March 15, 2022
Tyler Hewes, CFP®
“In this world, nothing is certain except death and taxes.”
- Benjamin Franklin
In our conversations and planning discussions we often talk about taxes and death. When we talk about the latter it is usually in the context of estate planning, transferring assets to the next generation, mitigating taxes, insurance considerations, the impact of the 2017 changes to the estate tax exclusion, and all the headline-grabbing items we see in the financial press any time a famous person dies intestate (without a will or trust). What many people neglect to discuss (either with their advisors or their families) are the quiet parts of dealing with a death; the mundane, routine, and at times grueling steps that are needed to carry on after a loved one passes. Recently, those quiet parts got very loud for my family.
On January 31st, my father-in-law passed away unexpectedly. He was sixty-eight years old, a twenty year veteran of the U.S. Navy who retired as a Master Chief having served aboard nuclear submarines for the majority of his career. Following his time in the Navy, he spent twenty years as a civil servant coordinating supplies and repairs for the Navy’s fleet. He was a former Boy Scout troop leader, an avid historical recreationist, a fantastic cook (he had such an amazing palate that he could break down ingredients in dishes based on smell and small tastes), and, above all else, a loving husband of forty-eight years, a kind and supportive father, and a devoted grandfather. He was the kind of father-in-law who said, “Call me Dad,” and you knew he meant it.
The last month has been a whirlwind of grief (telling our children that Grandpa died was a “top five toughest moments” event), paperwork (so much paperwork), planning, and calling numerous agencies and insurance companies with my mother-in-law. This experience served to reinforce what we already know at WEIL: navigating a death is financially complex. This experience also made me so grateful for my chosen profession as I was able to help my mother-in-law navigate, what was to her, unfamiliar terrain. My parents-in-law do not have an overly complex financial life and their estate plan is very straightforward, and yet the steps to transfer assets to the surviving spouse, the process of updating Social Security, dealing with banks and retirement accounts, life insurance and end-of-life costs, and dealing with Medicare and Tri-Care has required significant effort. As an advisor and a person recently made responsible for helping settle my father-in-law’s estate – and because my father-in-law was a believer in passing along well-earned lessons – I lay out below some important steps that can make settling a small estate easier.
Decades of advising clients and helping them achieve financial peace of mind has persuaded us at WEIL that helping people prepare for and execute transition plans after death (or incapacity) needs to be core to our services. For those of you who have large and/or complicated estates, or just want to consolidate the preparation and transition of your estate in the hands of a skilled third party, we have designed Estate Preparation & Transition, one of three pillar services provided here at WEIL (along with Financial Advisory and Investment Management). Preparation & Transition is a robust and comprehensive plan of conversations (including, if needed, a referral to an estate planning attorney), information collection, document storage, periodic reviews, and establishing “when-the-time-comes” procedures. Below is a snapshot of the items we step through in helping clients prepare and settle estates. (Items vary based on client needs.)
THINGS TO DO NOW
Life Insurance You should have a list of all your life insurance policies, including the insurance company name, their phone number, the death benefit, and the policy number. This includes any policies you may have through an employer. Your spouse/heirs, trustees, and/or executors should know where to find this list. You should also make sure the beneficiary designations are up to date.
List of Assets/Accounts You should have a consolidated list of all your assets, including bank accounts, investment and retirement accounts, and anything of value (say, over $1,000) that will need to be distributed and/or passed on to your surviving spouse or heirs. Make sure that this list includes names of institutions, any individuals with whom you work at those institutions, account numbers, phone numbers for the institutions/individual advisors, and log on credentials for online access.
Write a Letter A parallel project to the List of Assets is to write your family/heirs a letter of instruction to cover all the personal property that is not covered by your Will/Trust or even in the List of Assets. While not a formal legal document, a letter can help the next generation avoid family squabbles by designating specific personal and/or sentimental items to particular heirs. This will help the family avoid having to horse-trade about who gets the Christmas ornaments or Mom’s cookbook collection during a period of heightened emotion. Better yet, discuss “who wants what” in advance with your heirs and then memorialize that in the letter. For those sentimentally inclined, this letter is also an opportunity to tell your loved ones about your values, your hopes for them, and the stories you would like them to pass along about you to generations yet unborn.
Important Documents We recommend that you store your documents (whether they’re hard copy or virtual) in the same place, and make sure your spouse/heirs, trustees, and/or executors know their location(s). A short list of such documents is:
Estate documents – trusts, wills, powers of attorney, medical directives, etc.
Deeds / titles – home(s) and car(s)
Certificates – birth, marriage, divorce, etc. Anything that they’ll need to present to an outside agency or party to prove their relationship to you after you’ve passed
Identification – Original Passport, original social security card, a copy of your Driver’s License, and copies of your Credit Cards
Complete and Update Paperwork Make sure your spouse and/or heirs are the beneficiary recipients of your retirement accounts and insurance. If you have had any changes in your life (divorce, passing of a planned beneficiary, etc.), be sure to update those accounts – they do not distribute according to your estate plan (will or trust). They distribute based on the beneficiary designation you have on file with the retirement account custodian. It is key to make sure your beneficiary elections are up to date.
