My loved one passed away. What now? A financial advisor may be a valuable resource.

 

Roxanne Alexander

Roxanne Alexander, CAIA, CFP®, AIF®, ADPA® Senior Financial Advisor

My dad recently passed away, and a month prior, a very dear client passed away. Both left their spouses to handle the finances, and although they left their affairs organized, extensive detective work was still necessary. Once the initial shock of losing someone subsides and the ceremonial procedures are over—what do you do now financially? After losing a best friend and loved one, thinking about money and handling the red tape required by financial institutions may be the last thing someone wants to face. In the best cases, it can take months to navigate through insurance policies, trusts, wills, bill payments and account transfers to beneficiaries. Tremendous pressure is lifted off the family when they have someone they can trust to reach out to—which could be a financial advisor.

Knowing the total picture

A family working with a financial advisor when a loved one passes away has several advantages. Financial planners and advisors usually know the total financial picture and may have clues to accounts of which you may be unaware. For example, another client who recently passed away had several annuities bought 30 years ago that were held at various insurance companies. The trustees of the trust had no prior details on these policies, so working with those annuity companies was very time consuming and difficult, as each company had their own requirements. One company wanted original documents and another accepted faxed copies, one wanted a long-form death certificate and another accepted photo copies, while some companies required a letter of acceptance for qualified account rollovers. Since the trustees worked long hours, it was hard for them to find the time to spend on the phone with the insurance companies navigating all the paperwork. A financial advisor knows the right questions to ask, which can speed up the process considerably.

The advisor may also be familiar with family dynamics—in some cases the client may have discussed personal matters about the family, such as one child not being financially responsible or wanting gifting to continue to a certain charity, which may help the surviving family members make decisions.

Knowing the technology

My mom inherited a bank account abroad—not only did she not speak the language, but that bank’s technology was very complex and required several passwords and barcodes. This was confusing for her, and having someone to walk her through the process was very helpful.

A cellphone or computer can be a valuable resource—it contains a plethora of information such as emails, passwords and other financial information. Having the deceased’s cellphone or computer can be crucial for logging in to accounts, resetting passwords, etc. Information in emails can also give clues to other accounts and bills that need to be cancelled. While working with one client, we realized there were several apps on the spouse’s phone that needed to be cancelled to avoid a monthly fee. It is important to keep in mind that although the intentions may be good, accessing these devices without permission could cause potential liability. It makes sense to talk to an estate attorney about what should be in place in advance before taking this approach. Having a legal document in place allowing you to access the phone, email, social media and other financial accounts of a deceased love one may prevent any potential legal disputes. Another option could be to discuss passwords beforehand, but accessing someone’s account after that person has passed away may also have legal ramifications.

Knowing the process

An advisor can help you through the process of dealing with retirement accounts, pension companies and insurance companies, as this can be confusing when it comes to rolling accounts over to the beneficiary due to the complex tax and transfer rules. Advisors have experience in what to look for and can facilitate the process more quickly, avoiding issues the client would not have expected.

Advisors can act as a liaison between family members. They can explain the process and expectations with respect to time and requirements by account custodians. The advisor can be a neutral third party that can discuss the best course of action between beneficiaries. Consulting a professional can ensure that accounts are set up correctly, avoiding potential tax penalties or premature tax payments. Discussions with beneficiaries regarding the best course of action could save them time and money in the long term—for example, issues like taking a lump sum versus leaving the account invested or knowing the tax consequences if they liquidate the account.

Many advisors will gladly work with heirs to open new accounts as a courtesy to the client. In many cases, retirement accounts must be split at the current custodian before they can be moved. IRAs and inherited IRAs have complicated account rules for tax purposes, so correct accounts should be opened to avoid any type of tax penalty.

 

Knowing the professionals

The financial advisor may have relationships with the client’s CPA, estate attorney and insurance agents. A client may change estate attorneys and not inform the beneficiaries, but the advisor may still have several revisions of the estate documents and beneficiary update forms on file. Financial advisors can also work as a team with the other professionals to brainstorm the most efficient plan for taxes and future estate planning. The advisor can coordinate obtaining trust tax IDs, facilitate the update of estate documents with the attorney or make sure any trust accounting is in place after consulting with the CPA.

Planning for the future

A financial advisor can reevaluate your risk tolerance, goals and expenses going forward, especially if your financial plan was created when you were married. Usually the portfolio is anchored to the spouse with the lower risk tolerance. Have the goals changed? Have the expenses changed? Should the portfolio still be invested in the same allocation?

