When a head of a household dies, a surviving spouse or children often end up in our office. During the initial conference it frequently becomes obvious how little is known about the family finances. Assets, debts, how bills are paid, account numbers, passwords are all a mystery. So, on top of handling the stress of a death, now detective skills are needed.
It would be so much easier if questions were asked and records created at an earlier time. Yet asking a parent or spouse about finances is often very difficult. Sometimes it is easier to start such a conversation by asking what a person wants done in the event of serious illness or death. Under what circumstances should medical care be withheld? What burial instructions, memorial services, or other celebrations of life are wanted? Who will take over estate management? What instructions do they have for a Personal Representative or Executor? Once the ice is broken, other questions can follow.
It is important to know:
1. What is the annual income?
2. Where does the money come from?
3. What assets exist? Copies of deeds, bank account statements, financial institution statements, car titles, insurance policies, medical insurance policies, auto policies, long term care policies, retirement account statements and an inventory of important or valuable items will be very helpful. Account numbers and passwords are valuable.
What debts exist? How are they paid? If online, log in names and passwords will be needed.
4. Where can the original Wills, Trusts, Living Wills and Powers of Attorney be found? Are they up to date?
5. Upon an illness or death, what provisions have been made for family members to have access to funds? Can a probate be avoided?
6. Who should be contacted for help? CPAs, Financial Advisors, Insurance Agents, Bankers, Attorneys should all be listed.
Once this information is assembled, it should be preserved and updated from time to time. The process of gathering information can also reveal serious problems that can be solved easily before an incapacitating illness or death occurs. Problems such as missing will or trust documents, obsolete documents, no recently executed powers of attorney for health care decisions or business decisions and assets that are poorly invested or not secure from loss. This would be the time to have investments reviewed by a financial adviser and estate planning needs reviewed by an attorney. The goal, of course, is to not only assemble information for use after a death, but to create an action plan that will provide for family members during their lifetimes and ease estate handling after an illness or death.