Wealth Matters: Six financial steps when there’s a family death

Mark Keating, Willow Creek Financial Services

WEALTH MATTERS MARK KEATING, CFP, AEP, WEALTH MATTERS BY MARK KEATING, CFP, AEP

No one can fully prepare for the death of a spouse or close family member, or dear friend. But the less we know and the less we are prepared, the more complicated dealing with financial issues that arise after a death can become.

This is a subject no one wants to read about. So do me a favor, and clip this article and save it with your important papers until you need it. Someday, when you are quite possibly at your least prepared, emotionally, to deal with the death of your loved one — you’ll be relieved you did.

So if you’re a realist and prefer to be prepared, please read on.

1. Get organized.

Having all your important documents in one safe location will save you and your loved ones a lot of time in the future. Included with this article is a suggested list of documents to gather — preferably before you need them.

You can do this yourself for you and your spouse. In the case of, say, elderly parents or a loved one who may be dying, you can pass this list on and encourage them to do the same while they still can.

2. Reach out to professionals.

After a loved one dies, it’s imperative to:

Contact their attorney, CPA and financial planner right away. They are most qualified to help guide you through the maze of tasks ahead of you.

Work with the deceased’s investment adviser to update securities records for stepped up basis, so future reporting of sales to the IRS will be accurately reflected. That potentially could save tax dollars.

Establish the new basis for any major assets that could be sold in the future. Examples are collectibles and artwork. Doing so can reduce or eliminate capital gains.

For example, if there are real estate holdings, you will need to get updated appraisals so that upon the future sale, the new basis can be easily determined.

The financial adviser on the retirement accounts — such as IRA, 401(k), Roth IRA — will help you ensure that ownership gets transferred to the correct beneficiaries.

Beneficiaries should meet with their tax advisers to determine the best way to handle future distributions.

Change names on bank accounts not inside the trust, on credit cards and on titles to assets jointly held but not in the trust.

3. Review the will or trust.

Meet with the deceased’s attorney to go over the will and/or trust. If none exists, discuss how the probate process will work.

4. Deal with insurance matters.

If there is an active life insurance policy, contact the provider. It can take several weeks to receive the funds, so it’s important to contact them as soon as possible.

Contact providers of all other insurance policies — auto, homeowner, credit card, accident, etc. — to let them know of the passing and to close or change the name on the policy.

5. Remember pensions or other employer benefits.

Check with all your deceased loved one’s former employers to determine if they had any life insurance policies or other benefits, such as a pension.

6. Review Social Security benefit options.

If you are a surviving spouse, it’s important to review with your financial planner the most advantageous Social Security strategy, as there are a maze of options, some significantly more financially beneficial than others.

As every situation is unique, it’s important to contact trusted professionals early in the process. It’s also helpful to have a trusted friend or other close relative guide you through these tasks.

After a loved one dies, remaining family members will often feel disoriented, confused and overwhelmed. They may not be in a frame of mind to deal well with all the financial arrangements. Being organized and cognizant of what’s needed before you need it will make this difficult time more manageable.

Mark Keating, CFP, is a certified financial planner and an accredited estate planner with Willow Creek Financial Services (707-829-1146, wcfsinc.com) in Sebastopol, one of the leading wealth management firms in California. Wealth Matters is a monthly column from the firm’s partners.