Early Widow

[Global Wizzo]

Hi All,
First. This is not a sympathy request post. I’ve gotten a lot of that

Looking for suggestions on the following scenario.
My son died a few days ago. Assuming everything eventually gets finalized, his widow with two young (under 10) kids will have high 6 to low 7 figure insurance package.

My thoughts were to suggest
about 50K per Child added to current educational funds.
50-100k in accessible money market
Remainder invested 60/40 moderate growth/tax free fund.

She needs to finish her degree. Age late 30s
Income base about 2K/month plus any draw on investments.

TIAA, Vanguard and others are available platforms.

Lot more experience here, all suggestions appreciated.

Thanks to all

[athena53]

Wow. I've got a son the same age- and a DIL and grandchldren. It's wonderful that your son had such good plans in place for them in case he left this world early.

Your DIL has the luxury of time to make major decisions. I wouldn't even worry about putting money aside for the kids' educations yet. She needs to get a handle on her new expense structure- what about health insurance? Will it be a high-deductible plan, which means heavy potential out-of-pocket costs? She may need child care while she goes back for her degree. What will that cost? What's her income potential after that? Does she have any inclination to learn about investing? ETFs might be the way to go.

Do you have any concern that she might not use the money wisely or might be scammed by an "advisor"?

I'm glad you're thinking ahead. Another thought, though- take your cue from her. She may not even be able to cope with financial planning right now- as long as the bills are being paid and she's putting one foot in front of the other, you may want to wait till she's ready.

[rodi]

athena53 gave great advise. Let your DIL know that you are ready to advise/help when DIL is ready... but there is no rush. But also tell her there is no rush for DIL to sign up with a financial advisor..... For now, let her put the money in a money market account till she gets her bearings.

I'd be worried about some of the less ethical financial (vulture) types looking to pad their own bottom line approaching her to take advantage. Since she is getting an insurance payout - make sure that the insurance company doesn't push an annuity or some other inappropriate financial vehicle in the interest of "simplifying her life".

I agree that I would worry about funding the kids educational needs after the dust settles... Plenty of time to do that in the next few years...

[pjm-7]

My condolences. Make sure that she files for her social security survivor benefits to help provide for the children and help with finishing her education.

Assist her in finding a fee-only financial planner that is willing to work with the available low cost firms like TIAA and Vanguard. Have her stay away from the commission brokerage firms (i.e. Merrill Lynch, Morgan Stanley, etc.) they will only see commissions and not put her interests first. A financial planner can help with her own life insurance needs with TIAA. Also, she needs to work with an estate planning attorney to make sure her children are provided for.

Just have her take it slow. The investing part can come later. Having a structure and plan should be formulated.

[Gumby]

Quote:

Originally Posted by pjm-7 My condolences. Make sure that she files for her social security survivor benefits to help provide for the children and help with finishing her education.

+1. Social Security survivor benefits were designed for exactly this situation. Here is the SSA link for that https://www.ssa.gov/planners/survivors/ifyou.html

If your son was a veteran, there may be other benefits, including educational assistance.

ETA: Here is another useful link for potential educational assistance https://studentloanhero.com/featured...ips-for-women/

[Souschef]

Quote:

Originally Posted by pjm-7 My condolences. Make sure that she files for her social security survivor benefits to help provide for the children and help with finishing her education. Just have her take it slow. The investing part can come later. Having a structure and plan should be formulated.

The advice we give in grief recovery groups is not to do anything big for a bout a year, unless it is an emergency.
Someone took advantage of DW and put her in an annuity to "protect" her life insurance proceeds, while netting 3K to 7K in commissions.
Later on, she can set up 529 plans for the children's education.

[Global Wizzo]

Good advice.
Good part, she is smart and stable.
I started funds for the kids at birth so anything there is additive.
I had a good friend that was a ML advisor decimate the part of my portfolio years ago. Lesson learned.

Everyone is tracking my thoughts.

Thx. D

[nate2953]

As already mentioned, Survivor Benefits for the children. And possible Mother’s Benefits for the young widow. Even though she is not 60, she could receive benefits based on having at least one child being under the age of 16.

[pb4uski]

Global Wizzo,

I know you aren't looking for it, but my deepest sympathies. I'm guessing that your son was around my daughter's age and I can't imagine what you are going through and I really don't want to even try. And what a good MIL/grandmother you are for trying to get good advice for your DIL.

I would probably recommend that the whole shooting match be put into Vanguard Wellington or some similar balanced fund with a great historical track record. I presume that your DIL spends more than $2k a month that she receives in income, so she can set up an automatic monthly redemption be made and sent to her checking account. Once she finishes her degree if she starts working then she can dial it down for her new take home pay.

+1 with others about not worrying about funding the grandkids education for now... a plan for that can come in a year or two once things have settled down for them.

Also, the DIL should consider if she needs some term life insurance to make sure those kiddos are protected, but it might not need to be a lot if she has a high 6/low 7 figure portfolio.

Finally, if anyone approaches DIL about "investing" in an annuity, just shoot them. (Just kidding... sort of).

Best wishes.

