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More About Jacob’s Mother

December 20, 2016

Last week I wrote about Jacob’s mother who had to move out of her house when her husband died. I also wrote that she was left with $370,000 and that elicited some calls and e-mails questioning that she was not so bad off. Thus today’s follow up.

The woman’s 38 year old husband died – that is bad off regardless of amount of the money in her bank account. While she was able to marshal some funds, she did not have sufficient cash flow to continue living in her house. Had there been adequate life insurance she would have had the option of remaining or not. Without the insurance, she had no choice; and that is the purpose of life insurance.

I don’t know if she would have remained in her house, or purchased a less expensive house in the same area, but she had no choice. She knew she could not afford the monthly mortgage, real estate taxes and myriad payments required to maintain the house, so she moved as quickly as she was able. Also, by moving, her children had to go to different schools, leave friends and after school activities, and grow up without a father causing as big an upheaval in their lives as their mother’s.

Having an adequately funded plan with the suitable legal documents provides the survivor with an option to stay where they are or change. Without the right plans there is no choice, no decision or breathing room to get used to new circumstances. And God forbid if both parents would have been killed there would have been no will, no designation of guardians, no regular payments to the guardians and no fund for future financial comfort for the children. The 28 year old mentioned in the column had no arrangements, but hopefully by now her and her husband have sufficient life insurance and the proper documents.

The husband was 38, so pretty well established in his occupation with a job that provided life insurance as a benefit, able to accumulate some 401k funds, and also able to build some equity in their house after all selling and moving costs. They had no other savings but were managing comfortably on their two salaries. The wife is not destitute, but a widow with two children living with her parents, with concerns about future financial security and college funding for her children. This does not leave her in any type of enviable position. Anyone that thinks otherwise is just not in tune with how life works.

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