Much of your wealth is tied up in complex assets that requite a sophisticated knowledge of real estate and financing to manage. Are your BIL and SIL knowledgeable and capable of managing these assets? Would they be able to manage the portfolio during a big downturn in the market with no liquidity? Do they have the necessary connections to manage and sell the assets? What happens if you both die during the construction phase of a major project?
They wouldn't, but I have a partner in our development company that could. In order for them to be saddled with all of this responsibility my business partner, my wife, and I would all have to be killed at the same time. This is very unlikely because we very seldom hang out together outside of work.
Our projects have pretty large margins and could be sold at break-even or better during a crisis unless the Austin market all of a sudden turns into Detroit. This could happen, but it is very unlikely.
This is a situation where the life insurance would provide substantial cash that would get them through a difficult period while they get up to speed or deal with a liquidity event. Or it could keep them from liquidating assets in a down market at fire sale prices to pay college expenses. Until you have sufficient cash and traditional paper assets to see the guardians through a difficult period, I would keep enough of the insurance to cover liquidity needs and the cost of a few years of child rearing plus something for their education.
We have about $550k in perfectly liquid assets right now and a lot of equity in rentals that could be converted to cash. At the end of this year that will be closer to $1M. At some point it just seems like the term insurance is not a good value.
We'd really want $300k ($100k each) for college plus enough cash to have the kids not be a burden on family if we die. I'm not sure how much cash this translates to, but we should be in the ballpark later this year. Any thoughts on that?