My Spouse Died – What Do I Need to Do to Protect Myself?

July 24, 2009

After a spouse dies and the family gets through the funeral, the immediate concern is to square away the couple’s assets and make sure the surviving spouse has enough to live on. After that, there is one more step to take: protecting yourself.

One area where you need to be proactive is to consider who will be able to assist you with financial and health matters if you become ill or incapacitated. Before, you and your spouse relied on each other to serve in these roles. Now you need to legally appoint someone to be able to step in and help you. At this point, you definitely need to execute a Durable Power of Attorney and Health Care Proxy. And many people like to add a child to their bank account so she can easily help with paying bills. See my blog post on how to do this appropriately (don’t add her as a joint owner!).

If you go to see your elder law attorney after your spouse has passed away, in addition to helping you transfer your spouse’s assets to your name, she will also help you put in place these fundamental documents that will serve to protect you, should you ever become unable to handle your affairs or medical decisions yourself.

My Spouse Just Died – What Do I Need to Do with Our Assets?

Filed under: Probate — Tags: , , , — Alexis @ 10:53 AM

Clients often come in bewildered about what they need to do with bank accounts and other assets after a spouse has passed away. People are always the most concerned about the home.

The good news is that there is usually very little to do. Spouses typically hold most of their assets “jointly.” This means that both are equal, complete owners. If you and your spouse held your checking account jointly, it is now yours – just like that, there is nothing you need to do. Same goes for stocks, CD’s, the home, anything that you held jointly.

As for assets that your spouse held is his name alone, you will need to take some steps. If your spouse held a small bank account in his name alone, usually going to the bank with a certified death certificate will be enough, and the bank will issue the funds to you. As for anything with a beneficiary listed, like IRA’s, 401(k)’s, and life insurance policies, you will need to obtain the appropriate forms from the financial institutions, mail them in with a certified death certificate, and they will issue a check with the proceeds.

Typically a will does not need to be probated when one spouse passes away. It’s a good idea to meet with an elder law attorney. Bring in a list of all the assets you both hold, with copies of bank statements and other proof of ownership, and the attorney will help you sort out what needs to be done.  Yesterday I met with a client for just one hour and he walked out feeling confident in his understanding of the few steps he has to take to square away his deceased wife’s assets. That’s one hour well spent.

See my next blog on steps you need to take to protect yourself, now that you are single.

Don’t Add Your Child as a Joint Owner on Your Bank Account

May 22, 2009

Filed under: Estate Planning — Tags: , , , — Alexis @ 1:37 PM

So many clients tell me that they want to add a child to their bank account so that the child can help them pay bills and manage their finances, and also so someone will have access to the bank account should anything happen to the parent. I agree – but I don’t agree with the bank’s usual approach which is to just name a child as joint owner and send the customer on her way. 

Naming a child as a joint owner is dangerous. A joint owner has complete rights to the full amount of money in that account. If your daughter wants to withdraw it all, move to Aruba, and never speak to you again, she is well within her rights to do so – the bank can’t stop her. If she gets divorced, gets in a car accident, makes a bad business deal – that money is on the table and you had better believe the opposing attorney will chase after it. “Not fair,” you cry. Technically, there are laws to deal with these scenarios, but it is much easier to avoid them to begin with. 

Don’t let the bank tell you to name a joint owner. Instead, patiently explain your two goals: (1) someone should be able to help with your account while you are living, and (2) someone should have access to the account after your passing (ex. to pay final bills or for a funeral). To accomplish the first, the bank can add your child under a Durable Power of Attorney. I acted as Power of Attorney for a client who had no family, and his checks were printed: “George Clooney, Alexis Levitt, IFF.” I was on the account, but clearly as a Power of Attorney and not a joint owner.

As for the second goal of allowing access to the account after your passing, there are several ways to do this. Some banks list a “beneficiary,” others use “payable on death to,” some use “in trust for.” Note that if you name someone as Power of Attorney, their authority ends at your passing, so you need this second category listed on your account, as well. (And this has the added bonus of allowing this account to pass to a beneficiary without going through probate.)

This will take persistence on your part, and you may have to insist on working with a manager. Most customer service folks at the banks only know to offer you the option of joint ownership.

Putting Assets in Joint Names to Avoid Probate – Will It Work?

May 21, 2009

Filed under: Estate Planning — Tags: , , , — Alexis @ 1:32 PM

Lots of people want to avoid probate. That’s the court process that a family must go through to distribute anything that was in the decedent’s name alone upon her passing. Despite its bad reputation, probate isn’t the end of the world. Yes, it’s a hassle, and yes, there are hoops to go through, but you can hire an attorney to do most of the work for you.   

If you still want your family to avoid probate, many people opt to make all of their property into “nonprobate” assets. This is anything that has someone else’s name on it in addition to yours at your passing. For example, many people purchase homes together with the spouse. We name beneciaries on life insurance policies and IRA’s.  So why not just put someone else’s name on all of your assets and be done with it?

Because that quite likely will not result in the distribution that you would like. Let’s say Ophelia has an IRA valued at $100,000 and a life insurance policy with a death benefit of $100,000. She puts her son’s name on the IRA and her daughter on the life insurance. Easy, right? Not really. Her health care needs increase over the years and she taps into the IRA. By the time she passes away, her son inherits an IRA worth $50,000 and her daughter cashes in the life insurance policy for the full $100,000.

The best way to make sure people will inherit as you would like, while also helping them to avoid probate, is to work with an elder law attorney who can draw up the appropriate trust (if that is the right solution for you), help you properly list beneficiaries on your assets, and match you up with a qualified financial advisor who can make sure there will be enough in your estate to treat all the beneficiaries in the way you would like.

See tomorrow’s post on why it is dangerous to list a child as a joint owner of a bank account.