After a loved one dies, there are important – perhaps time-sensitive – decisions to make. Losing a family member or friend is one of the hardest life events to cope with. Survivors are the people who must make the decisions or carry out the directives of the person who died. The husband, wife, partner, or maybe even the child, parent, brother or sister, or close friend may have to step in to help with this process. Each person may have different tasks to handle, while some might not have any responsibilities after their loved one dies. In any situation, the best preparation is to have a plan. A valuable lesson, at any age, it to take time to organize your financial life and seek the assistance of a fiduciary to help with your planning needs.
As a financial advisor, some of the greatest joys are seeing my clients reach their version of financial independence. During our relationship, I watch my clients grow throughout their careers until that major milestone of retirement meets them face to face, then I fortunately get to watch them through retirement until that last milestone is upon them. But, along the way, we are always planning since there are many revisions to their personal plan as their family dynamics change and the investment landscape changes alongside them.
Being proactive, I have found, is the best way to help my clients in preparation of that last milestone. Whether it is a review of their beneficiary designations, a review of the charitable organizations dear to the client for philanthropic donations, or a review of their estate plan because they know they can’t take it with them but they can sure tell everyone how to spend it. We work together to create a plan then monitor the plan because “a goal without a plan is a wish,” was once said by a French writer. Having a plan is extremely important during this emotional time to help the survivors. In my experience, I have helped several clients through this last milestone and have collected a few best practices for what you may expect after losing a loved one.
Collect various documents and important paperwork.
This may include insurance policies, marriage license, birth certificates, revocable trusts, Last Will & Testament, Social Security information, etc. Keeping everything organized will help limit the search for some of them. Do not throw anything away until someone reviews it. You cannot be sure what might prove to be needed later, therefore, a good record keeping system is very important. At CPS Investment Advisors, we keep a secure electronic file for each client’s personal records. I, as the advisor, maintain that database for the client so when something happens, I can help immediately.
The death certificate of your loved one is generally needed every time you go to make a claim for benefits. Your funeral director or county health department can help you obtain certified copies of the death certificate. There will most likely be a cost associated with certified copies, but some companies you will deal with for a benefit claim will require one, so it is best practice to request about 8 to 12 initially. You may need more later, but this should get you through the bulk of your need.
A nice clean color copy, although this is clearly not a certified copy, may be used in some instances. Some companies just need to see the pertinent information from the death certificate while some require the certified certificate with the raised embossing.
Simplify your life.
When you lose a loved one, and you start to put together the pieces to their financial life, you may encounter assets that you never knew they owned. The first place to look is at the balance sheet. Make sure you know where everything is and have a plan for where everything is going. If you come across an asset you were not previously aware of, add it to the balance sheet so you know to come back to it later. If you are the surviving spouse, and you are set to inherit everything, simplification helps the transition process. Would you rather have same amount of assets in the same number of accounts or the same amount of assets in a fewer number of accounts? This is a best practice of where less is more. Bank accounts, investment accounts and retirement plans are some examples of assets that can be consolidated into your existing like-registered account(s) easily. After a death, you may need to change the title on property or transfer ownership. Automobiles, your house, credit cards and safe deposit box are some examples of assets that may require action on your part to change ownership or title. Getting assets out of the deceased name and into the names of the beneficiaries is an important part to the simplification process.
Note: You may need to open a bank account for the estate, if so, the estate will need its own tax identification number. The Internal Revenue Service website, irs.gov, is a great source of information or you can just stop by our CPS Group tax department and we can handle this for you.
Establishing a new normal.
As the survivor of a loved one, there are a few new normalcies that will take place over time. Try to focus on what needs to be done right away, less attention to what can be done tomorrow, or even less focus on what can be put off for some time into the future. The future may seem very far away, especially during this time of grieving. It is a natural feeling to seem overwhelmed by practical matters so try to take one step at a time. Allowing others to help is not always a bad thing, so consider the advice given to you from those you trust.
The most often asked question I usually get from a surviving spouse is, “Do I have enough money to cover my expenses for the rest of my life now that my spouse is gone?” My immediate response is, “How long are you going to live?” In my experience, the surviving spouse generally loses some income after the death of a spouse. In some instances, changes in social security, pensions, annuity payouts and required minimum distributions from retirement plans, your income may change.
But expenses do not go down by nearly as much as you may think they might. Therefore, it is best practice to keep an eye on your bank account balances. Look at the value at the beginning of the month, again at the end of the month, and do this for the next 3 to 6 months following the death of a spouse.
This may take you even longer but tracking those balances will keep a high-level overview of the income and expenses occurring within your various accounts without having to dig into the details. If balances go up, then your income is exceeding your expenses, all appears fine. If balances go down, then you might be spending more than you thought. At this time is when you will want to review the details or consider creating a budget.
Your financial plan likely changed after the death of your spouse, so it is important to know what your new plan looks like going forward and make any necessary changes as appropriate. If you, or someone you know, needs guidance after losing someone they love, feel free to reach out to one of our advisors. As fiduciaries, legally and ethically obligated to act in your best interest, we’re here to help create a plan based on your unique needs.
Tony Corrao | CFP®️