Jacob’s Father Died and His Mother Had to Move out of Her House

Jacob’s Father Died and His Mother Had to Move out of Her House

Last week I met two young mothers, one was 28 and the other 38. They both had two children. The 28 year old was married and she and her husband were in good health. The 38 year old was a widow. Her husband was in good health until he was diagnosed with a brain tumor and died seven months later. Her oldest son is named Jacob, age 9.

The 28 year old and her husband do not have a will and do not have life insurance. Neither did the 38 year old widow until her husband was diagnosed and they then had a will prepared, but he was not able to get life insurance. When he died his employer had a policy with $200,000 coverage that she received. After he died, she, Jacob and her younger daughter had to move out of their house into her parent’s house. She also received about $80,000 net from the sale of her home and $90,000 from her husband’s 401k account. She has a job and is able to continue working and with the Social Security payments for the two children and interest on her savings is able to manage. Her mother watches the children as she no longer can afford the sitter the children were sent to after school hours. She doesn’t have a clue how she will cover the children’s college education except from what might be left from the $370,000 she received. At least her husband had a will so the probate process was relatively easy and not costly. Since the husband was in his late 30s he was able to accumulate some home equity and 401k funds, and his boss covered him with some life insurance. If the wife also passed away untimely there would not have been adequate funds to provide for the guardian and the children as they grew up.

I told the 28 year old she and her husband need to get a will, if for no other reason than to name a guardian for their children if they both have an untimely death. I also told them they each should get a minimum of $1 million 30-year fixed premium term policy for about $120 a month total cost for both of them. Furthermore, they should provide in the will that the guardians should receive a fixed payment of $2,000 a month for the care of their two children and an interest free loan of up to $100,000 to build an addition on their home, if necessary for the care of their two children.

The 28 year old couple can make arrangements the best way they can in case the unspoken occurs. It is too late for Jacob’s mother.

Note: I wrote related blogs that can be accessed from the archives for these dates: May 16, 2013, May 23, 2013 and Feb 10, 2015. Read them! And do something!