Personal Finance

Is Your Estate in Order? How to Protect Your Loved Ones’ Financial Future

Expertise: Landlording & Rental Properties
23 Articles Written

If you died the minute you finished reading this article, would you be prepared?

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Death is a thing no one likes to think about. No one likes to think about their mortality; we are all young and invincible. We are too busy building our portfolios, saving for early retirement, raising our children or thinking about anything and everything else.

This week someone told me that had he not almost died a few times on the road driving to work, he would never have gotten insurance. Because “it’s a waste of money.” He has 6 kids and a stay-at-home wife. He’s the breadwinner.


The Repercussions of Not Planning Ahead

Do you have a wife, kids, rental houses, financial obligations to extended family? If you departed this world today, would you leave no wake in life? No matter your age, I promise there are repercussions to your death outside of just sadness.

Guess what!

Like many others, this guy didn’t prepare, and his family is suffering not only the loss of him, BUT also a financial loss.

If you died today, would your wife and kids be taken care of? 

Better question: If you died today, would those who are left behind be left in the lurch?

Another friend I was talking to told me that 300k would be PLENTY for his family of 8. Really? Is it really? If you make 100k a year, that is 3 years of your wife having time to get her “stuff” together before she has to start supporting the family. For a lot of us, one person took a backseat to another, so the earning potential is not the same. So could you really be able to take care of your family. Is $300k enough to reinvest to produce and income till they can get back on your feet?

Even if You’re Not Married

If you are single, you may be wondering, how does this pertain to me?

Related: Don’t Learn the Hard Way: Why Contingency Funds are VITAL in Real Estate

This amazing guy was full of life and dedication to what was doing. He loved in his day job. He was in the same place as my husband. He and my husband winged together. We were honored and excited to be in the same squadron again. He was young, vibrant real estate investor. (Don’t worry, I was training him right. Give him 15 years and he was going to beat me!) He was excitedly telling me all about the house he just bought in Austin and the house he was going to buy when he came home from deployment.

Than the unthinkable happened — and he didn’t.

Don’t kid yourself that with the thought, “I’m not a fighter pilot.” This could be you in your car!

Do you really want to do to do that to your family? 

Preparing your documents for death is AWFUL — trust me! No one knows better than me how much “fun” doing all that can be. The last day before my husband left for San Diego to leave for deployment, guess where we were:

Getting our documents signed at base legal.

Protect Your Family’s Financial Future

Do you think that was fun? Trust me, the last thing I wanted to do was think about my husband’s mortality. I didn’t want to spend the hours filling out the “estate” information or get our real estate attorney to put together the trusts, wills, living wills, and everything else I would need to protect my financial future. Or use one of my precious days off to get this all done.

But that’s the responsibility of being an adult, an investor, someone who knows and acknowledges their responsibilities.

Related: BP Podcast 005: Dealing with Death – A Financial Discussion with CFP Neal Frankle

Are you going to be:

  • The person who only left your spouse 100k insurance so they have to go back to work within 3 months of your death after moving across the country because they’d just relocated due to your job?
  • The person whose spouse got nothing because you didn’t fix the paperwork when you were married 7 years ago?

You are investors! You know and embrace paperwork. Otherwise, you wouldn’t invest in real estate.

Do yourself and your family a favor! Don’t skimp where it really matters:

  • Make sure you have your documents in place
  • Make sure you have adequate insurance so your family is taken care of until they can realistically get on their feet. DON’T forget to talk to your partner to make sure they agree with the amount of time you think!
  • Make sure your beneficiaries are the “right ones.” The last thing you want is for your will be prepared — and your family still destitute!

Investors: What have you done to ensure your loved ones’ financial future should the unthinkable happen?

Leave me a comment below, and let’s talk!