If you are going to be receiving an annuity or pension as part of your retirement plan, be sure to discuss the options and impacts of selecting either single or dual life and how that affects your cash flow now and after you have passed.
THINGS TO DO AFTER
Notify Social Security Administration The Social Security Administration (SSA) needs to be informed at the time of any passing, in part to make sure that social security benefits are discontinued (since any funds distributed after death can and will be pulled back by the SSA), but also so that eligible survivors can apply for redirected payments and/or Survivors Benefits. In the case of spouses, social security benefits convert to the higher of the two benefits, if the benefit of the deceased spouse was the greater of the two. The SSA does not automatically update benefits.
Freeze the Deceased’s Credit Because there is always the risk that scammers might come out of the woodwork to take advantage after there has been a death, we recommend immediately freezing the credit of the deceased person. Two days after losing her husband, my mother-in-law received a call from someone claiming to be from Medicare offering their condolences and “confirming” my father-in-law’s Date of Death, Social Security Number, and Medicare Number. Unfortunately (and completely understandably) she did not realize that the call was illegitimate until she had provided the requested information. Luckily, we were able to work with the credit rating agencies (TransUnion, Equifax, and Experian) to put a freeze on my father-in-law’s credit. We also worked with Medicare to put password protection on his account, so if anyone tried to call with his details to file a medical claim, they would be denied access without the password.
(Apparently the latest scam is to submit false claims to Medicare that are supposedly covering the end-of-life costs. Sadly, this was not the first time that morning that the Medicare official with whom we spoke had had to deal with a similar call from a distraught widow.)
Order Multiple Copies of the Death Certificate Certificates of death are required by multiple companies and agencies in the securing of benefits and transferring of assets. Better to order too many copies than to have to request more copies after the fact. Thus far, we’ve needed 20 copies (including ones for the Department of Defense, the U.S. Navy, Social Security, their bank, etc.).
Cancel and Close
Your loved one’s driver’s license should be cancelled with the Department of Motor Vehicles. (This helps prevent identity theft.)
Outstanding credit card accounts need to be retitled or closed. Any unpaid balances need to be addressed.
We suggest memorializing social media accounts (such as Facebook), instead of leaving them active. This turns your loved one’s account into an “In Memory of.”
Email accounts need to be set up as auto-forward to the surviving spouse or heirs, and eventually closed. This is another way of preventing identity theft.
Change and/or Terminate Insurance Policies
Insurance companies, including homeowners, auto, and health, need to be contacted to cancel any policies that name your loved one. This is, in part, a cost-saving measure, as well as way of ensuring that coverage is current and accurate.
Medicare Parts A and B will automatically be cancelled after a death, but Medicare Advantage and/or Part D prescription drug plan coverages will need to be discontinued, as well as any supplemental plans.
Update Accounts
Bank and brokerage accounts need title updates. This includes any accounts that were held jointly, including any bank accounts that are community property.
THINGS TO BE PREPARED FOR
Online Access Being Disabled If you have a joint bank account that is set up with Rights of Survivorship, the bank will not freeze the account at the passing of your spouse. They may, however, freeze online access to the account (assuming the deceased spouse’s email and SSN were associated with the login) and disable any automatic payments or draws from the account. Setting up two logins to the bank account (and any other joint financial accounts) and knowing what bills are automatically paid from the account will help mitigate any interruptions of access.
Not Making Any Life-Changing Decisions Right after losing Dad, my “planning brain” kicked in and I started thinking about options for my mother-in-law to sell the house, capturing the gain and relieving herself of a mortgage, buying a condo, simplifying, etc. This instinct to streamline and organize was not helpful and, in fact, was an impediment to helping solve the “today” problems and obstacles. There will be a time for those discussions, but now, within the first year of his passing, is not the time. Allow yourself and your family to grieve and get an understanding of the new financial realities. Do not make huge purchases or investments; instead, give yourself time and space to breathe and just deal with the “today” issues and let the “tomorrow” decisions wait for just a little while.
Listen to Yourself This is a corollary to the advice above – when it comes to all the help and helpful information inevitably coming your way, give yourself permission to say “Stop, go back, repeat that,” and, most importantly, “Now is not the time. Can we revisit this in X days? Weeks? Months?” The people assisting you with the transition of an estate are going to understand and will want to work at whatever pace you set. Grief and the process of dealing with the impact of a passing is not a straight line.
If you would like to learn more about WEIL’s Estate Preparation & Transition, or discuss any aspects of your estate plan, please reach out to any of the advisors at WEIL.
Investment in mutual funds is also subject to market risk, investment style risk, investment adviser risk, market sector risk, equity securities risk, and portfolio turnover risks. More information about these risks and other risks can be found in the funds’ prospectus. You may obtain a prospectus for CWC's mutual funds by calling us toll-free at 800.355.9345 or visiting www.cweil.com. The prospectus should be read carefully before investing. CWC's mutual funds are distributed by Rafferty Capital Markets, LLC—Garden City, NY 11530. Nothing herein should be construed as legal or tax advice. You should consult an attorney or tax professional regarding your specific legal or tax situation. Christopher Weil & Company, Inc. may be contacted at 800.355.9345 or info@cweil.com.