Spin-Off of Inheritance Message Thread: Do Your Heirs Know What Your Intentions Are?

[NannyBeBe]

We have a TOD on our home so it goes to our daughter. Her name is on all of our accounts and she has our Power of Attorney. She also has our Medical Power of Attorney. We do not have a Living Will because we do not want doctors making the final decision for us. Our daughter can do that. Doctors push for a Living Will because they do not want to deal with family members. We have a Will and an attachment to the Will distributing our personal property. No probate will be necessary.

 

[DLgal]

So an insurance salesman told you to buy more insurance?

Sure, maybe you're insanely wealthy and need to load up on insurance to avoid the estate tax for your millions of dollars you plan to leave, and the art collection is already held in trust. Or maybe you have special needs. General mainstream personal financial recommendations are less than half that for most people.

LOL. No. We don't have anything close to millions. If we did, we wouldn't need insurance.

No, an insurance salesman agreed with me that we were underinsured and offered a policy in line with our needs. We don't pay that much for the coverage we have, but it makes me sleep better at night knowing that if the worst thing happens, my children will not be either financial burdens on any relatives, or left to fend for themselves in "the system." It's the least we can do for them.

Again, TERM life insurance is designed to be income replacement.

 

[barkley]

as an aside for individuals with disabled kids-

if you/your spouse has any future eligibility to a pension take the time to read the rules under which their pension operates. some permit a spouse to waive lifetime survivor financial benefit rights in favor of those lifetime rights to financial benefits being granted to their disabled child/children. the child has to meet specific disability criteria and all the legal paperwork has to be in place prior to retirement but it can be life altering for a disabled adult to have a guaranteed source of income after their parents pass.

 

[cvjw]

Our adult sons know how much money we have and that it will be left to them - evenly split. Just got around to doing an official will.

My parents have placed my sister and I on all of their accounts and everything will eventually pass to the 2 of us. We agree on almost everything, so I foresee no issues there.

DH’s parents are another story. They have a lot of $$$$$, but are secretive about the amounts and details of the Will. I know there are insurance policies and 401 k’s with the kids as beneficiaries. The 3 kids don’t all get along that well, so that should be fun dealing with them when the time comes. Especially with lots of money at stake.

 

[CdnCarrie]

Our adult sons know how much money we have and that it will be left to them - evenly split. Just got around to doing an official will.

My parents have placed my sister and I on all of their accounts and everything will eventually pass to the 2 of us. We agree on almost everything, so I foresee no issues there.

DH’s parents are another story. They have a lot of $$$$$, but are secretive about the amounts and details of the Will. I know there are insurance policies and 401 k’s with the kids as beneficiaries. The 3 kids don’t all get along that well, so that should be fun dealing with them when the time comes. Especially with lots of money at stake.

How do they know how much money? Wouldn't the amount depend on the value of the assets at the time of you and your spouse's passing? Value of your house could skyrocket or you could spend more of your retirement fund than you expect to.

 

[cvjw]

How do they know how much money? Wouldn't the amount depend on the value of the assets at the time of you and your spouse's passing? Value of your house could skyrocket or you could spend more of your retirement fund than you expect to.

they know how much money we currently have. Of course things could change between now and when we die!

 

[QueenIsabella]

Our adult sons know how much money we have and that it will be left to them - evenly split. Just got around to doing an official will.

My parents have placed my sister and I on all of their accounts and everything will eventually pass to the 2 of us. We agree on almost everything, so I foresee no issues there.

DH’s parents are another story. They have a lot of $$$$$, but are secretive about the amounts and details of the Will. I know there are insurance policies and 401 k’s with the kids as beneficiaries. The 3 kids don’t all get along that well, so that should be fun dealing with them when the time comes. Especially with lots of money at stake.

The good news is, the insurance policies and 401ks/IRAs should be fairly straightforward. They're just split three ways, and the retirement accounts have to be rolled over into new accounts, naming the individual inheritors (you can't have joint retirement accounts). Then RMDs and laws kick in as to withdrawals for them.

The rest of the stuff could get dicey--if there's a house to sell, if there are heirlooms of some value, etc. That's where fights can break out, even among heirs who got along beforehand. My suggestion is to (a) stay out of it (you, personally, since it's not your family), and (b) try to be the bigger person (your husband). Try.

 

[amylevan]

Dave Ramsey might want to look into updated numbers. We were told 25x in 2017 when we applied for secondary term policies. That is what underwriters will insure you up to. I was issued a $1M as a non working spouse. Non working spouses can be insured at the same threshold as their working spouse.

