Life Insurance & Similiar Questions

[jackb1117]

As I mentioned in a post a few months back, my wife & I are expecting our first child in a couple months.

Up until this point, we haven't bothered with any life insurance or POA/will. Probably not the best approach, but we are both equal earners who live below our means- if one of us were to go unexpectedly the other would carry on just fine (from a financial perspective), and we both have modest LI policies through our employers (a couple years salary each). From a will perspective, our thought process more or less was that if 1 were to go, the other inherits everything by default (and is fine with us) and if we both go at once f*ck it, not our problem.

Now that we have a little one coming in the near future, I think we need to buckle down and take a look at this stuff, but not sure where to start. Based on very cursory research in years past, it sounds like I should look at a term life insurance policy, but not sure how long (looks like options range from 10-30 yrs) or for how much- I assume that this is for some multiple of annual salary?

Anything else we should look at- I imagine we should put in place written healthcare POA's and a fairly boilerplate will? Is it worth it to set up a trust from the start?

[lund]

Will - also find out when a trust would be good if it not at this point, and make the arrangements for your present and future kids
POAs for healthcare including your wishes on subjects like if/when to pull the plug
Guardians - a list of ranked alternatives of them. If something happens to one suggestion (such as Liz and Bob divorce and are overwhelmed, or Jenny and John get a special needs kid and are unable), there are more suggestions.
Life insurance



I do not like the standard of leaving everything unconditionally to the spouse. If the spouse remarries and dies, the kids from the first marriage are SOL. I think that of mutually owned property, half belongs to each spouse and should be split among that spouse's kids when the second spouse dies or remarries.

Try to find a way to either let the remaining spouse have the use of the "other spouse's half" of the assets but let it be fully inherited by the kids on the death of that spouse, or possibly solve it with life insurance.

And if there are any special stuff ("grandpa's watch"), will it to the kids with a punishing clause if it is not delivered on time. This list will also let executors know what things are special and should not be sold off.


Plan to revise the will every three years. People and circumstances change.

[steph08]

We have a one year old and just got life insurance. We got $350k each. Mine is about $17/mo and DH is $35/mo (I am in excellent health and shape, he is overweight and six years older). That is about 8x salary for us as we make almost the same. I totaled all our debts and added an extra year for bereavement and an extra 50k to throw into a college fund for the kid.

We still haven't done a will. We can't agree on guardians.

[hypersion]

Using the life insurance calculator online most suggested 10 times gross income which is what i got.  I ended up getting a 20 year term since I hope by then I'll have enough money not to worth about life insurance.  Cost about $56 a month for $800K but I'm overweight, asthma, high cholesterol and some other issue.

[Lizard Queen]

Life insurance--what do you want it to cover? Do you want the surviving spouse set for life, or just tide them over for a few years? Do you need it to cover funeral costs or pay off debts? Do you want it to cover all college costs? Would you cover that much if you were alive? How much do you expect it to cost in 20 years? What kind of ROI on that money would you expect?

(I'm a bad YMer. I'm self-insuring with a low 6fig inheritance.)

[jackb1117]

Aug 27, 2015 20:44:32 GMT -5 Lizard Queen said:

Life insurance--what do you want it to cover? Do you want the surviving spouse set for life, or just tide them over for a few years? Do you need it to cover funeral costs or pay off debts? Do you want it to cover all college costs? Would you cover that much if you were alive? How much do you expect it to cost in 20 years? What kind of ROI on that money would you expect?

(I'm a bad YMer. I'm self-insuring with a low 6fig inheritance.)

That's a good point- I hadn't thought of what I would want it to cover. The policy through my employer would pay off the house, but I suppose it's possible that I lose my job and kick the bucket on the same day, so probably shouldn't bank on that.

I did an online quote with USAA after I wrote this and I it was quoting me $45 or so for a $500k 20 yr policy; I am a bit overweight but otherwise in good health. It did ask me questions about my wife, so not sure if that was a policy for both of us- will have to check.

