Preparing a financial disaster kit

This was originally published on Monday, August 22 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

Life’s emergency situations can happen at any moment. Advanced preparation and planning can ease the stress that comes with a disaster. A financial disaster kit can make the process of recovering less stressful. A well-crafted kit contains information necessary to assist in the recovery process and is based solely on your household’s situation.

  • Income. In case your income is disrupted by the disaster, having proof of your income will be needed if you apply for assistance. Include pay stubs or Leave Earning Statements that reflect your current pay as well as anyone else in your household that is employed. If you receive Social Security, veterans benefits, housing or food assistance, or any other government benefits, include information on how much you receive. Include paperwork showing income received from alimony and child support received as well.
  • Financial assets. Many people today do their banking online or on their smartphones. Although this can make life easier under normal life conditions, once disaster strikes we will lose many of our modern conveniences. Keep a current copy of your bank or credit union statements as well as your credit card statements. Having these documents on hand can prove that you have an account at that financial institution. Do the same for your retirement and investment accounts. Include a copy of your vehicle registration and ownership papers.
  • Financial obligations. Make copies of your monthly bills. Your utility bills such as power and water can be extra proof of where you reside. Include statements from all your financial obligations such as your credit cards and loans. The documents should have the name of the financial institution, the account number, and contact information. Make copies of your credit cards front and back. Include copies of your car, student and other loans in your kit. If you pay alimony or child support include a copy of your payment agreement.
  • Insurance policies. After a disaster this is probably one of the most important documents you should have ready and on hand. Before a disaster, be sure to review your documents and that you have adequate coverage. If you are unsure of your coverage, visit your insurance company. Keep copies of your current homeowners or renters, auto, and life insurance policies. You may want to include recent photos of your home, high valued items within your home, and your vehicles(s). These pictures can be on a CD, thumb drive, or some other portable device that will not take up much room in your kit.
  • Tax information. Some financial loans request that you have tax information for the past three years. Keep copies of your federal and/or state taxes for at least the past three years in your financial disaster kit. Include the most recent property tax information as well.
  • Estate. A finance disaster kit should cover even the worst case scenario. Keep a copy of your will or trust in your kit. Your spouse should as well. Having a trust will keep your assets from going through probate, and having a trust or a will may reduce family conflict, and reduce some the stress of dealing with a disaster and the loss of a loved one. If you become injured or incapacitated, your power of attorneys will give someone you trust the ability to work on your behalf.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

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Selecting a life insurance beneficiary is important preparation

This was originally published on Monday, April 4 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: I am sixty years old and a widower. I have a mortgage which I am solely responsible for and two adult children. I have a life insurance plan through my employer. If I were to pass, I want my son to inherit my house. I was wondering if it would be possible for a portion of my life insurance to go to my two children and to my mortgage bank to ensure that the payments are made?

Answer: I commend you for taking this matter into consideration before you pass. No one likes thinking about passing on but it is very important to be prepared when it happens. Unfortunately, many families go through some bitter times trying to decide how to carry out their loved one’s final wishes. Sometimes this can cause a rift that cannot be mended. A lot of these disputes can be avoided if specific instructions were left behind. It is important that you understand your insurance policy and the parameters within that policy. When choosing your beneficiary there are several things to consider.

The proper beneficiary — Selecting a beneficiary is a very personal decision. Some people want to ensure that their loved ones have enough money to cover funeral expenses or they may want to ensure that their family can survive after they pass. Yet, some view it as a financial transaction. When choosing a beneficiary ask yourself a few questions. Who will be bearing the costs of your funeral? Who counts on you financially? Take time when choosing your beneficiary. Here are some choices to consider:

