Financial Costs of Dying
Have you ever thought of the financial burden you leave behind your loved ones at the time of your demise? Would you like to make your crossing over as peaceful as possible? Here are two parts of the equation everyone needs to consider and how to make adequate preparation to leave a lasting legacy to your loved ones:
Funding at need
When someone dies in the family, the two major concerns that crop up immediately are: “What to do?” and “Where to get the funds?” Here are the bills the family needs to address immediately:
Hospital bills. Depending on the cause of death, whether critical illness or accident, hospital bills can be dramatically high—in hundreds of thousands of pesos when involving a series of emergency and intensive care unit confinements, including the professional fees of an attending team of specialist doctors. Often, health coverages are limited such that additional cash has to be shelled out.
Wake. Arrangements with the funeral director depends on whether you have purchased a memorial plan or buying at need. Furthermore, the type of memorial service that will be rendered depends on the type and provisions of the plan purchased: traditional, fixed-value plan or cremation. You can either work within the plan or pay for extra services. There are normally four phases of this service: a) call for service; b) preservation, cosmetics, casketing and other arrangements; c) viewing and final arrangements; and d) interment.
Interment rites and burial. Arrangement with the memorial park to prepare the burial site or crematory. If you have purchased a lot at preneed price, family members will be forced to buy at “at-need price”, which is way much higher since memorial lots appreciates in value over time just like other real estate. There is a separate interment fee and cost of vault where the casket with mortal remains will be rested.
Family-income continuation
If the deceased is a bread winner in the family, the emotional pain is aggravated by the realized loss of income. How will the aggrieved spouse single-handedly handle financial obligations as a result of sudden demise of a loved one? Aside from normal household expenses, the remaining spouse has to wrestle with education fees for the kids, home mortgage and other loans payable. If there are very little savings left, will he or she be forced to sell assets at a loss, such as jewelries, cars, or possibly move to a smaller home or apartment, change their lifestyle due to decreased source of income? The loss of one family member can cause dreams to crumble.
How about estate taxes to be filed and paid within six months to the BIR for assets coowned or owned by deceased spouse or family member prior to transfer to heirs? If this is not paid on time, penalties will be imposed, which will cause another financial worry to the family. Will you allow this to happen to your family?
A powerful reason to do estate preplanning is the sense of comfort and security this gives to your loved ones who are caught off guard and make the difficult decisions for you. Being well prepared for the inevitable means they can focus on the more important process of grieving. As we all know, a funeral is the final gesture of farewell from family and friends, a recollection of how a person lived his life on earth.
When your nest egg has grown to the desired level, you can start to enjoy retirement doing what you love without worrying over money, while thinking of its distribution or whatever legacy you wish to leave the future generation, the people you care about, your favorite church, as well as the charitable institutions you support.
Proper financial planning is about managing your wealth that goes through the process of growing, cultivating, protecting and eventual distribution and transfer of wealth, so that your loved ones may enjoy also the fruits of your labor with the help of various tools or devices, such as wills, insurance, donations, sale, incorporation and trust instruments. It is also a way to help you prepare funding for inevitable events that happens in our life so you may leave a peaceful and lasting legacy to your loved ones. Here is a famous quote from Benjamin Franklin that says, “In this world nothing can be said to be certain,
except death and taxes.”
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Arlyn Cheng is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 59th batch of RFP program in 2017. For more details, inquire at info@rfp.ph or text at <name><RFP> at 0917-9689774
Source: http://www.businessmirror.com.ph/financial-costs-of-dying/
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