Here is how I did it.
This article will show you "how I protected my family for life from vulnerabilities and threats."If you search that phrase (or something similar) on Google you will see thousands of articles. Of the few I read when searching this problem, I discovered very few were worth reading. There were articles and adds by life insurance companies, financial firms, and even lawyers and law firms. They all talked about specific products. Ranging from insurance, to legal documents, to investing. But none of them showed me HOW THEY DID IT.
How did they use this product? How will it solve my problem?
What I noticed is that they were showing me trees when I didn't understand the forest. And the products they were offering didn't completely solve my problem. So here is my playbook. It is the playbook that I used, and it is the same playbook that I teach to my clients. This is the foundation of
Step 1: I created a Revocable Living Trust.
This was the heart of my plan. This type of trust avoids probate (lengthy, expensive, public court lawsuit) and allowed me to select a person that I trust to manage all the assets in my trust if I am not able to.
While I am alive, I get to control all of my assets just like I normally would. Nothing changes there. I can do whatever I want with my property. However once I die, this document allowed me to control when my children get access to my money and how. Without this they would get everything in a single check when they are 18. Now, each one of my kids has their share kept in Trust for them for their lifetime. I peace of mind knowing it will always be used for their benefit, and cannot be accessed by any creditors or potential ex-spouse in the future.
It also saved about $150,000 in legal fees and court costs that my family would have had to pay when I died.
Step 2: I changed ownership of my property to my trust.
In order for a trust to work correctly the trust must own my assets. So I went to the bank and removed my name from the accounts and changed it to the name of my trust. I did this with all of my assets. So now, me personally Christopher Gipe, owns next to nothing because my trust owns everything.
Step 3: I got Term Life Insurance for myself.
I have 3 young kids and one of the biggest threats to their safety and security is if something happened to me today. My family relies on my income for food, clothing, shelter. So if I died tomorrow I needed to make sure that my wife and children were still taken care of. This is where term life insurance comes into play. If something happened to me tomorrow these life insurance policies (that are paid out to my trust I created in step 1) will pay for all of my family's needs until my kids are at least 21 years old. And if properly managed (which it will be because of my Trust) it will last my wife the rest of her life.
Step 4: I got Term Life Insurance for my spouse.
My amazing wife is the caretaker of our kids and has the hardest job between the two of us. If something happened to her our family would be in a very difficult position. Unfortunately, life still goes on and the bills still must be paid. This policy will allow me to take the time I will need to grieve and allow me to be there for my kids without having to worry how the bills are going to get paid when I am not working. This will also allow me to hire someone to help me with my kids when I eventually return to work. This lets me do all of that.
Step 5: I set up short term guardians.
I put together a short document that allows family members and non-family members whom I trust to take custody of my children on a temporary basis if something happened to me and my wife until my long term guardians can get there. Otherwise my kids could be taken into child protective services temporarily.
Our Long Term Guardians were all set up when we created our trust. Like I said, that is the heart of my plan and is super powerful.
Step 6: I created a Durable Power of Attorney.
Now that my kids and family are secure, I then needed to protect myself. What happens if I am not able to manage my money get sick or lose my mind? Well, my power of attorney lets the person I selected to step into my shoes and make those decisions for me. They make sure my bills are paid and money is looked after.
Powers of attorney are very powerful documents and can be abused if they are not set up correctly. So choosing the right person is the most important thing. I also limited mine to only becoming usable if I am incapacitated. And when I get better it terminates. Without this, I could be facing an eviction, foreclosure, collections notices or some other financial crisis.
Step 7: I created an Advanced Health Care Directive.
Similar to a power of attorney, this gives someone that I chose the power to make medical decisions for me if I cannot. Without this who would make my medical decisions? Naturally, my spouse would be able to but what if we in an accident together?
This is where that document comes into play. I have a few back ups listed that will be able to make those decisions for me and gives them some instructions for what I want. Without this navigating medical treatment will be a nightmare for your family.
Step 8: I review these documents at least every couple years.
This plan will only work if I keep it up to date. So I update it when ever I need to, and I review it at least every couple years. All good things in life require maintenance. Your cars your house you name it. They all require maintenance, and your trust is no different. No matter how good your plan is when you set it up, it won't work as intended if you never review it.
This is the exact process that I used (although when I was first figuring this out I did it in the wrong order). These are the first 8 Steps that should be completed before anything else, and in a perfect world would be completed before you own a home or start contributing to retirement accounts. Because this will be the foundation everything else is built on.
These 8 steps are will protect your family for life.
Once you've completed these done, this is more of the beginning of the journey. There will be more steps and more problems to solve and situations to consider. But this is the foundation, and all of those problems can wait until you have a solid foundation. I hope this helps you on your journey, and that you take these next steps to protect your family's future.
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