Some businesses could not pull through the increased expenses inflation has brought on over the past few years unscathed. Due to this, companies have put employees out of work or laid off employees to reduce costs. If you are dealing with the stress of recent unemployment, remember you are not alone. You can use this circumstance to protect yourself and your loved ones.
Look At Your Finances
Rather than dwelling on the loss of your job, it’s a great time to plan for your future and assess the state of your finances. If you were laid off through no fault of your own, resources are available to you. Many companies provide unemployment or a severance package. Furthermore, your employer may pay out vacation and sick days that you’ve accrued.
Maximizing your resources while minimizing expenses will help you conserve when you go without a regular paycheck. Make a list of your assets and the value of them. Remember to include all bank accounts, investment accounts, retirement accounts, cars, and property. Some of these things can be liquidated should you need funds, and it’s essential to know the value of each asset. Remember that liquidating some assets, such as investment accounts, carries capital gains taxes of up to 20%. Moreover, some retirement accounts incur penalties when cashed out early.
Make a list of all of your debts and monthly payments. Do you have expenses that can be eliminated for now, such as cable television, streaming services, luxury salon services, childcare services, or housekeeping? If so, it is better to eliminate these things sooner rather than later to put towards essential expenses such as food or mortgage payment. You can quickly re-establish these services once you find your new job. However, Many people are surprised at what they can go without, even when that regular paycheck starts rolling in again.
Update Your Estate Plan
When life changes for the better, like having a new baby, getting married, or being promoted, most people know it’s time to update the estate plan. However, the estate plan should also be updated during disadvantageous times as well.
Updating your estate plan during a job loss is essential for many reasons. For example, if your insurance policy was provided through the company you worked for, it will usually terminate once you lose the job. This will require a revisit to your estate plan and possibly call for changes. Or if you’ve needed to dip into your savings account to cover living expenses, and that savings account was being left to one child while another child received a different asset, you may need to update the plan for more even distribution of wealth.
Create an Estate Plan
When an estate plan has not already been put into place, it’s time to create one. An estate plan protects your finances and property by minimizing taxes and expenses, which leaves more to your loved ones. Without an estate plan, the court will decide who inherits what you’ve worked so hard for. Conversely, a proper estate plan leaves it up to you to make these choices. Importantly, your estate plan will include essential clauses such as who you would like to be the caregiver of your minor children in the event of death and authorize individuals you trust to make medical or financial decisions on your behalf. An estate plan offers you and your loved ones peace of mind knowing that in the event of any unfortunate circumstances, they won’t have to face potential family conflicts or make challenging decisions amidst an already emotionally charged period.
Our expert estate planning attorneys will help you create a basic plan you can afford now. Down the road, you can add to your estate plan. Contact us today for your free consultation to learn more about the benefits estate planning has for your specific situation.