  • Family – For most, this is the top of the priority list, especially for those who are financially dependent on you. Family members could include your spouse or partner, children, parents, or siblings. You can choose multiple family members as your beneficiaries. Per stripes means you can designate branches of a family or lineage and the proceeds are divided equally among the beneficiary and/or their surviving children. Let’s say that you named your son and daughter as your beneficiaries and they receive 50 percent each of the proceeds. If your son passes before you, his children will split his 50 percent equally and your daughter still receives her 50 percent. Using the same scenario, if your son had two children, then the proceeds will be divided equally between your son’s children and your daughter. The proceeds will be divided into thirds.
  • Legal guardian – If you are appointing a minor (under 18 years of age) or someone who is not mentally or physically able to care for themselves as your beneficiary, you may be required to name a legal guardian. You do not have to choose the appointed legal guardian; you can request to appoint a guardian of your choice.
  • Estate – You may choose your estate to be your beneficiary. You must have your last will and testament drawn and the executor of your will receive the proceeds from your life insurance policy. The executor will have to carry out the terms of your will. When you name your estate as the beneficiary, it will be the sole beneficiary of your life insurance policy. Talk with your accountant to discuss the taxes associated with your estate becoming your beneficiary.
  • Trust – A trust is a legal agreement that allows a third party, or trustee, to hold assets on behalf of the beneficiary or beneficiaries. You can make the trust your life insurance beneficiary. You can specify the terms of a trust controlling when and to whom distributions may be made. A trust can also protect your estate from your heir’s creditors or from beneficiaries who may not be adept at money management.
  • Charity – You can name a charity to receive some or all of your proceeds.
  • Mortgage – You can make your mortgage institution a beneficiary of your life insurance policy. Be very specific about the amount and account number etc. when doing so.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Improving your financial status in 2013

This article was originally published on Monday, 07 January 2013 as the Money Matters article in the Guam Pacific Daily News (PDN).  Click here to subscribe to the PDN.

Question: This year I plan on improving my financial status. Do you have any tips on how to achieve this goal?

Answer: First, happy New Year and thank you for reading Money Matters.

This is a great question, especially for this time of year.

With the year just starting off, many of us make resolutions to exercise, to lose weight or to quit smoking. Making a new year’s financial resolution is just as important.

In these uncertain financial times with fiscal cliffs all around us, we must decide what we can control versus what we cannot.

You can control how much you save and how you allocate where your money goes. You can’t control what the markets and economy may do in 2013. Being prepared for those unexpected times is imperative.

Get a financial plan in place and decide how you want your money to work for you. What are your short- and long-term goals? How much do you need to get there?

How will you go about achieving those goals? If you don’t know where you’re headed with a sound strategy in place, it’s less likely you will arrive at your financial destination.

Here are three tips that can help you achieve your financial goals:

Set achievable goals. Set goals you know are attainable. Making a goal that is unreasonable will only discourage you. Think about what you really want to achieve, what steps you will need to achieve these goals, and what they will cost you. Write these goals down and hold yourself accountable.

Plan your estate. Many of us procrastinate on this because we do not like to think of the worst.

Making sure your loved ones who are dependent on you are well taken care of should be a priority.

Think about an advanced health care directive, a will and/or a living trust, a durable power of attorney, and an in loco parentis. Depending on your situation, you may not need all these. You can purchase software or get templates online.

I suggest you have an estate planning attorney look over your documents, especially if your situation is complex.

Examine your credit. This is the best time to check your credit.

For the past month or so you have been using your credit card(s) to spread the holiday spirit.

Take a good look at your credit card statement for any false purchases and let your bank know immediately if you see anything suspicious.

The start of the year also is one of the best times to check your credit score.

You can receive a free credit report at www.annualcreditreport.com.

This website allows you to request a free credit report once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.

You may get all three reports at once or spread them out over a four-month period.

I recommend getting a report from each of the three companies mentioned above in four-month increments. That way, you’ll be monitoring your credit throughout the year and not just once a year.

Carefully look at your report for any odd postings and try to get them fixed as soon as possible.

You also can use sites such as quizzle.com and creditkarma.com to see your score for free and learn more ways to improve it.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com. To read past columns visit the Money Matters blog at https://moneymattersguam.wordpress.com.