With a new baby in the family, Ross and Reena want to put their finances in order.
Ross and Reena had three main goals in planning their estate:
- If one of them dies, they each want to make it easier for the other to carry on financially. To start, they’d like to have enough money to pay off the mortgage.
- They want to leave their child in good hands, with enough money to meet his needs in case something happens to both of them.
- They want to make it as easy as they can for family members to settle their estate and pay any final costs.
What they decide: Ross and Reena talk to an adviser and decide to do three things:
- First, they each write a legal will. They name Reena’s sister to take care of their child if something happens to both of them.
- They each get a $300,000 life insurance policy and name the other spouse as the beneficiary. That way, whoever survives will have enough money to pay off the mortgage and any final costs, such as a funeral. If something happens to both of them, the money will help the sister to raise their child.
- They set up a registered savings plan for their child’s future education. They plan to save just $80 a month to start. They will save more as their incomes go up.
The result: Ross and Reena know they will have to update their wills from time to time. It will be especially important if they have more children. However, for now they can rest easy. They have taken care of all their main concerns.