[jackb1117]

Aug 27, 2015 17:48:14 GMT -5 lund said:

Will - also find out when a trust would be good if it not at this point, and make the arrangements for your present and future kids
POAs for healthcare including your wishes on subjects like if/when to pull the plug
Guardians - a list of ranked alternatives of them. If something happens to one suggestion (such as Liz and Bob divorce and are overwhelmed, or Jenny and John get a special needs kid and are unable), there are more suggestions.
Life insurance



I do not like the standard of leaving everything unconditionally to the spouse. If the spouse remarries and dies, the kids from the first marriage are SOL. I think that of mutually owned property, half belongs to each spouse and should be split among that spouse's kids when the second spouse dies or remarries.

Try to find a way to either let the remaining spouse have the use of the "other spouse's half" of the assets but let it be fully inherited by the kids on the death of that spouse, or possibly solve it with life insurance.

And if there are any special stuff ("grandpa's watch"), will it to the kids with a punishing clause if it is not delivered on time. This list will also let executors know what things are special and should not be sold off.


Plan to revise the will every three years. People and circumstances change.

We have discussed the POA wishes, but would be good to have it actually in writing.

As for what the other does with the money, I don't really care- they should move on with their lives so not concerned if they use it on a new family in the future -personal preference I suppose.

But in general, probably good to review every few years since things change.

[steph08]

I used select quote for life insurance - super easy.

I assumed DH would keep working, so I included daycare costs in the estimate as well.

I will say that I am biased but agree with Lund. My mom's mom died, dad remarried and then died a few years later. Paid off house, life insurance, other assets, etc. Step-mom did care for the kids (two already gone, two high school/college) until she died as well. Step-mom left nothing to my mom and aunts/uncle, instead giving it all to her brother.

[CCL]

Aug 27, 2015 20:57:22 GMT -5 jackb1117 said:

Aug 27, 2015 20:44:32 GMT -5 Lizard Queen said:

Life insurance--what do you want it to cover? Do you want the surviving spouse set for life, or just tide them over for a few years? Do you need it to cover funeral costs or pay off debts? Do you want it to cover all college costs? Would you cover that much if you were alive? How much do you expect it to cost in 20 years? What kind of ROI on that money would you expect?

(I'm a bad YMer. I'm self-insuring with a low 6fig inheritance.)

That's a good point- I hadn't thought of what I would want it to cover. The policy through my employer would pay off the house, but I suppose it's possible that I lose my job and kick the bucket on the same day, so probably shouldn't bank on that.

I did an online quote with USAA after I wrote this and I it was quoting me $45 or so for a $500k 20 yr policy; I am a bit overweight but otherwise in good health. It did ask me questions about my wife, so not sure if that was a policy for both of us- will have to check.

Yes, don't depend on insurance solely from your job. You never know what might happen in the future. Many people change jobs for lots of different reasons. Or new employer might offer only a limited amount of insurance. Health problems can develop at any age. I was uninsurable for a while and not very old at the time. Hubby's employer insurance would only allow you to increase coverage by $5000 or so every 4 years. Several years later, I was able to get a new term policy. We had to answer a lot of questions and had to pass physicals, including multiple lab tests. They even contacted my physicians regarding my health, so they do verify health status, at least in my case.

[thyme4change]

We got enough life insurance to get the kids to adulthood.  It expires when my son is 21.  So, if we both die when he is 21 and still in college, he will have to suffer through with just receiving half of our assets.  So tragic that he would only get three-quarters of a million dollars or so to start his life.  

As far as a trust and what-not, we haven't bothered.  We joint own everything, we are legally married, we are the first and only spouse, neither of our parents nor our siblings would claim anything.  The life insurance would pay out, the house would already transfer, so it would just be a matter of getting the 401k moved over to the surviving spouse.  Not sure what would be involved in that - but it wouldn't have to be immediate.  I don't have a good plan for our kids should we die before they turn 18, so my super-responsible family would have to figure it out.  They probably already have a plan, given that I am doing it wrong (according to them.)  If your custody plan isn't as obvious, that might be worth it.  

