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Plan Well, Retire Well

Saving and investing your money

Losing a Loved One

In the past few months, both of us – Kathy and Karen – have lost a close relative. We have been experiencing firsthand some of the challenges that, up until now, we have only heard and read about. We decided to share some of those experiences with you here on our blog. Neither of us is an attorney or an authority on estate planning, and these posts will NOT give any kind of legal or estate planning advice. But we hope that these posts will point out the challenges and surprises that survivors encounter after the death of a loved one. Some posts will talk about handling a person's finances when they become unable to do so for themselves. Others will be about the process of settling someone's affairs after they have passed away. We want this to be a conversation, and we invite you to comment and share your own experiences.

Today's post is an introduction for this series and gives you some background about Karen's  loved one.

Karen Chan, Special Projects, University of Illinois Extension

My father passed away in January. I'll call him Pete. His mental capacity had slowly deteriorated over a period of years, and he had not been able to manage his own finances for quite a while. He had a power of attorney naming me and my sister as co-agents, and we had used that – or tried to – on several occasions in recent years. I'll call her Sally.

My mom passed away several years ago. As far as I know, there really wasn't much that had to be done in terms of handling her financial affairs. She and Dad apparently owned everything jointly except her IRA, which named him as beneficiary. Once the funeral was paid for and a death certificate was presented to the IRA custodian, that pretty much wrapped things up.

But with Dad's death, it is a completely different story.

Dad had a will. Mirroring what he did with the Power of Attorney, he named me and Sally as co-executors. He named beneficiaries on some savings bonds, and had a Payable on Death (POD) designation on one financial account. He did not have a trust, and he did not add names of family members to assets as some people do. Except for the savings bonds and the account with the POD, everything else was in his name only. All of those assets will have to go through probate, and the will is the document that determines how things are distributed. Fortunately, my sister had the original of the will. But neither of us had been an executor before, and neither of us live in the community where Dad lived.

While we were in town for the funeral, Sally and I tried to take care of some business. Pete lived in one of the Eastern states – not in Illinois – so some of my experiences may be different from what might happen when someone passes in Illinois.

While Sally and I were both in town at the same time, it would have been convenient to begin tasks associated with the estate. However, we didn't have the death certificate yet and had not been approved as the executors for the estate. Without those documents, we couldn't do anything and were limited to fact-finding. Here's what we learned:

  • In this state, an attorney is appointed in each jurisdiction to serve as the Commissioner of Accounts. The Commissioner is the person with whom the executor must file the inventory and accountings of the estate. We stopped by that office and got copies of the forms we would need. Of course, they were also on the web but at least we felt like we were doing something.
  • We would have to set an appointment to see a staffer in the Clerk of Court's office to present the will, be approved as executors, and initiate the probate process. We needed the death certificate to do that, and we would both have to appear in person.
  • We visited the bank where Dad had his savings account and IRA. The bank was able to tell us that there was no POD designation on the savings account, but we could learn nothing about the IRA. Those who believed that they might be named as beneficiaries would have to fill out a formal request to be sent to the bank's national IRA office to learn whether or not they were named on the IRA and to indicate how they wanted the funds paid out.

With nothing more that we could do at that time, Sally and I headed our separate ways.

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So sorry for your loss. My heartfelt condolences to you and your family. I would like to make matters as easy as possible for my loved ones at my passing. Question: Will it make estate settlement easier if you have both a will and property in trusts, or is one better than the other?
by Carol Paterek on Wednesday 3/20/2013

I lost my Mom (a widow for 30 years) in January 2012 and have been faced with similiar decisions. Fortunately, she had some of the logistics that you mentioned in your article addressed before she was no longer able to manage her financial affairs. She had a will along with power of attorney for medical decision and also personal property, designating me as POA. In addition, all of her assets, including her house were included in a revocable trust agreement (which became irrevocable upon her death). That allowed us to avoid probate and I was named in the will as the executor of her estate. She had also added me on her credit card and bank accounts, so this allowed me to continue to pay the necessary bills and manage her funds. Life insurance and annuities all listed myself and my siblings as the beneficiaries, so these funds were able to be distributed directly to us once death certificates were available. The will, trust, and POA documents all addressed the order of successors to be appointed in case I was unable to fulfill my role as POA and / or executor. One important thing that we learned was that a new Taxpayer Identification Number (TIN) had to be issued for the trust upon her death because her Social Security # could no longer be used. For this first year, we will have to file two tax returns: one for the 1 month where income (Social Security, pension, and interest) was earned on the SS#. A second return will be filed using the new TIN for the remainder of the year. Pre-plannning the funeral and financial affairs ahead of time was a huge help for our family.
by Karen M on Wednesday 3/20/2013

Dear Karen, Thanks for sharing your experience. It sounds like your mother did a lot of planning, and that’s wonderful. Having the right documents in place certainly makes things easier. For our other readers, I wanted to point out that having a Power of Attorney for Property is an alternate way of making sure someone can pay bills and manage accounts such as checking and credit card accounts. Adding someone’s name as an owner on the account can have unintended consequences, and my impression is that attorneys do not advise it. Thanks again, Karen, for taking the time to show us how planning can pay off. Karen Chan
by Kathy Sweedler on Thursday 3/21/2013

Thank you, Carol. I think you’re smart to be looking ahead and thinking about what will make the process easier on your survivors. Assets in a trust doesn’t have to go through probate, which can be an advantage. And trusts can do things that wills can’t, like specify who will manage your assets if you’re unable to do so. Assets controlled by a will do go through probate. What’s best? That depends on your particular situation and the kinds of assets you have. For very small estates, cost may be a consideration: drafting a trust will cost more than having a will drawn up. I’d suggest you talk with an attorney. Estate planning is not one-size-fits all, and it’s important to get professional advice. You can ask around to see who your friends or relatives have worked with. Or you can contact your local bar association for a referral. There may be an Estate Planning Council in your area - a membership organization that includes attorneys, CPAs, financial planners, and trust officers. Another option is to look for one of the select attorneys who are members of the American College of Trusts and Estates Council ( Karen Chan
by Kathy Sweedler on Thursday 3/21/2013

This article is prompting some questions and concerns. I guess even though i am under 40, i still need to consider all this at this time. Especially if Death faces me and my husband at the same time. I have to think about my children. Good article, i am serioulsy going to look into the cost of a trust vs a will. Thanks for the info Ms. Karen.
by Ofe Del on Tuesday 3/26/2013

Dear Ofe,Good for you! You are wise to think about this and put things in place to look after your kids. We often think that estate planning is just for the old, but it’s really for everyone.Thank you for your comment, Karen
by Kathy Sweedler on Wednesday 4/10/2013