Term policies are meant to replace income for the remainder of a person's working life. At the age of 40, someone seeking a term policy will need 25 years of income replacement.

We don't yet own a home due to high COL. If my husband died tomorrow, we'd need at least $1M JUST to buy a home. And the rest of the money from insurance would have to last us like 40 years.

The vast majority of Americans are severely underinsured.

What life insurance companies will insure you up to is not the same as the recommended amount.

But yes, if you go into an insurance salesman and say that you think you’re underinsured, they’re going to agree with you and sell you the max. Obviously.

Term insurance is income replacement, so you factor in how many more years you plan to work but you also include the wealth you’re accumulating with time. Retirement accounts, equity in housing, stuff….
25x is not the normal recommendation for the average person. Yes, families with disabilities may have a different calculator but you implied that everyone should have 25x.

 

[DLgal]

What life insurance companies will insure you up to is not the same as the recommended amount.

But yes, if you go into an insurance salesman and say that you think you’re underinsured, they’re going to agree with you and sell you the max. Obviously.

Term insurance is income replacement, so you factor in how many more years you plan to work but you also include the wealth you’re accumulating with time. Retirement accounts, equity in housing, stuff….
25x is not the normal recommendation for the average person. Yes, families with disabilities may have a different calculator but you implied that everyone should have 25x.

All those other assets are taxable upon receipt after death. Insurance payouts are not.

According to financial advisor Jeff Rose, who writes about life insurance and investments for his website Good Financial Cents, most families should strive to have at least 10 times their income in life insurance coverage.

However, that’s a “minimum” to shoot for, he says, adding that 20 times your income is more in line with the amount of coverage people should carry. “This is especially true for younger families whose income is expected to increase as their career advances,” he says.

Based on Rose’s advice, if you’re an individual who’s currently earning $40,000 per year, you should strive to buy life insurance coverage with a death benefit of at least $400,000, but ideally up to $800,000 or more.

And, if you earn $70,000 per year? That means you need $700,000 to $1.4 million in life insurance coverage. Conversely, high-earners who bring in $150,000 per year may need as much as $1.5 million to $3 million in life insurance.

While 10x to 20x your income is a general rule of thumb, you may want to buy even more coverage depending on your lifestyle and your needs. Individuals who have a lot of debt may want to shoot for a higher death benefit, as will those who have multiple children.

And if you believe you’ll earn considerably more money in the future, that’s another reason to buy more coverage than you need right now. After all, you can get lower rates for coverage if you’re young and healthy, whereas you’ll have to pay higher monthly premiums the longer you wait.

https://www.google.com/amp/s/amp.cnn.com/cnn/cnn-underscored/money/how-much-life-insurance-do-i-need

 

[tinkerbellandpeterpan]

We have a TOD on our home so it goes to our daughter. Her name is on all of our accounts and she has our Power of Attorney. She also has our Medical Power of Attorney. We do not have a Living Will because we do not want doctors making the final decision for us. Our daughter can do that. Doctors push for a Living Will because they do not want to deal with family members. We have a Will and an attachment to the Will distributing our personal property. No probate will be necessary.

I don't mean this to be snarky (tone is so hard to tell when typing), but that is literally the definition of probate. If any asset is passing via the will it goes through probate.

 

[barkley]

I don't mean this to be snarky (tone is so hard to tell when typing), but that is literally the definition of probate. If any asset is passing via the will it goes through probate.

the word 'probate' yes-(the official proving of a will) but i think when we use the term most of us think of the process of probate some states require. my state of washington does not require probate in any case (even in the absence of a will)-it's entirely discretionary and very rare.

 

[dvcgirl67]

I know what both sides have with respect to our remaining two parents (my mother, DH's father), and if we were to get anything from either side, it wouldn't be more than maybe 100-300K...depending on how long both live and how much they burn through what they have left. On my side, any inheritance is to be spit between my two sisters and me, on the other side, DH and I would get 2/3 and our sister in-law 1/3. But...not counting on it.

For our estate, yes, we have detailed wills and the estate would be split evenly between my two sisters and the sister in law on my husband's side (his brother's former wife who is like his sister). Each would get 1/3 of our estate (minus some funds for our dogs) which isn't small potatoes as we're nearing retirement. We have no children, but we do have three dogs we love very much. We have instructions on where the two schnauzers go....to their breeder, who has promised that she'd keep the older one who is diabetic and find a good home for our youngest schnauzer. She runs our states schnauzer rescue organization, so she'd go to a good home. Our Airedale is older, and my next-door neighbor loves her and has promised to take her. We set aside 25K for the oldest dog, and 50K for each of the other two (to go to the new owners)....the older two have medical conditions and we wouldn't want their vet bills/medicines to be a burden. Pets are expensive to own.

