No one likes to talk about the end of their life, but as all financial planners know, this is one of the most important topics that must be talked about from a planning perspective and since August is National Make-a-Will Month (who knew), what better time to talk about the power of estate planning, than now? Legal zoom Make-a-Will Month
My dad passed away a few months ago, but one of the things that made it easier for my brother and I to deal with, was the fact that my dad had a well-thought out estate plan already in place. At a time when you are mourning and grieving, the last thing you need to worry about is how to pay for all the expenses and how to settle the deceased’s estate.
One of the best things my dad did, was to add my brother and I as authorized users on his primary checking account. My dad did this a year before his death, when he knew things were not good. While this may not work for all families, it gave my brother and I peace of mind to know, that all we had to do was write a check to pay for all the funeral expenses and any other bills that came due in the weeks following his death. (Of course, this only works if there is money in the account.)
We also had access to on line banking, so we were able to see what deposits came in, like Social Security and what recurring bills needed to be cancelled, like Netflix, his cell phone and most importantly, the recurring payment to the IRS that he had set up to pay his quarterly estimated taxes. Although taxes would still have to be paid, we could wait to do that on his final tax return.
All of my dad’s other accounts were either TOD accounts (Transfer on Death) or they had named beneficiaries (my brother and I), so nothing would have to go through probate. We had a copy of his Will and the attorney presented it in court to obtain the Letter of Testamentary, which allowed us to open up an account in the name of my father’s estate. This account was necessary to receive the refund from the assisted living facility where my dad had purchased an apartment 6 years earlier.
While the above does not constitute a complete estate plan, it does represent the very least that one should do. My dad had other documents in place as well, like a POA (power of attorney), a Health Care Directive and a DNR (Do Not Resuscitate). If you want control at the end of your life, you are going to need these important documents and others, in order to make sure your desires, wishes and intentions are fulfilled. There are many lists available on line to help you get started – I like LifeHappens.org
Was your father ever divorced?
One of the questions I was asked when I called about a certain account, was whether my dad had ever been divorced. He had not and my mom predeceased him, but this made me think of the possible ramifications if he were divorced and there was a divorce agreement and an ex-wife out there, who may have some rights to his estate per the agreement.
If that were the case, it would be even more important to make sure that a post-divorce estate plan was in place to ensure that the deceased’s intentions and the intentions of their divorce agreement were properly addressed. Many a horror story has been told of the spouse who never removed an ex-spouses’ name as beneficiary on an account after the divorce, and now, instead of going to the new spouse or children, the asset went to the unintended.
An estate plan is imperative when there is a second marriage and both parties have children from the first marriage. In most cases, when you are married, your estate automatically goes to your spouse upon your death. But, what happens when your new spouse dies? Your money, which was intended in part to go to your children, may now end up with your spouse’s heirs (his/her children) rather than your children.
How a CDFA™ can help
Part of my services as a CDFA™ is to help my clients transition to a new life after divorce. This includes helping them with post-divorce estate planning, and now that I have this personal experience, while not one I really wanted, I am better equipped to advise my clients and help them take this final step to ensure that their family is protected in case of an untimely death. If this final step is not taken, everything that was fought for in the divorce and all the money that was spent, may be in jeopardy.
I realize estate planning may not be on the top of your ‘To-do List‘, especially when you are young and healthy, or you have just gone through a devastating divorce, but it is one of the greatest gifts you can leave behind for your family. Knowing that my two daughters, now 22 and 24, will be protected, is worth all the money in the world to me.
Oh, and one more thing, don’t forget to leave behind the passwords to all your on line accounts, including email and social media. Although my dad did leave us with a handwritten list of passwords, my brother and I spent hours trying to decipher his scribbles of numbers and letters (upper case, lower case? is that a 5 or the letter S?) and to this day, we have been unsuccessful at accessing his AOL account.
Knowledge is power – be informed, be empowered…take control.