[Mardi Gras Audrey]

We have to do the same thing.  We have been married for about 3 years and haven't updated anything    Luckily, we don't have kids yet.  

I got life insurance before I got married so my DH will get that if I die.  It is a $1 million 30 year term policy I got in my 30s. It costs ~$55 a month. He has $400k of insurance through his employer (I think).  We both work and could support ourselves on our incomes.

The bigger issue would be that I have a will that isn't updated.  DH is named in it but we were only friends at the time so he is listed as getting the same shares as my siblings and my best friends. My parents are listed as getting the largest share of things (The will states things are divided by percentage).  To make it more complicated, my bigger accounts have listed beneficiaries, which I presume passes outside of the will?  These have my parents listed (DH is not listed because these were pre-marriage accounts where a good chunk of the money was from an inheritance).

We are in a community property state so I don't know how that will muddy things up. The house is in my name only and he signed off on it as "sole and separate property" (Although, he has said if I die he wouldn't stay here... his family is all in another part of the country).  

I don't even know where my will is (I think it's with my DSM. I seem to remember giving her a copy when it was completed years ago since dad was the listed executor and beneficiary).  

What happens if a will is never found/presented?  Does it just go by the laws of the state?  How does someone know a will exists?  (My sibs and friends that were listed don't know about it and my DH and DSM/Dad get along great.  They wouldn't fight over anything and would treat each other well if I passed).

 

[lund]

The life insurance should IMO at least cover:

• paying off medical debts (illness or accidents usually mean a lot of such)
  
• funeral (at least a modest but decent one) plus plot, stone,....
  
• extra costs while raising kids (more day care may be needed, paying somebody for shuttling kids to activities, perhaps a housecleaning or garden service or handyman service, more pre-cooked food bought due to time constraints,...)
• extra costs during the bereavment year (counseling, sick leave,....)
  
• more child-related expenses, such as after-school care and summer camps (more may be needed when there are less parents to help out)
  
• paying off other debts, making it possible for the remaining parent to stay in the home should s/he so wish
• increase the college funds - a remaining parent with good income may earn enough for the kids to not get any help but not enough to have saved up or being able to cash-flow the EFC (see below)
  
• in case of a SAHP, s/he may need to get more education in order to be able to get back to work. Money should also cover any transition periods, since the new job may have a small beginner salary.
  

Check if the remaining parent will get the possibility to opt for the retirement half social security of the spouse before ten years of marriage. I think not. This means that for a low-income remaining spouse being the widow/er of  high older earner after a short marriage, one should check the amounts and consider if more insurance is needed.

Consider if part of the life insurance should go directly to a trust for the child, to be used for education and related expenses, be it an in-state college (or the corresponding amount), technical school, or something else, but one education only (no perpetual students), max 5 years (one extra year for changing majors or illness), covering tuition, boarding/lodging (not more money than for boarding), books, fees, health insurance (if not on parent's), renter's insurance, tools (think tech school). Remaining money is to go to the kid at age 28.

I have also the idea that money (insurance or inheritance) should not be accessible for the kid before age 28 unless it is for education or buying a modest home provided this remains the private property of the child and the child is able to cover the costs him/herself.

Else, the risk of a life with the wrong partner, a lot of partying, too little jobs and education, and blowing it all may follow.

(I have witnessed such a trainwreck from afar. From being a heir to quite wealthy parents to being divorced with two kids living in social housing without education.)

Also, if the youngster has supported him/herself for a few years, before or after college, s/he has learnt the value of money and the connection between work and money.

And in case of a bad stepparent (the kind that lets the "rich" kid pay, which many 18-year-olds will do if the lights will be shut off for younger sibs) or other person who may use them similarly, there has been time to get away from them. (Some stepparents are wonderful. Some are the opposite. And don't trust the step´s heirs/children to do the right thing!)

