What happens to my life insurance money if I die…
When I was a senior in high school my grandfather passed away.
He was a business owner (he owned an auto body shop for over 50 years) and he and my grandmother supplemented their income by owning some rental properties.
When he died, he left my grandmother an estate including a family farm a few hours outside of town that had been inherited from his own father. Subdivisions had built up around it, but my grandparents were holding out and letting farmers lease the land from them.
As my grandmother, father, and uncle worked with estate planners and financial planners, all of us grandchildren started receiving monetary gifts as they were trying to slowly make the estate smaller for tax purposes.
I’m talking monetary gifts of like $10,000!
Like a check that just showed up to my dorm room one day.
I didn’t have the financial responsibilities at that age that I have now, so I did what any other 18 year old girl would do when handed a check for $10,000.
I went on a cruise. I went shopping.
I look back now that I’m almost 40 and I just shake my head. I mean- I didn’t do anything profoundly stupid with the money. But I didn’t do anything smart with it either. Man- it would have been nice to have stuck even part of that money somewhere for when I was older and wiser.
Apparently my uncle invested the money for his own kids and gave it to them after they graduated. Kind of sticks in my craw a little. I mean… more power to them… I’m envious…
Lesson learned- my goal is that someday, this small business that I am running will be big enough that I will have created a nice nest egg.
Plus, I do have life insurance so I know that my children will be taken care of if something happens to me.
But I do not want them to get money when they are young. Unless of course they need it to pay for college or a car to get to work /school or a down payment on a house. Otherwise I think a partial payment at 21, 25, and 30 would be a smarter way to go… based on my own past experience, of course.
It is very important to note that you can verbalize what you want to happen with your life insurance benefits and retirement money, but you have to make it legal. And to do that- you need a Trust.
Having a Trust sounds like something that only wealthy people have. But it’s not. It’s something that responsible people have. It is something that people who are “adulting” have.
That’s right- the next step in “adulting” after having kids is meeting with a professional to discuss things like life insurance, wills, and trusts.
We don’t plan to die today. Just like we don’t plan on getting in car accidents or setting the microwave popcorn bag on fire as we are cooking our afternoon snack. But I personally know two friends who have lost a total of 3 of their loved ones in the last 6 weeks- and all of those were sudden deaths. People were blindsided into preparing for memorial services and making arrangements for burial or cremation when they weren’t expecting it.
It happens every day.
Families that have a plan in place with a will, trust, and life insurance have less to worry about in the event of a death because they are prepared.
Families that do not have a plan in place can be torn apart with siblings fighting, left with figuring out how to pay for medical and funeral bills and how to financially afford to stay in their home.
Do you know a family that did not prepare properly for a sudden death? Or even a death that a family knew was coming?
I know that no one enjoys talking about death and that most people plan on living a long time and they will take care of planning some other time. But what happens if some other time never happens because of the unexpected.
The time to prepare a will, trust, and life insurance is right now.
P.S. We are holding a FREE seminar on Wednesday, May 1st from 6:30 pm – 7:30 pm at Good Harvest Cafe in Pewaukee, WI entitled “OMG! I’m Dead… Learn what you should do before this moment to prevent chaos from erupting…”
Save your (free) seat by registering on our Eventbrite page:
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If you'd like to explore your insurance options, please visit our contact page or connect with a member of The Richards Group team at (262) 326-4750.