If you have young children, you must have life insurance, typically level term life insurance
Attorney Tom Olsen: Having young kids and I'm talking under the age of 18, but maybe under the age of 25.
Attorney Chris Merill: Exactly.
Attorney Tom Olsen: It is absolutely the responsible thing to do, it is now time for you to get your estate planning in place step number one. Step number two is you need to have level term life insurance in place. For young people, it's not expensive at all but just need that. You've got to have it just in case something happens to you or your spouse.
Attorney Chris Merill: Exactly. Tom, I know, we both, as well as of course all the lawyers in our office, it's really important as part of the discussion and doing these documents for them. We are always telling them get the term life. I would have to say that for me anyway, I would say that when my clients are signing documents and I'm reviewing everything with them as far as the action plan, I'm really happy to say that 90% of them once they sign documents, they tell me they have that insurance in place.
Attorney Tom Olsen: Awesome. Good.
Attorney Chris Merill: They got it in place from the time we started the conversations, until signing, they have it in place.
Attorney Tom Olsen: Even with a married couple where let's say the mom is a stay-at-home mom, I say congratulations to her, that's the hardest job in the world. Even she needs to have life insurance on her life, because if she passed away guess what? Dad's going to have to hire some in-home care. He's going to have to pay for what she was doing.
Attorney Chris Merill: Correct. Which is very significant. It's very significant. The advice is that term life insurance on both parents is very important.
Attorney Tom Olsen: We were talking about trust. They're all the same thing, revocable living trust, but we were talking about using them for a married couple that has young kids or it could be a single person with young kids, and often for married couples with young kids, often the most important asset or most valuable asset they own is their IRAs and their life insurance.
Remember that if you're a married couple and we're going to set up this trust for you for the benefit of your young kids, you would be naming each other as a primary beneficiary of your IRAs and life insurance. You'd be naming your living trust as a contingent beneficiary.
Chrissy, over the years I've had so many people say, "Oh, I've got kids, they're six and eight years old. I named them as my contingent beneficiary." That's scary, but I'll tell you something that's even more scary is people over the years, a number of them come to me and said, "Tom, I just named my brother the alternate beneficiary of my life insurance. If we both pass away, I'm sure my brother will use that money for the benefit of my kids,'' and warning. I should actually get some warning bells on this podcast thing here. That's a very scary prospect. Not a good idea.
Attorney Chris Merill: The people don't realize legally brother has no obligation based upon that to give to the kids.
Attorney Tom Olsen: That's right. A brother can use it for whatever he wants to, and even the brother was honest as the day is long. Remember that you might leave it all to your brother and he survives you both and a year later your brother dies, well, where does that money go then?
Attorney Chris Merill: Exactly.