Also, a person is usually more mature at age 28 than at age 18, also when it comes to selecting a partner and not accepting BS, freeloading and similar.

And if the loss of parents mess up the kid, there is extra time to recover and mature and get on track again.

Insurance through work will end with work - somebody who is unable to work may be terminated and thus be uninsured. Keep enough inurance owned by you!

Also check your disability insurance. Consider a private one for own occupation. It should be covering long-term disability (disability is often far more devastating to a family's long-term finances than death). Short-term is gravy, but is not as necessary (since you will recover).

I do not trust the first and only spouse thing. I believe that life goes on, and that a widow/er may meet somebody with whom s/he may get happy again. In fact, I hope that my spouse or I would. I also realise that there is a risk of a freeloader finding a lonely widow/er too.

(And yes, my will is according to that.)

[lund]

It is possible to have second-line beneficiaries in the will and include nice ones and exclude bad ones.

It is important to have the will in such a place that it will be found.

[Deleted]

I was only concerned about having coverage until the kids were gone, so 20 year term was enough for me, if I die the day after coverage ends, youngest will be 20 and halfway through college (hopefully).  At that point that point the college fund will be taking care of him anyhow and he'll inherit the millions in my retirement accounts.

I didn't go by a strict X number of years income for figuring the amount.  I went through and worked out what would need to be paid off and how much I assumed kids would need for college and went by that.  At the time, I was married and if the mortgage was gone and the kids had enough for college my spouse could have easily handled all the other bills.  Keep in mind there will also be SS checks coming in for child and the spouse caring for the minor child.  In my case, my income would have been replaced nearly 100% by those checks.  I went with 400K term.  200K to my spouse and 200K to my older son's Dad for his care. 

[phil5185]

That's a good point- I hadn't thought of what I would want it to cover. The policy through my employer would pay off the house, but I suppose it's possible that I lose my job and kick the bucket on the same day, so probably shouldn't bank on that.

Generally, you don't want to use the LI to pay off the house (or other lump sums). The survivor should retain the money, draw a monthly 'income', and try to live as before - ie, making the house payments, the car payments, sending the kids to college, etc.

[The Captain]

Aug 28, 2015 8:25:31 GMT -5 phil5185 said:

That's a good point- I hadn't thought of what I would want it to cover. The policy through my employer would pay off the house, but I suppose it's possible that I lose my job and kick the bucket on the same day, so probably shouldn't bank on that.

Generally, you don't want to use the LI to pay off the house (or other lump sums). The survivor should retain the money, draw a monthly 'income', and try to live as before - ie, making the house payments, the car payments, sending the kids to college, etc.

Do you know I have actually had to sit down with DH and talk him through this? 

The man must think I'm super morbid at times but I swear I will haunt him if he messes this up!!!

Me:  So what do you do with the life insurance if I pass?

DH:  Umm - pay off the house and car if we owe anything?

Me:  No - try again - remember it's about managing cash flow...

DH:  Hire a less expensive financial planner?

Me:  *Sigh* 

[thyme4change]

Aug 28, 2015 9:11:51 GMT -5 The Captain said:

Aug 28, 2015 8:25:31 GMT -5 phil5185 said:

Generally, you don't want to use the LI to pay off the house (or other lump sums). The survivor should retain the money, draw a monthly 'income', and try to live as before - ie, making the house payments, the car payments, sending the kids to college, etc.

Do you know I have actually had to sit down with DH and talk him through this? 

The man must think I'm super morbid at times but I swear I will haunt him if he messes this up!!!

Me:  So what do you do with the life insurance if I pass?

DH:  Umm - pay off the house and car if we owe anything?

Me:  No - try again - remember it's about managing cash flow...

DH:  Hire a less expensive financial planner?

Me:  *Sigh* 

Meh - my husband is an adult.  He hasn't managed our money, but he is a pretty smart guy.  If the biggest mistake he makes is paying off the house and then figuring out how to move forward - somehow he will survive it.  A paid off house can always be rectified later by a sale, or a refinance.  Plus, I know dozens of people who pay off their house because they can't stand having that hang over their heads.  They may not be as rich as Phil, but they are happy.  

