How to plan ahead

By Jeffrey Moormeier | Jul 18, 2018

My brother died on July 4.

This will be the last column on this topic for a while. I have been writing about his journey and how it relates to financial issues for a few months, and I want to tie a few topics together as an epilogue.

My brother was 62, and he worked for New York Life. He left behind a wife and two adult children. The purpose of this article is to go through the immediate, practical issues that somebody like his heirs will face.

Every person has an estate. After they die, their estate needs to be settled. In other words, taxes will need to be paid by the deceased for the length of time they were alive during the year.

The bigger and more complex the estate, the longer it takes. The new tax code has increased the size of the estate before certain “estate taxes” are applied.

This is not a column on estate planning or tax planning.

First, business goes on. It would be nice if the world stopped, so the heirs could get their feet planted on the ground.

I am not a lawyer. This is not intended as legal advice, yet you are going to need some legal documents.

The obvious one is a death certificate, and the second is Letters Testamentary. If there is a surviving spouse, then most financial issues can be dealt with using these two simple documents, even if there is no will.

We live in a community property state. It is assumed that everything belongs to the spouse if no will exists.

Letters Testamentary is the legal document that authorizes the executor to act for the deceased.  Both documents are needed in most transactions.

For example: to claim life insurance proceeds, change joint bank account titles, change property titles, file spousal social security benefits, spousal pensions benefits and other routine business.

Make sure to get plenty of copies of each. One is issued by the state of Washington, and the courts issue the other after reviewing the will or lack thereof.

Passwords.

Hopefully your spouse has shown you the location of his or her passwords: passwords for the phone, the computer, online services, bank accounts, subscriptions, Facebook etc.

In my May 2017 column entitled “For Your Family’s Sake,” I listed 25 files that you should have before you pass away.

Among them is a file for each of the following: bank accounts, investments, retirement accounts, safe deposit boxes, credit cards, mortgage loans, personal insurance, and property insurance.

Be very specific in these files. Have the account numbers and points of contact written down. You will need to contact these institutions to make changes.

Knowing how many accounts and the location of these accounts is critical.

If having a spouse die unexpectedly is not enough, try conducting business without the proper documents.

There is also the matter of intellectual or practical interest.  Many of the spouses I have dealt with over the years have fallen into the category of “traditional” relationships.

The husband’s role was to manage the business end of things while the wife managed the household and home.

I know this sounds outdated, but it is still a model that works very well. Some wives are the primary driver in the financial realm. Sometimes it is just a matter of who is better at it.  I am not making a judgment call.

With over 30 years of experience working with clients, I am just pointing it out.

If the spouse left behind was not the primary driver of their financial life, then they may feel overwhelmed to make any decision involving money.

I have a friend who died and left his wife $2,000,000.

Prior to this, she had never even opened a bank account. I know this is an extreme case, but it illustrates the point I want to make, and that is to be prepared.

Be prepared by having your financial life organized. Start with the files I mentioned earlier.

If you are the driving force behind the finances in your family, at least keep your spouse or executor informed.  Involve them with your trusted advisors.

Ask yourself this question, “What will my spouse do if something suddenly happens to me?”

Many people have sons or daughters that step in and help. Many do not.

For my brother, he had a pretty good plan in place. His wife has a good handle on the finances. He had time to get his life in order. And his son is a financial planner.

Some other people I have worked with have been crippled by events like this, and for someone who is in the people business, it hurts me to watch them grieve and be afraid of making a mistake when some prior planning could help them in their time of need.

I hope dying young does not happen to you, but if it does, the ideas in this article may be very helpful for those left behind.

Jeffrey Moormeier of JG Moormeier Financial is a Mukilteo-based financial advisor affiliated with KMS Financial Services, an SEC registered investment adviser. His column does not represent the opinions of KMS Financial Services, nor is it an official prediction or recommendation of any kind. The opinions expressed in this column are generalizations. For advise catered to your specific financial circumstances, contact Jeff directly at jeff@jgmoormeier.com or 425-931-8898.

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