As homeowners plan for their future, it is important to make detailed estimates of cash flow and retirement needs. A picture of cash flow and expenses, in turn, can help clarify estate-planning goals.
The planning often begins with an inventory of assets that will comprise the estate. However, some assets may require additional investigation. In a recent example, a widow did not discover a policy taken out by her late husband until ten years after his death. The $100,000 policy provided insurance against the home’s foreclosure and, by its contractual terms, should have paid that sum to the widow at the time of the late husband’s death. Instead, the widow continued to make monthly payments on the mortgage and insurance premiums.
An attorney that focuses on estate planning might draw several lessons from this example. First, even a brief consultation with an attorney can help provide an outline for couples planning their retirement and estate. The widow most likely could have learned about the existence of the policy at such a meeting. On the flip side, if real property is encumbered by a reverse mortgage, second mortgage or some other security interest, an attorney can work with individuals to factor that debt obligation into their planning.
When an individual passes, heirs and surviving loved ones will benefit immensely from an organized estate plan. In the absence of one, there may be no safeguard against overlooked transfers, as in this example. Policy administrators might not have automated process to ensure that policies are timely paid. A comprehensive estate plan and experienced attorney can help avoid such mistakes.
Source: Bellingtam Herald, “As it moved to seize home, bank never told widow her loan was insured,” Kevin G. Hall, April 16, 2015