[Deleted]

I'd pay off the house before he was in the ground.

[NomoreDramaQ1015]

They may not be as rich as Phil, but they are happy. 

They can't be happy that goes against YM code! 

Agree with thyme.  I have life insurance so my DH has options when I pass.  I really do not care if he chooses to pay off debts or invest it so he can leave millions to our children when he dies.  I think I'm doing pretty good spouse/life wise if my biggest worry is DH paying off a house instead of investing my life insurance.

[phil5185]

They may not be as rich as Phil, but they are happy.

I didn't know that it was an 'either/or' gate??  

[thyme4change]

Aug 28, 2015 10:38:43 GMT -5 phil5185 said:

They may not be as rich as Phil, but they are happy.

I didn't know that it was an 'either/or' gate??  

LOL - it isn't, but people need different things to feel happy.  My sister and her husband put a bunch of money into a religious based investment.  Surprise, surprise - it was a scam.  They lost all their money (and those awesome Christian men who did this because told them to are all in jail.)  After that, all she wanted to do was pay off her house.  She couldn't get comfortable until it was paid off. So, her house is paid off, and they now have plenty of other investments.  I don't think she would be comfortable taking a mortgage to invest - even if the numbers say so.

[tskeeter]

Aug 28, 2015 2:38:07 GMT -5 lund said:

The life insurance should IMO at least cover:

• paying off medical debts (illness or accidents usually mean a lot of such)
  
• funeral (at least a modest but decent one) plus plot, stone,....
  
• extra costs while raising kids (more day care may be needed, paying somebody for shuttling kids to activities, perhaps a housecleaning or garden service or handyman service, more pre-cooked food bought due to time constraints,...)
• extra costs during the bereavment year (counseling, sick leave,....)
  
• more child-related expenses, such as after-school care and summer camps (more may be needed when there are less parents to help out)
  
• paying off other debts, making it possible for the remaining parent to stay in the home should s/he so wish
• increase the college funds - a remaining parent with good income may earn enough for the kids to not get any help but not enough to have saved up or being able to cash-flow the EFC (see below)
  
• in case of a SAHP, s/he may need to get more education in order to be able to get back to work. Money should also cover any transition periods, since the new job may have a small beginner salary.
  

Check if the remaining parent will get the possibility to opt for the retirement half social security of the spouse before ten years of marriage. I think not. This means that for a low-income remaining spouse being the widow/er of  high older earner after a short marriage, one should check the amounts and consider if more insurance is needed.

Consider if part of the life insurance should go directly to a trust for the child, to be used for education and related expenses, be it an in-state college (or the corresponding amount), technical school, or something else, but one education only (no perpetual students), max 5 years (one extra year for changing majors or illness), covering tuition, boarding/lodging (not more money than for boarding), books, fees, health insurance (if not on parent's), renter's insurance, tools (think tech school). Remaining money is to go to the kid at age 28.

I have also the idea that money (insurance or inheritance) should not be accessible for the kid before age 28 unless it is for education or buying a modest home provided this remains the private property of the child and the child is able to cover the costs him/herself.

Else, the risk of a life with the wrong partner, a lot of partying, too little jobs and education, and blowing it all may follow.

(I have witnessed such a trainwreck from afar. From being a heir to quite wealthy parents to being divorced with two kids living in social housing without education.)

Also, if the youngster has supported him/herself for a few years, before or after college, s/he has learnt the value of money and the connection between work and money.

And in case of a bad stepparent (the kind that lets the "rich" kid pay, which many 18-year-olds will do if the lights will be shut off for younger sibs) or other person who may use them similarly, there has been time to get away from them. (Some stepparents are wonderful. Some are the opposite. And don't trust the step´s heirs/children to do the right thing!)

Also, a person is usually more mature at age 28 than at age 18, also when it comes to selecting a partner and not accepting BS, freeloading and similar.

