Guiding You Through Grief: Navigating Financial Matters After the Loss of a Loved One

Do you have aging parents? Are you the POA, Executor, or Trustee for someone? What exactly is the difference between these legal designations? I will help you form a clear understanding of the process so that you can know what to expect, who to call, and how to take care of yourself during an already difficult time.

In the past couple of months, a few of our dear clients have passed away. When a spouse calls to let us know of their loved one’s passing, they always mention being overwhelmed at the thought of what happens now as it relates to their investments. As you may recall, there are many steps that are crucial to handling an estate or inheriting money when someone passes away. As our clients’ trusted advisors, we walk them through these steps and help relieve that burden during their time of sorrow.

As time passes, we are faced with the harsh reality of aging parents, grandparents, and other family. We avoid thinking about death – but unfortunately it is one of life’s only certainties. Losing a loved one is a heartbreaking and challenging experience and having to take on the responsibilities of someone else’s finances or estate can be daunting. My goal throughout this series is to prepare you for what to expect when facing this situation. Preparing you for the process will allow you to focus on what matters during challenging times – being present in the moment with family and friends and taking care of yourself emotionally. Follow along over the coming weeks to understand what this process may look like, what to be aware of, and how to get it done (with help, of course)! #WealthWednesdays

Part 1: Help! My loved one passed away – Where do I even start?

  1. Take a deep breath and allow yourself a moment to process what is happening. There is not an urgency to alert banks and brokerage firms.
  2. Did your loved one have a will? A Trust? Not everyone has (or needs) a Will – this will depend on account sizes, titling, real estate property ownership, etc.
  3. Call an expert! You do not have to face this alone. I can walk you through the process and alleviate some of the overwhelming paperwork and stress you will face.
    1. Part 2: Help! I was the Power of Attorney for my loved one who passed away. What do I do now?

      So, you were named POA for a loved one. Maybe you assisted them in paying bills and banking affairs, or maybe you never even needed to act on their behalf. What happens to the Power of Attorney at death? This is a trick question because Power of Attorney ceases at death! Once your loved one has passed away, the duties fall to the Executor of the Estate. In most cases, this is the same person but in some instances , the POA and Executor are not the same individual.

      If you are both the POA and the Executor, your responsibilities do not cease but do change. Next week’s post will dive deeper into the duties associated with being an Executor or Trustee.

      Part 3: Help! I can’t find my loved one’s trust/will/deeds. Where do I look?

      As an advisor, I recommend clients keep their most important documents in a Safe Deposit Box; start by checking with their primary bank and any other local banks they have accounts with. If they do not have a Safe Deposit Box or it is not in there, try locating a safe or file cabinet at home. Some people also keep their important documents in their home desk or hutch.

      Part 4: Help! I’ve located my loved one’s legal documents, and they had a Trust, what is that?

      Trusts and Wills can both be used to direct how to distribute one’s assets in life (Trust) or death (Trust OR Will).
      Trusts have a lot of flexibility and can be set up to direct assets during the grantor/trustor’s lifetime and/or after they die. They can last years and continue to pay out to beneficiaries on a structured, periodic basis, or instruct one-time payouts after death. Trust assets do not have to go through Probate. The person who acts out the trust according to its terms is a Trustee.

      It is important to note that Payable on Death (also called Transfer on Death) account titling will supersede any beneficiary information listed in Trust documents. Ex: If you are listed as a POD beneficiary on a bank account, it can transfer directly to you without having to enter the estate first/go through Probate.

      For additional details, you can check out the link below:

      Part 5: Help! I’ve located my loved one’s legal documents and they had a Will, how does that work?

      Wills are established to direct assets after death only. Wills often contain specific verbiage about who the beneficiaries are, what property/assets they are entitled to, and typically contain burial instructions. The person who acts out the terms of the will is an Executor (also called Administrator).
      It is important to note that Payable on Death (also called Transfer on Death) account titling will supersede any beneficiary information listed in the will or Trust documents. Ex: If you are listed as a POD beneficiary on a bank account, it can transfer directly to you without having to enter the estate first/go through Probate.