Links to other related blogs:

Navigating the Death of a Loved One

Estate Planning for Online Accounts & Digital Media

Estate Planning Proceed with Caution

 

Feel free to contact Roxanne Alexander with any questions by phone 305.448.8882 ext. 236 or email: RAlexander@EK-FF.com

For more information on financial planning visit our website at www.EK-FF.com.

Navigating the Death of a Loved One

Josh Mungavin

Josh Mungavin CFP®,  Principal, Wealth Manager

Click Here to download a PDF of this check-list.

The death of a loved one can be devastating and emotionally overwhelming. Over the coming weeks and months, you will be faced with unfamiliar but important decisions. Employ the help of loved ones and trusted advisors to assist with these responsibilities. Please remember that many people, such as family, friends, and professional and spiritual advisors, are here to support you and allow you to focus on the most immediately important issue — the well-being of yourself and your family.

Unfortunately, you will almost certainly encounter financial or other decisions that require urgent attention. This guide will help you organize and prioritize matters that are in direct need of resolution and suspend those issues that can wait until you are personally better prepared to overcome challenges that now seems daunting. We want to encourage you to give this list to anyone it may be able to help. Please do not hesitate to reach out to Josh Mungavin and Evensky & Katz / Foldes Financial Wealth Management at (305) 448-8882 or jmungavin@ek-ff.com, if you have any questions or if you have any suggested changes/additions to this document that you think may help improve navigating other families through this difficult time.

Within the First 48 Hours

  • Arrange care. Should the deceased have dependents, pets, or a need for security at his or her premises, establish who will tend to these responsibilities.

 

  • Keep records and notes. Keep a log with detailed notes of people you speak to, including their contact information and pertinent conversations regarding your loved one’s passing. This will help the process proceed smoothly and completely. Keep all receipts! You may also find it helpful to keep records of people who lend assistance or send gifts, flowers, cards, donations, or food to your home so you can thank these supporters at a later time.
    • You may find it helpful to keep all post-death matters in a dedicated account or find a way to separate these expenses in order to maintain organized records to settle the estate.

 

  • Provide notice. Those you wish to contact may include family, friends, employer, executor, powers of attorney, or religious advisors.
    • Lean on family during this time. Allow others to help you make the decisions that follow in the days and months to come; you do not have to take on all duties alone.

 

  • Locate documents.
    • The deceased’s attorney, CPA, or financial planner may be an invaluable resource in helping to locate documents such as deeds, titles, tax returns, will, and estate plan.
    • Remember to consider where the deceased typically kept important papers such as a safe-deposit box, file folder, or electronic storage device.
    • Other helpful or necessary documents are the birth and marriage certificates, military discharge papers, etc. Hopefully you can easily access an Emergency Binder that the deceased had compiled.

 

  • Refer to the deceased’s wishes. Consult any wishes the deceased may have provided for his or her passing such as organ donation, cremation, or location of burial, which you can also find in the documents section of his or her Emergency Binder.

 

  • Preparing for the remembrance. Depending on the detail of instruction left, the initial matters may be left to your discretion. These include:
    • Bereavement leave may be available from your employer. If so, notify your employer and arrange for care of children and pets in order to give yourself time to focus on the arrangements that need to be made.
    • Prepare and arrange for an obituary for those who would like to pay their last respects.
      • Depending on the known wishes of the deceased, you may indicate that donations to a specific charity can be made in lieu of flowers or other gifts.
    • If the deceased didn’t document his or her wishes for final resting, with the assistance of family and friends, contact funeral homes and plan final arrangements. Set up appointments to research various funeral home options to evaluate and compare services and costs.
      • Be aware that funeral homes can vary drastically in cost and funeral costs often are shockingly high. If you feel uncomfortable with a decision, do not feel rushed or pushed into deciding. Just sign nothing, walk away, and either ask for the assistance of a loved one or take time to think before deciding. It may help to ask around to see how other peoples’ experiences have been with specific funeral homes.
    • Check for potential VA burial benefits. Veterans may be eligible for funeral benefits that can drastically reduce cost, such as burial at a national cemetery or financial assistance toward burial elsewhere.
    • If your loved one was a veteran, please visit the website http://www.benefits.va.gov/compensation/claims-special-burial.asp and follow the instructions provided. This website will go into further detail about the claim process. You will notice there are different burial compensations the surviving spouse, children, or executor may or may not be eligible for, so read carefully. The heirs will need to locate the veteran’s original or certified copy of the DD-214, Award Letter (list of service/nonservice connected disabilities), and username and password for eBenefits (applying through eBenefits is the most efficient way to file a claim), an original death certificate, and a funeral receipt that has the veteran’s name on it. If you cannot locate the eBenefits information or have any other questions, please contact your local VA Disabled American Veterans office (DAV) to help you file a burial claim.
      • Steps if you have the eBenefits information:
        • Visit the eBenefits homepage at https://www.ebenefits.va.gov/ebenefits/homepage and log in.
        • Click on Apply for Benefits.
        • Scroll to the bottom and open burial benefits to start the claim process.
        • NOTE: The burial compensation is a reimbursement and depending on if the circumstances of the death (service or nonservice-connected), the benefits will only cover a portion of the funeral expenses. The reimbursement process could take up to six months.