And if the loss of parents mess up the kid, there is extra time to recover and mature and get on track again.

Insurance through work will end with work - somebody who is unable to work may be terminated and thus be uninsured. Keep enough inurance owned by you!

Also check your disability insurance. Consider a private one for own occupation. It should be covering long-term disability (disability is often far more devastating to a family's long-term finances than death). Short-term is gravy, but is not as necessary (since you will recover).

I do not trust the first and only spouse thing. I believe that life goes on, and that a widow/er may meet somebody with whom s/he may get happy again. In fact, I hope that my spouse or I would. I also realise that there is a risk of a freeloader finding a lonely widow/er too.

(And yes, my will is according to that.)

lund, I think you're on the right track.  Most people think about life insurance to pay off the mortgage on the house.  However, spouses both provide a lot of services to the family that must be replaced if a spouse passes away.  Everything from mowing the lawn and doing the laundry to providing taxi service to and from kids activities.  Even though you live on less than your combined incomes, today.  I expect that what you don't consume in living expenses goes into your retirement accounts.  A surviving spouse will still need to save for retirement, and the amount required to support a single person's retirement isn't all that much less than what is need for a couple.  Also, the surviving spouse's SS income will be way less than the spouse's combined incomes.  (My MIL, who never qualified for SS on her own account, was quite shocked to find that when my FIL passed away, that the SS benefits dropped by 1/3.  MIL had been getting spousal benefits equal to 1/2 of FIL's benefits.  Since FIL passed, MIL receives an amout equal to FIL's benefit.  So, if their combined benefit was $2,400 a month while FIL was alive, the benefit dropped to $1,600 on his death.)  With a working spouse, a surviving spouse would get the larger of the benefit they earned, or the benefit earned by their deceased spouse.  It's also worth noting that minor children receive a benefit from SS if a parent passes away.  I believe that benefit lasts until the later of their 21st birthday or they gradulate from college.

In general terms, if a person earns $60K a year, their after tax income over a period of 20 years (pretty much gets kids out of high school), assuming compensation increases (raises and promotions) of 5.5% a year, would be about $1,600,000.  The net present value of that income stream, assuming 3% inflation would be about $1,150,000.  If you assume that a spouses' living expenses, clothes, food, car, entertainment, etc. are about 50% of their after tax income, that would mean that you'd have to replace about $600K in todays dollars over 20 years.  If you're like me, and willing to gamble a little bit, you'd probably want to be looking for about $500K worth of insurance.

I think you're on the right track, too, concerning protecting the assets you guys accumulate for your kids.  A simple lapse in estate planning on the part of a surviving spouse can easily disinherit your children.  (And, watching aging parents and their friends, I'm a bit surprised at how many older folks, men and women, are looking for a new spouse to support them after they have lost their previous spouse.  And, given how the finances of the elderly are likely to change over the next few decades, I think this is going to become even more common.)     

[jinksd1]

Aug 28, 2015 8:25:31 GMT -5 phil5185 said:

That's a good point- I hadn't thought of what I would want it to cover. The policy through my employer would pay off the house, but I suppose it's possible that I lose my job and kick the bucket on the same day, so probably shouldn't bank on that.

Generally, you don't want to use the LI to pay off the house (or other lump sums). The survivor should retain the money, draw a monthly 'income', and try to live as before - ie, making the house payments, the car payments, sending the kids to college, etc.

Good advice generally, but I'm probably going to go against it in my situation.  DH made most of the income (all at the end, since I had lost my job...I'm still without a job).  If I don't pay off the house, I'll have to sell it, and I'm not willing to do that.  With a job, I should be able to swing the other bills and the upkeep on the house, but not with a mortgage payment.

That's why they call it personal finance.  There's no one-size-fits-all financial advice.

