The “bus test” is quite simple – It asks the question “If X is hit by a bus, what happens to Y that relies on X”?
Let’s replace X and Y with some real examples.
If the primary bread winner of a family is hit by a bus, what happens to the family? If a business owner is hit by a bus, can the business survive? If the managing partner of a partnership is hit by a bus, can the partnership be salvaged? If the beloved leader of a country is hit by the bus, can the country still thrive or does it fall into chaos?
If you were hit by a bus, do your loved ones know how to navigate and survive a world without you?
No one wants to be hit by a bus but let’s face it – we have little control on the proverbial bus. The bus test is a useful planning tool that helps plan for the long term. Once a year, put yourself as X and think through the steps you should be taking now to ensure your Y will be well taken care of after you.
Here are the most basic areas to get started. Depending on your situation, this list can be short or long so consult a competent advisor for your situation.
- Have primary and secondary beneficiaries added in all your bank accounts, brokerage accounts, 401ks etc.
- Buy term life insurance. Many people buy enough coverage to pay off all the loans and then leave some money behind.
- Understand your local laws and create a plan for seamless transfer of real estate that is titled in your name. This may require connecting with an attorney depending on the situation.
- Think through the guardianship of minor children and create legal documents outlining how you want that to be handled. This is crucial for single parents.
- Create a instructions document and inform your family where to find it. This document will have important information such as list of all assets, loans, passwords etc. Think of it as the map your loved ones will use to navigate the world without you. It can be a simple online document on google drive or an diary with your notes in pencil. Revise the document once a year to keep it current.