Elizabeth Colegrove is a passionate "buy and hold" investor who specializes in turning her once-negative transient lifestyle (Military) into a positive lifestyle. She self manages her entire real estate portfolio from long distance while holding down a full time job. When she isn't finding new real estate deals, she enjoys traveling, hanging out with her awesome boat-building husband, playing with her mischievous kitty, or writing on her newest project, her blog.
    Gregory Hiban Real Estate Agent from Philadelphia, Pennsylvania
    Replied almost 6 years ago
    There is really no excuse to have a MINIMUM of $500K in 20 year term life insurance if you have dependents, it is ridiculously cheap relative to the value provided. Specifically as this pertains to real estate investors, it is usually one spouse who is either significantly more involved or knowledgable about their portfolio. I would suggest for real estate investors whose spouse would lack the desire or competency to manage the portfolio without you, carry enough life insurance to extinguish all mortgage debt.
    Elizabeth Colegrove from Hanford, California
    Replied almost 6 years ago
    Greg, I totally agree! My rule of thumb has always been that life insurance must exceed our mortgage debt. I don’t think people realize how “cheap” term insurance is these days. I know that we are all pinching pennies for our next investment. Saving $50 for $1 million dollars of term life for 30 years of insurance, (make sure you shop around as that was one of our quotes after investigating a lot of different places) is not worth putting your family in jeopardy!
    Kyle Hipp Investor from Appleton, Wisconsin
    Replied almost 6 years ago
    Luckily I am invincible and immune to communicable diseases. However I believe that will all end in a couple months when I hit 30. I’ll have to check my paperwork but I think that is the case. I do have life insurance through my employer and although my wife and children would be comfortable they would definitely not be without financial worry going forward if I were to die. Wills and an estate plan is on our list to do and has been for a while. This just might be the year. Additional term insurance on all family members will also be started soon as my employment is not a lifetime plan. I did also buy a Powerball ticket so I think I should be OK come wednesday…. Good article. Definitely an important topic.
    Gregory Hiban Real Estate Agent from Philadelphia, Pennsylvania
    Replied almost 6 years ago
    Kyle, I would make sure you have life insurance locked in that is outside of your employer. If you were to become diagnosed with something in the future that made you uninsurable and then you lost your job, you would have no way of getting reasonably priced life insurance (that is, assuming you cannot keep your company life insurance when you are no longer with the company, which you usually, if not always, cannot).
    Elizabeth Colegrove from Hanford, California
    Replied almost 6 years ago
    Totally agree! Also make sure you get insurance for a spouse! If you can, it is much easier to insure a spouse when they are working than when they are unemployed (found that out the hard way). Since they take a “fine tooth comb” to your health history the earlier you can lock the insurance (before pregnancy, and other normal coming of “age” health issues) the cheaper and easier the experience!
    Elizabeth Colegrove from Hanford, California
    Replied almost 6 years ago
    Kyle, I laughed so hard on your first sentence 🙂 “Death” is the subject no one wants to talk about. That being said, please don’t put those will’s off any longer. I have seen too much in the past 18 months with people being burned ! Definitely shop around for different insurance careers. When I shopped around I found a much better deal than any employed (minus the SGLI, military life insurance).
    Andy Gross from Baltimore, Maryland
    Replied almost 6 years ago
    I’ll second what Elizabeth said. Never underestimate how fickle life can be and never underestimate how deranged family can be after your death. Some will fight over the pots and pans. Spend some time with an attorney to get stuff sorted out. Put together a book of assets/liabilities so your next-of-kin knows your where to find your stuff. This kind of planning should make you sick to your stomach, but it’s part of being an adult.
    Elizabeth Colegrove from Hanford, California
    Replied almost 6 years ago
    I totally agree! Good thought on the book! That is my next item of business!
    Andy Gross from Baltimore, Maryland
    Replied almost 6 years ago
    Thanks. A friend of mine was finding accounts and assets years after his mother passed away, and each time, he had to reopen probate.
    Ana Perez Investor from Burbank, California
    Replied almost 6 years ago
    Thank you Elizabeth, this is a wake up call! My husband and I are constantly traveling out of the country and we always say we have to put our papers together but it never happens. This is a priority, I admit. You mentioned in your post that before your husband was deployed you went to base legal to have them prepare for you. My husband is retired from military and you just reminded me about this benefit where they can help us put everything together. No excuses for us!
    Silvia Durango from Bronx, Philadelphia , New York, PA
    Replied almost 6 years ago
    I am glad someone wrote an article on the importance of Life Insurance.., hate to sound like A salesperson but I am an Agent in NY and NJ for New York Life. Now and days Life Insurance does many things other than insure individuals’ life. If you have it already, great! Also, understand what else is Life Insurance good for. Inbox me if you have questions…
    Vincent Cao Investor from Lincoln, Nebraska
    Replied almost 6 years ago
    I’m glad that you wrote on such an important topic! covering liabilities is just the beginning, When planning for your estate you need to consider many contingencies and the loved ones you may leave behind. There are even ways to structure how your businesses are passed on or managed to make it hassle-free for your surviving spouse if they aren’t knowledgeable in Real Estate!