      Part 6: Help! I am the Executor of an estate and I do not know how to move forward with estate accounts.

      Once you’ve located your loved one’s legal documents and determined you are listed as the requested Executor/Administrator of their affairs, you will need to establish an estate.

      1. Obtain Death Certificates from the funeral home. Depending on how many banks/brokerage firms/insurance policies your loved one had, you may need to order additional official copies.
      2. Apply for an EIN (Employer Identification Number) on the IRS’s website. An EIN is required for tax purposes. Applying can be done fully online and is a quick and easy process. You’ll only need a few key pieces of the deceased’s info (and yours, as Executor).
      3. Take the Death Certificates and EIN to the courthouse of the county in which the decedent lived. The courthouse will formally appoint you as Executor and provide a Court Appointment Letter (also called Qualification Letter) with an official seal. This step is important – you’ll need this before opening any estate accounts.
      4. Once you have all 3 of the documents listed above, you can take them to any financial institutions where your loved one had accounts. They’ll use the EIN to establish accounts titled in the name of the Estate. If you are the executor of an estate looking for help with investment accounts, please contact me!

      Part 7: Help! My loved one’s bank accounts are still sending and receiving money electronically. What do I do?

      An important step in the process of settling affairs is obtaining and analyzing bank account statements. You’ll want to look for recurring charges and deposits that need to be stopped or transferred. Some common recurring charges to look for:

      Deposits: Social Security, pensions, retirement accounts or annuity income payments (might be listed as the name of a Financial Institution or Insurance Company)
      Charges: Electric/power, cable/internet, cell phone, credit card payments or other debt payments, and insurance premiums.

      Often, a bank partner can help you in stopping these charges. You’ll need to contact the local Social Security office directly to notify them of the death.

      Part 8: Help! I found out my loved one had Life and/or Long-Term Care Insurance policies. How do I get these paid out?

      In the last post, I mentioned insurance policies. In your hunt for legal documents or in your review of bank statements, you may have come across a Life or Long-Term Care Insurance policy that has a Death Benefit. These policies most often have specific beneficiaries named, do not have to go through Probate, and are paid out tax-free to the beneficiaries. Insurance policies can be confusing, and the death claim paperwork can be tedious, so reach out to an expert advisor to assist you through this process!

      Part 9: Help! I’ve received an inheritance and I don’t know much about investing.

      Inheriting money can be a blessing but comes with a lot of stress and decisions – especially if you’ve never had a financial advisor or investments. You’ll want to meet with a financial advisor to develop a financial plan that will answer a lot of questions – can/should I pay off any outstanding debt? What goals do I have and how can my assets help me meet them? What types of investments are best suited for me, and what level of risk should I be taking? Financial plans are tailored to you and will help you implement the next steps. Please reach out to me to discuss financial planning!

      Part 10: Help! Now that I’ve gone through this process for my loved one, how do I set a plan and establish my own Will/Trust to make things easier for my own family?

      After serving as executor or trustee for a deceased loved one, you’ll surely realize the importance of proper planning. You’ll want to make sure you have a will/trust/power of attorney/medical directive in place, and that they are updated since any major life changes have happened. Examples would be new property, significant increase or decrease in assets, new family members (children, grandchildren, dependents), or deceased family members. The hardest part will be the decision-making, as the actual process for establishing these documents is easier than ever. There are websites like RocketLawyer and LegalZoom that walk you through the documents for a low price (or even free trial) and there are also templates at places like Staples or your local library. Be sure to have these documents notarized and witnessed; they will be invalid without this. As always, working with an attorney and financial advisor will enable you to structure and plan the most efficient ways for you and your family’s needs and wishes. Please reach out to me if you’d like to discuss Estate planning.

      Follow-up: In conclusion of this series, we uncovered a lot to do in the event of the passing of a family member, however there is much more we didn’t have the capacity to discuss. Death is overwhelming and emotional, so the key is to find an expert who can walk you through the steps with compassion and knowledge. The team at River Birch has helped clients through this process for over 123 years in banking, investments, and insurance. Please reach out if you’d like more information on how we can assist you through a difficult time and prepare your affairs to make it easier for the next generation!