 

  • Be cautious of cost. Final resting arrangements can prove costly. Carry a note pad during this time to keep a current accounting of cost; many services will ask for a deposit in advance. If, at any time, you feel uncomfortable with deciding immediately, do not feel forced into any decisions, especially a potentially costly one; take your time and ask a trusted advisor for assistance.
    • PLEASE BE AWARE: When financial institutions obtain proof of death, in almost all cases, the institution will freeze the assets owned by the deceased, so plan accordingly.

 

  • Temporary death certificates. Official death certificates can take a few weeks or months to receive. Temporary certificates are sufficient to deal with many pressing matters. An official copy, however, will likely be required to process insurance claims. Ask the funeral director to assist you with this matter. The funeral home also has the ability to prepare and issue a statement of death; obtain at least ten of these as well.

 

Within the First Week

  • Household Matters.
    • All expenses such as mortgage, taxes, insurance, utilities, and maintenance must remain current if the deceased owns real estate. If no one is living in the house for the immediate future, it may be sensible to suspend unused services and utilities.
      • Should your family be faced with the decision to sell assets, you may choose to consult an attorney first.
    • Check the deceased’s mail for items that may require immediate attention.

 

  • Contact the Deceased’s Employer. Collect all belongings that may remain at the work place and inquire about outstanding wages and group insurance plans.
    • If the deceased was self-employed, locate related ownership documents and arrange for short-term business continuation. The deceased’s business partners or attorney may be able to help facilitate this transition.

 

  • Evaluate Contents of Safe-Deposit Box. Assets held in this fashion should be distributed to the intended beneficiary quickly, as the printed death notice will trigger a hold on the contents to be used to satisfy debts of the deceased’s estate. Should you not be an authorized key holder or you are unable to access the box, you may need to petition the court to issue an order to open the box if it contains important documents.
    • Although creditors of the deceased must be paid, do not pay for or sign anything without obtaining a professional opinion on the matter.

 

  • Take Care of Yourself. Don’t forget to take time for yourself. Find a way to rest; everyone must grieve in his or her own way and on his or her own time.

 

Within the First Month

  • Official Death Certificates. Order a minimum of ten — but as many as twenty is advisable — original certified copies of the deceased’s death certificate. You will be asked for an official death certificate in countless instances such as transferring bank accounts or safe-deposit boxes, transferring title to vehicles and real estate, claiming insurance proceeds, redeeming investable assets, and filing final tax returns. The funeral home can ensure the forms are filed with the state. Your state’s vital statistics office can help you obtain as many duplicates as needed, for a fee.

 

  • Submit the Will to Probate. An estate attorney can assist you with submitting the will to probate or state district court. Because probate is governed by state law, states vary on the permitted time period for filing, but often this must be done within thirty days following death.
    • If a will exists, identify the executor to distribute the property and assist with other instructions for the estate.
  • If the party died intestate (without a will), state law will often govern who can manage the distribution of the estate.
  • Probate does not encompass those assets that are owned by a trust, held as property of tenants-in-common, or pass by operation of law. Consult your attorney regarding assets not included in the probate process, but common examples are:
    • life insurance proceeds,
    • retirement accounts that have named beneficiaries, pension distributions, and unpaid wages,
    • trust-owned property,
    • assets specified as transfer-on-death (TOD) or payable-on-death (POD), or
    • property held in joint tenancy with right of survivorship, community property with right of survivorship, or tenants by the entirety with a spouse.

