Cash Needs…

• Finding an answer to the question begins with identifying the various cash and income needs resulting from a wage earner’s death – then estimating how much it would take to meet them.
• An initial step is to figure how much immediate cash it will take to pay final expenses arising from that death – medical bills, funeral costs, and estate administration costs.
• Cash needs might also include funds to pay off a home mortgage if desired, to retire any outstanding debts such as car loans, credit card balances and other consumer debt, and to pay any federal income, estate, and state death taxes that are due – in cash – at the wage earner’s death.
• Typically, there’s also a need to establish emergency funds, and maybe education funds.
• Business owners probably have additional cash needs.

How Much Cash…

• Since costs vary across the nation, it’s important to personalize the amounts that might be required based on regional costs and personal desires.
• Funds to pay for a private college or an out-of-state university will far exceed the cost of in-state schooling at a public university.
• One family might have a car loan and considerable credit card debt; another family might have less or none.
• One person might think an emergency fund should equal six months’ salary; another might want more or less.

Ongoing Income Needs…

• In addition to immediate cash needs, families invariably need a source of regular, continuing income for a number of uses.
• Money from somewhere will be needed to replace the deceased’s income that paid day-to-day living expenses – food, clothing, transportation, school expenses, medical and dental checkups, entertainment, gifts, utilities, home and car repairs, and more.
• There will be monthly mortgage payments if the mortgage isn’t paid off, or rent payments if the family rents rather than owns its home.
• Income needs can vary greatly – not just by geographic location, but by how much the deceased was earning and what the family is used to. Since expenses typically increase as income rises, the income needs of a family accustomed to a high annual income will be greater than those for a household where annual incomeis more modest.