When doing any type of estate planning and setting up assets for your heirs, make sure that you communicate with them about your wishes and your plans for the future. A lack of communication can lead to some critical errors that may prove very costly.
For instance, one family shut down their father’s bank account when he had a stroke. He could no longer communicate with them. They took the money and put their father in a home. He passed away not long after.
When he died, they found out that he had a life insurance policy. It was worth $1 million. The children were stunned, thinking that they were in line for a windfall.
However, they found out that the man had set the policy up so that the institution he bought it from could deduct the monthly payments automatically. They took the money out of his bank account.
Unfortunately, since they had closed down that bank account before finding out, it cut off those payments. They had not bothered to forward their father’s mail, so they never got the notices from the insurance company asking for payments. As such, the insurance company then canceled the policy before their father passed away, and they got nothing.
This is just one example, but it certainly shows the value of communication and how much people stand to lose for simple oversights. Make sure that you know about all of your estate planning options, but then take it one step further and discuss those options with your heirs well in advance.