 

  • Life Insurance. Remember that proceeds from life insurance are probably not part of the probate process. Often, collecting death benefits can be as simple as completing the necessary claims forms and submitting them with an original or certified copy of the death certificate. Each company will have a slightly different process for claiming death benefits. Therefore, attached you will find a letter template that you can use to notify the insurance company of the death and request specific instructions on how to properly file the claim.
    • If you are unsure of a potential group policy provided by an employer, you may need to contact companies in the deceased’s employment history to inquire. Additionally, in the case of a group policy, you will find a sample letter attached to use for your convenience.
  • Medical Bills. If an ailment preceded the passing of your loved one, health insurance may cover part or all of the medical costs. Begin by contacting the business office at the hospital or clinic where he or she was treated and request outstanding balances. Then compare bank records and insurance to determine which have been reimbursed or paid. Reconciling all billing and payment information will help in completing the required claim documents.
  • Discontinue Amenities. Cancel those services that are no longer necessary or were only utilized by the deceased (e.g., cable and Internet service or gym, club, or fraternity memberships) while continuing certain services (e.g., electricity, water, or lawn service) that may be necessary to maintain his or her property.
  • Social Security. Contact the Social Security Administration at ssa.gov or 800.772.1213 to report the death and file for survivor benefits. Additional or different benefits may be available for the surviving spouse or minor children. You must, however, contact the Social Security office to request information as these benefits are not automatically issued. Be sure to have Social Security numbers on hand before calling and, should you qualify for benefits, it may be necessary to make an appointment to visit the Social Security office. Be sure to get explicit instructions on what you will need to bring with you to your appointment. The funeral director will often inform the Social Security office of your loved one’s passing as the Social Security Administration needs to know as soon as possible to ensure the relatives of the deceased receive all benefits to which they are entitled. Keep in mind that not all survivors are eligible for benefits, so do not accept benefits that you are not certain about after the death of your loved one.
  • Notify Financial and Lending Institutions. (The following will all likely require a death certificate and letters testamentary.)
    • Pension administrators; be sure to ask about specific survivor benefits of which you may not be aware.
    • Banks, savings, and investment institutions and custodians (notification needs to be provided for all joint and individually-owned accounts).
      • Be aware that the contents of these accounts may be frozen, so you should plan accordingly so as to avoid the need for such funds.
      • New accounts in the names of the heirs will likely be required.
    • Credit card companies
      • Occasionally credit cards offer accidental death insurance which will relieve any outstanding balance upon the cardholder’s death.
    • Mortgage or other debt obligations
      • Debts are now the responsibility of the estate and outstanding balances must be paid utilizing the assets of the estate. In the case of a married survivor, the debts often transfer to the surviving spouse, so consult an attorney with questions about potential creditor claims and protection.
    • If the deceased’s child is at a university, the school may be able to offer different financial aid options due to the change in circumstances.

 

Within the First Three Months

  • Notify credit bureaus, the Veterans’ Administration (if you have not done so already for burial benefits), and other government agencies for potential death benefits.
    • Credit bureaus: it is a good idea to request a copy of the descendant’s credit report and notify each entity of the individual’s passing. If the Social Security Administration has been notified of the passing, his or her Social Security number will be flagged to help prevent identity theft.
      • Equifax,
      • Experian, or
      • Trans Union
    • Cancel the deceased’s driver’s license.

 

  • File Final Tax Returns. An estate attorney or accountant can help you with filing the deceased’s final state and federal tax returns. Final tax returns are typically due within nine months of the date of death.
  • Evaluate Your Financial and Estate Situation. If not already resolved with the estate or probate proceedings, now is the time to approach potentially selling real or personal assets. Should you decide to keep real estate or other titled assets, you will need a death certificate to transfer the assets into the new owner’s name. This process may begin by evaluating and cataloging what the deceased owned.
    • For all assets that you will retain, such as real property, vehicles, or valuable personal property, you will need to transfer the insurance on those items to the new owner’s name. Occasionally, the insurance company will not allow changes to the owner of the policy but instead will require an entirely new policy.
      • The estate executor may need to catalog and appraise certain assets within ninety days of death to distribute on behalf of the estate.
    • Meet with your financial advisors and lawyers. Review all aspects of your own estate such as your estate plan, will, inheritance, financial needs, and investment options.
    • Try to organize your affairs to the best of your ability to help the next generation deal with your passing.
  • Send thank-you notes to those who have supported you since the loss of your loved one.

 

Other sources of helpful information include:

  1. County Clerk’s office for birth and marriage certificates
  2. National Personnel Record Center (for military discharge records)

https://www.archives.gov/st-louis/

https://www.archives.gov/veterans/military-service-records/index.html

314-801-0800

  1. Department of Veterans’ Affairs

http://www.va.gov/

800-827-1000

Feel free to contact Josh Mungavin CFP®, CRC® with any questions by phone 305.448.8882 ext. 219 or email: JMungavin@EK-FF.com.