We've been clear that we want the home and contents to be sold....we don't want any games as far as one party trying to keep the house as a rental or something and fooling with "market value"...etc. I love my one sister's husband....but he's an attorney who is very into real estate, and so I could see a scenario where that could come into play as we live in the same town. Everything is to be sold... and split it up three ways....and the same with our investments...etc.

My older sister would be the executrix of our estate and knows where all of our documents/passwords...etc are. Both of my sisters know what our net worth is as we speak openly about money and investments....and we're all essentially at the same level so it's not a taboo topic. Both sides know we'd like for them to make sure our remaining parents have any resources they may need from our estate, but one is almost 80 and the other is 91, and so we will leave our money to the next generation....our generation to use as they see fit for their families.

It gives me peace of mind knowing all of this is taken care of as we're traveling more and you just never know.

 

[tinkerbellandpeterpan]

the word 'probate' yes-(the official proving of a will) but i think when we use the term most of us think of the process of probate some states require. my state of washington does not require probate in any case (even in the absence of a will)-it's entirely discretionary and very rare.

Fair enough. That's pretty rare. But I didn't follow my own advice of always saying trust and estate laws are VERY state specific. You learn something new every day!

 

[NannyBeBe]

I don't mean this to be snarky (tone is so hard to tell when typing), but that is literally the definition of probate. If any asset is passing via the will it goes through probate.

I did not feel you were being snarky at all. Actually, just because there is a Will does not mean that there must be a probate. If everything can be handled according to the Will and outside of the courts and with no disagreements, then all is well.

 

[goofyernmost]

Sounds okay to me.

Yes it is funny, but at the same time sad that so many people do not have a clue how the majority live.

 

[goofyernmost]

My children know what my intent is but the mystery is how much will be left by the time I take that big trip. I always told them not to expect much because due to some setbacks, I didn't have much time to accumulate a boat load of retirement money, so the chances are if I live long enough there won't be much of anything left.

 

[ronandannette]

My children know what my intent is but the mystery is how much will be left by the time I take that big trip. I always told them not to expect much because due to some setbacks, I didn't have much time to accumulate a boat load of retirement money, so the chances are if I live long enough there won't me much of anything left.

This is us too. There may be some life insurance proceeds and our home to liquidate, provided we haven't sold and eaten it first.

 

[Living42Day]

I guess I'm pretty lucky, at our work we get 2x our annual salary in life insurance.

 

[notatallmagic]

Sadly, I've seen far too many families destroyed by the greed of fighting over inheritance; even to the point of wishing a speedier death so as not to "waste" money.

I have already told my children (one is now an adult/the other in a few months) that there will be nothing for them to inherit. I've raised them with all of their needs, and many of their wants, and contributed for half of their college expenses. Post college, I may, if able, share any financial blessings during my lifetime for things like family vacations, and hopefully lots of grandma gifts. But I've also sacrificed and gone without for much of my life, and equipped my children to be successful adults. Any estate I would have will be left to charity; I want to protect my children from the risk of that kind of greed.

Edited to Add: I should note that I've already purchased my "spot" in a peaceful rural cemetery, next to my grandparents. There are also some sentimental household items my kids have already jokingly "claimed" (for example, I have my grandma's AND my mom's rolling pins from years of cookie baking - each kid gets one ) The addict in the family already stole and sold pretty much every scrap of family jewelry, so not much there to pass on. It's crazy the things I've seen people fight over (think a cookie jar, yard tools..sigh)

 

[sasywtch]

I am not a collector and downsized years ago so not much there to leave. The house is already deeded to my youngest son. My work through retirement has a small payout that will cover final expenses and my daughter knows how to get that. The problem we had is with my ex husband (my kid's dad). He passed away last September. I thought his new wife of 2 years was suppose to be scattering his ashes this month but haven't heard anything. (We went ahead and had a small memorial here (they live 2 hours away) in October. My one daughter is wondering about all of his tools and some other things but I'm guessing, she is going to give it to her kids. My issue is that he has a deed to a plot next to me that my mom bought all of us in 1984. One daughter brought it up but she never answered about it. I'd like it to go to my kids but, I have no say.