[cronewitch]

Don't forget if you die the kid gets some SS until 18. Mostly you are thinking of the child, daycare, food, clothing, education and assume SS will give you a few hundred to help. If you are young the widow/widower may remarry and get promotions at work and have retirement accounts growing so term insurance to get them past college for the kid is enough for most people. If you want them to get rich off being widowed it may overwhelm them. Paying off the house isn't the wise thing but at least they get rid of a chunk they don't need to manage. Would they prefer 30K a year for 10 years or paying off a mortgage saving them 15K a year? Pay off then broke is less options and they still need to pay property taxes so it isn't like living is free. Spend thrifts might be much better off paying off the mortgage and earmarking 100K for college then having to live on their income.

[laladuck]

Hi Everyone,

We are looking into life insurance now as well as we have a new baby and want to make sure we are covered beyond our small amounts through work so this thread has been very useful! However, I have one quick question.... are life insurance payouts taxable? I ask as that answer will dramatically affect the amount we need to purchase.

Thanks!

[ArchietheDragon]

Sept 1, 2015 11:59:04 GMT -5 laladuck said:

Hi Everyone,

We are looking into life insurance now as well as we have a new baby and want to make sure we are covered beyond our small amounts through work so this thread has been very useful! However, I have one quick question.... are life insurance payouts taxable? I ask as that answer will dramatically affect the amount we need to purchase.

Thanks!

typically they are not taxable. 

[Ombud]

Aug 27, 2015 18:32:20 GMT -5 steph08 said:

I totaled all our debts and added an extra year for bereavement and an extra 50k to throw into a college fund for the kid.

Plus emergency fund and childcare until middle school age

[Angel!]

Sept 1, 2015 3:03:07 GMT -5 cronewitch said:

Don't forget if you die the kid gets some SS until 18. Mostly you are thinking of the child, daycare, food, clothing, education and assume SS will give you a few hundred to help.

I think many overlook this & it generally isn't just a few hundred. IIRC my kids will get somewhere around $3500/month in SS benefits. IMO that is huge & makes million dollar life insurance policies totally unnecessary for most people.

[yogiii]

We bought 500k 25 year policies right around when my oldest turned 1.  The kids are 3 years apart so the policy will expire when they are 23 and 26 and hopefully already a few years financially independent from Mom and Dad!  If one of us were to die the other could support our current household but with less going to savings.  I figured that 500k would send both kids to the college of their choosing and maybe have some left over for a wedding/house dp.  The money isn't really for the living spouse.

[snapdragon]

Aug 28, 2015 1:42:25 GMT -5 Mardi Gras Audrey said:

We have to do the same thing.  We have been married for about 3 years and haven't updated anything    Luckily, we don't have kids yet.  

I got life insurance before I got married so my DH will get that if I die.  It is a $1 million 30 year term policy I got in my 30s. It costs ~$55 a month. He has $400k of insurance through his employer (I think).  We both work and could support ourselves on our incomes.

The bigger issue would be that I have a will that isn't updated.  DH is named in it but we were only friends at the time so he is listed as getting the same shares as my siblings and my best friends. My parents are listed as getting the largest share of things (The will states things are divided by percentage).  To make it more complicated, my bigger accounts have listed beneficiaries, which I presume passes outside of the will?  These have my parents listed (DH is not listed because these were pre-marriage accounts where a good chunk of the money was from an inheritance).

We are in a community property state so I don't know how that will muddy things up. The house is in my name only and he signed off on it as "sole and separate property" (Although, he has said if I die he wouldn't stay here... his family is all in another part of the country).  

I don't even know where my will is (I think it's with my DSM. I seem to remember giving her a copy when it was completed years ago since dad was the listed executor and beneficiary).  

What happens if a will is never found/presented?  Does it just go by the laws of the state?  How does someone know a will exists?  (My sibs and friends that were listed don't know about it and my DH and DSM/Dad get along great.  They wouldn't fight over anything and would treat each other well if I passed).

 

I don't remember where you live but in my state wills are filed with the county. I did this with my mothers will, when she had to revise it a few years ago. So even if it was lost on my end there is a copy with the court house.