investment account you may have to pay tax on any capital gains you made. Depending on your income and the age of your investment, this rate can be up to 20%! Drawing cash out of a retirement account early may result in even MORE tax liability.
Take a Hard Look at Your Debts and Expenses
Along with a list of your assets, you should also create a list of your debts and expenses. This will provide you with a more complete picture of your financial situation. If you have expenses that can be temporarily eliminated, such as streaming subscriptions, house cleaning services, etc., you'll want to get rid of those first. If you quickly find another job, you can easily reestablish those services. But, if you continue to spend money on these luxuries you'll savings won't last as long. You can brainstorm creative ways to live on less (and you may decide you want to continue doing so even after you land a new job!). If you don't already have a monthly budget, create one that will help you minimize your expenses.
If you need to miss a payment or reduce payments, don't be afraid to work with your creditors. The vast majority prefer getting a partial payment rather than no payment. Most will be open to working with you.
Update or Create An Estate Plan
You probably already know that you need to update your estate plan after major life milestones such as getting married or having a baby. You should also update your estate plan when you lose your job or have another major change in come.
If life insurance was part of your employee benefit package, it will likely terminate when you leave your job. If, for example, you named your trust as the beneficiary of your life insurance policy, and were relying on those funds to provide for your family, you'll need to review your plan and make changes. Similarly, if you need to dip into your savings to pay for expenses during this time of unemployment, you may need to review the inheritance you leave to your children.
If you don't already have your documents in order, the experienced estate planning attorneys at DuPont & Blumenstiel in Dublin, OH can help. As part of our process, we will have you make a list of all your accounts, property, and debt. Then, we can help you protect your assets, minimize expenses, and lessen your tax burden.
The great thing about our business is that we also provide financial planning services. We can help you get out of debt and on the right track.
Without a plan in place, Ohio law will determine who inherits your accounts and property. A will or trust enables you to choose your beneficiaries and what you want each one to inherit from you. Certain types of trusts can protect your assets from creditors if the trust is established before any creditors’ claims arise.
Most importantly, an estate plan provides you and your family with the peace of mind of knowing that if anything happens to you, they won't have to deal with the possibility of family conflicts. The difficult decisions will have already been made ahead of time. We can help you create a basic plan that you can afford now; and, if you choose, you can add to your plan once you have a more stable income. We are here to help. Give us a call at 614-408-0529 to schedule a consultation.
Want to learn more about how an estate plan fits in with the rest of your financial life? Download our Consumer's Guide to Estate Planning in Ohio here.