Is it time for a lifeboat drill for your Life Insurance and Estate Planning?

Tim Watters |

Cruise ships often have lifeboat drills, which are a little bit sobering when you are in the middle of the North Atlantic. However, they help you prepare for a potential emergency that could happen. I find that it's a good idea to do the same thing with your life insurance and your estate planning. I often have these types of “drills” with my clients and I'm often surprised to see how poorly prepared people are.

Many times people think that they have life insurance when they don't. Also, I have found that they don’t know who the policy insures and may think that the policy covers the husband when it really only covers the wife or visa versa. Often, they don't have the actual insurance policies, merely some old statements from several years ago. This creates a mess for your family.

Insurance companies love to not pay claims.  There are often media stories about the many life insurance policies that could have been paid out that don't get paid out because the families didn’t even know the policy existed. Everybody should have a copy of their current life insurance policy stored in a safe place. With that policy, they should keep the most recent statements for the policies as well. 

I am often surprised to find that many small business owners have a cavalier attitude about “what if” planning. They often have no succession plan or Buy-Sell Agreement for their business.  Many times, they haven't even given their spouse access to their business files or business financials. It doesn't do you much good if your wife can’t sign checks on your behalf if you are disabled or die. I have been there for several clients who have died and have counseled many widows over the last 30 years. One Attorney I respect, Frank Brunetti, Esq, often says “you only die once, you might as well do it right”. I know it's an obvious point but, everybody should have a Last Will and Testament, a Durable Power of Attorney and Health Care Proxy document on file and you should know where those documents are stored.  Sometimes people store estate documents directly with their attorneys. Another option is to store them in your home. If you don't have the originals, it can add thousands of dollars to the estate process.

I am also not a fan of self-made estate planning documents. The ones I have seen were not done correctly; with scratch outs, no signatures, no witness affidavits etc. Would you self-diagnose and operate on your own Appendectomy?  The cost of getting your documents created should be viewed as a cost that is spread out over many years. It is a comfort to know that they have been done right.

Are your beneficiaries up to date? This is also an area that needs to be addressed. I recommend reviewing the beneficiaries every two years to make sure that they still match your wishes. Many people do not realize that the Last Will and Testament does not govern assets that have beneficiaries (retirement accounts, life insurance, annuities) unless you mention your Last Will and Testament in the beneficiary assignment.

Finally, I often recommend clients create short Voice Memos on their cell phone to cover different estate topics that are important for this type of planning. Here are some examples of short voice memo topics:

·       Who to call and how to deal with short term cash flow after death.

·       Where are the estate documents and life insurance policies stored

·       Where you have banking and investment accounts.


These memos should be updated periodically to make it as easy as possible for your loved ones to access.

If you have additional questions, please feel free to call my office at 201-843-0044 or check out our website at: for additional information concerning Financial Planning and Wealth Management topics.