 

Understanding Estate Exemption Rules

DavidGarcia_175x219

David L. Garcia, CPA, CFP®, ADPA®

In the beginning of 2013, Congress made the estate tax exemption permanent at $5 million per person, the 2012 rate, but adjusted the amount for inflation each year going forward. For 2016, the estate and gift tax exemption stands at $5.45 million per person. Congress also made another very popular component of the estate tax law, called “portability,” permanent. Portability allows spouses to combine their estate tax exemptions, effectively letting married couples give away or leave almost $10.9 million without owing estate tax.

Couples and their advisors must be diligent in making sure they get the benefits of portability since it is no longer automatic. The IRS recently issued final rules concerning the requirements for electing portability of a deceased spouse’s unused exemption amount. There still exists an unlimited marital deduction which allows you to leave all or part of your assets to your surviving spouse free of federal estate tax. However, to use your late spouse’s unused exemption, you must elect it on the estate tax return of the first spouse to die. This rule applies even if the first spouse doesn’t owe any estate tax. Generally, an estate tax return is due nine months after the date of death. A six-month extension is available if requested prior to the due date. This makes it imperative that high-net-worth people educate themselves on what portability is and how to elect it. Failure to follow the finalized rules may result in considerably higher estate taxes.

Of course, just because the estate exemption was made permanent in 2013 doesn’t mean the government can’t change the law in the future, but the current makeup of Congress makes it unlikely in the short-to-intermediate term. There has been a lot of activity in this area of the law over the last decade, so if you haven’t had your current estate strategy reviewed by your attorney in the last five years, it’s probably time for an estate checkup.

Feel free to contact David Garcia with any questions by phone 305.448.8882 ext. 224 or email: DGarcia@ek-ff.com  

Estate Planning for Online Accounts & Digital Media

RoxanneAlexander_175x219

Roxanne Alexander, CAIA, CFP®, AIF®, ADPA® Financial Advisor

We tend to overlook the amount of information and possible assets we have on the Web — social networking website accounts, frequent flier miles, online credit card and bank accounts, etc. What happens to all of this when we pass away? This crossed my mind as my uncle recently died and I have been noticing that people who probably have no idea he is gone are still posting to his Facebook account.

  1. Make a list of everything you access online, including the login credentials.

In addition to having your estate planning documents in order, it may make sense to have a list of online accounts that should be shut down in the event of death and provide this to a trusted family member or attorney. In order to close email accounts, a death certificate will need to be provided. This can be a long, difficult process.

Accounts such as Amazon, iTunes, and PayPal may have monetary value which could be passed to heirs, for example, a very large iTunes music collection or gift card balances.

Facebook accounts can also be difficult to completely remove, but if a family member has the password to the account he or she can log in and delete the account. The current Facebook policy regarding the death of a family member is to memorialize the account — certain private information is removed from public view and the page becomes accessible only to friends. Deleting the account totally is more difficult.

Twitter has strict privacy policies, and will rarely allow anyone to access the account of someone who is deceased without a death certificate, power of attorney, a court order, or an executor’s testament. Click here for information on contacting Twitter about a deceased user or media concerning a deceased family member.

  1. Determine what you would want done with each account and put it in writing.

Creating a digital will can help avoid these issues. This will appoint someone as an online executor and state formally how you would like your profiles to be handled. The easiest way for the online executor to take action would be to provide him or her with a list of all websites used and your login credentials. State in your will that the online executor should receive a copy of your death certificate. Remember to update this periodically as you make changes or update passwords.

  1. Assign someone you trust to serve as your online executor.

Deleting accounts can be tricky for family members if they don’t have your login credentials. Each website has its own requirements and legal process for dealing with death, which can be quite cumbersome for family members. How do you want to protect your legacy and your privacy?

       What can you do if there is no access?

If no documentation has been left by the deceased individual, trying to get into his or her email may be a good place to start, as this may lead to clues to other accounts the deceased may have had. It may make sense to keep email accounts open for a while, as you will be able to monitor other accounts from which the deceased receives email. You can also look through saved or archived emails to potentially find username and password confirmations or you may be able to request password resets for other accounts from that email address.

Looking through credit card statements can also be helpful in determining whether there are any other online accounts which may be paid for by automatic debits such as iTunes or LinkedIn.

Since planning for online accounts is a fairly new development, speak to your attorney about the best way to handle your current situation, as each state and each website has its own legislation and policy, respectively, on who can legally access your online information.

You can read more in depth on some of the legal aspects by clicking here.

Feel free to contact Roxanne Alexander with any questions by phone 305.448.8882 ext. 236 or email: RAlexander@ek-ff.com