Even a great estate plan cannot help your family, if they do not have the cash they need to meet expenses before the estate plan can be executed.
People often go to great lengths to get an estate plan carefully crafted that covers every possible need their family could have. That is a good thing, but it might not be enough.
If you are your family’s sole breadwinner and most everything is in your name, then you also need to think about how your family is going to make ends meet while your estate is being administered. Bank accounts in your name are supposed to be closed as soon as you pass away, so your family cannot legally access them.
Unfortunately, that is not going to stop any bill collectors from making calls, and grocery stores are not going to sell their food on credit to your family.
As a result, you also need to plan for your family to have access to cash.
Some advice on how to do that comes from South Africa by way of Personal Finance in “Will your family avoid a cash-flow crisis on your death?” The advice is also applicable to the U.S.
Getting an estate through probate can take a lot of time, depending on the size of the estate and the probate laws in the state.
Your family will not receive the cash from your will for a while, in most circumstances.
If you do anticipate that your family will need cash after you pass away, the most effective way to provide it is normally to take out a life insurance policy. These policies pay out almost immediately upon learning of death.
Another idea is to open a joint bank account with a trusted family member and to put some money in the account that will only be used in the event of your passing.
Reference: Personal Finance (April 22, 2017) “Will your family avoid a cash-flow crisis on your death?”