[Scratchy]

An issue that is not urgent, but deserves some attention probably in the next weeks is that the cost basis of property (such as investments at brokerage houses) inherited by your DIL or that she owned jointly with your son is reset as applicable. If there is real estate jointly owned or that was owned by your son, a timely appraisal might be appropriate. Also, it might be worth them asking their accountant or attorney whether they should file the necessary forms to elect portability of your son's estate tax exemption to your DIL.

My sincere wishes for peace and healing for you and your family during this difficult time.

[BeachOrCity]

I would be very careful to ensure that you tread very softly on advice versus intruding. DIL May have sensitivities that she does not express in this regard.

[ckelly78z]

Quote:

Originally Posted by BeachOrCity I would be very careful to ensure that you tread very softly on advice versus intruding. DIL May have sensitivities that she does not express in this regard.

I was thinking the same thing in regards to your relationship with your DIL...did she ask for advice in the past, could your actions/advice be taken as anything other than the love, and concern you have for them...be careful !

[donheff]

Quote:

Originally Posted by pb4uski Global Wizzo, I know you aren't looking for it, but my deepest sympathies. I'm guessing that your son was around my daughter's age and I can't imagine what you are going through and I really don't want to even try. And what a good MIL/grandmother you are for trying to get good advice for your DIL.

+1000. I was talking with my daughter yesterday about insurance and related planning since she announced that a baby is on the way. I agree with the recommendations above, particularly the recommendation to beware offers of help from the insurance company or unsolicited FAs.

[The Cosmic Avenger]

The only thing I can think of to add is that, unless the plan is for her to live off of the insurance money immediately, as if she retired early, 60/40 AA is too conservative for someone so young. I can't tell if "any draw on investments" means there will be an income/withdrawal plan, or if it might just be tapped as a supplement if there's a huge run-up. If she won't need it for a while, 75/25 would be more appropriate at her age, still even somewhat conservative if it's not for immediate use. And with $100K in operating cash, she could probably use that as a cushion during a downturn and stay very aggressive with the bulk of the investments.

But a fee for service FA can help guide her on specifics like that, I second that recommendation.

[athena53]

Another thought FWIW: I sure as heck can't time the market and can't tell anyone else to try it but if I were sinking an amount that large into equities I'd do it in chunks over time- say, 10% every month. It's just some protection against a correction. Totally up to how your DIL feels about risk-taking.

I'm glad she's good with money- that's half the battle. The father of my nephew by marriage was divorced and he remarried about 8 years ago and died a few years later. Second wife got a very good life insurance settlement. It's gone with very little to show for it and she's got a daughter who's college material. Nephew and my niece are thinking of helping the daughter with college. It sounds like your son chose well.

[Yachi]

Sorry for your loss. I'm a dad with young kids who's planned for insurance needs for my family. Here is what I would suggest to my surviving wife:
Year 1: don't make any changes (house, schools, you're working status). Stability is important to our children. Use funds from insurance or retirement accounts to pay bills
After that we're at a spending rate where high 6 figures, low 7 figures + social security survivor benefits would allow my wife to continue as a stay at home mom to the kids. I would expect her to decide if this is better, or if she needs the social and intellectual interaction of her own job. I believe survivor benefits end when the kids turn 18, and by then I would expect she would want to be working anyway.
The above is the thinking I used to figure out how much insurance to carry. The advice would then be to invest it to allow a safe withdrawal rate of 3%. We have been putting all our savings into a 401(k), IRA's and an HSA, with the expectation that we'll be able to withdrawal for our children's education or take out loans as needed when that time comes.

[HarveyS]

Great advice here so far. My $.02, have her think about life insurance on herself if not already in place. Also, document guardianship for the little ones should something tragic happen to her (again, if not already in place).

[ralphie]

First, my condolences to you and your family.
I have not made many (if any) replies to threads as I usually do not feel knowledgeable enough to offer much help. This case is different to me.
My dad died 49 years ago leaving my mother with two young kids (under 10) to raise. He didn't believe in life insurance but did have other assets.

I remember watching my mother focus on raising us two idiots, and not doing much else.

I also remember her having a little "heart scare" that was attributed to stress. That involved a short hospital stay and I vividly recall wondering what would happen to me and my sibling if she died. I suppose we were about 8-10 then.

Those memories make me want to stress what has already been suggested. Do nothing fast. Stability is crucial. Mom needs to be focused on her own health, and the health of the kids, with"Health" meaning both mental and physical. In a way, 1-year CDs would be good. (Spread out keeping FDIC limits in mind). This might force a waiting period.
Obviously some amount may be needed for immediate living expenses, but go slow.

Prayer to you all.

[Retired Expat]

Only comment, besides how sorry I am, is that she may well turn to her own parents or siblings for advice so being on good terms with them and the family being on the same page about things as you will help immensely.

[Chuckanut]

+1 on helping her out and making sure some scammer does not get his hands on the money your DL will need for herself and her children. And finding her a good income balanced fund that will provide her and the grandkids what they need.

As much as you can offer her the gift of your time. Kids, as most of us know, are time sponges, and they soak up a lot of time. Being able to drop the children with the grandparents from time to time so she can enjoy time without needing to be 'in charge' of children is a real gift.

Above all keep a good relationship with her.