Estate Planning for the Uninitiated

Estate Planning for the Uninitiated –

By Anne Tergesen, Wall Street Journal – 3/29/2019

Gary Altman, an estate-planning attorney in Rockville, Md., recently had a client turn to her brother-in-law to cover bills after her husband died. The client had plenty of money, but she couldn’t readily access it because some of the accounts were in her husband’s name alone and financial institutions often freeze single-owner accounts when a person dies.

“Her spouse died with assets in his own name, and their joint accounts were not large enough” to cover daily expenses, Mr. Altman said.

Mr. Altman’s client eventually got court authorization to manage her husband’s accounts, but hers was an avoidable problem.

Financial professionals and attorneys who work with widows and widowers say it’s common for surviving spouses who took a back seat on money matters to find themselves with an incomplete picture of their net worth or where the accounts are held. It’s a challenge that comes at a terrible time, when the spouse who inherits responsibility for the money is overwhelmed and may not fully understand the details. Yet “you cannot put your head in the sand because you are grieving,” said Rebecca Milliman, senior wealth strategist at CIBC U.S. Private Wealth Management. “A lot needs to get done.” There are steps couples can take to prevent—or resolve—any issues.

If you don’t have advisers already, you probably need to hire a financial planner, an attorney who specializes in estate settlement, and an accountant to file income tax returns for the estate and handle any state or federal estate tax returns that are due.

A large percentage of widows—as many as 70%, according to some surveys—end up firing advisers they inherit.
“You need to find someone you can feel comfortable with,” said Ellen Kamp, co-founder of W Connection, a group for widows. Ms. Kamp, who switched financial advisers after her husband died, recommends asking friends, relatives, and colleagues for referrals to a fiduciary, who is legally obligated to put your interests first, and interviewing at least two or three candidates before making a final choice. At a time when a surviving spouse feels overwhelmed, it is generally counterproductive to make major decisions, said Susan Bradley, founder of Sudden Money Institute, which trains advisers working with clients in transition.
Grief can reduce “cognitive capacity,” she added.
Ms. Bradley recommends putting nonessential decisions on hold for at least a year. For example, deposit life-insurance proceeds in the bank rather than investing it. “It’s important to find a way to slow down the decision-making process but not completely stop it and to focus on what is essential so the surviving spouse doesn’t have their brain scattered in the clutter of everything.” Ms. Bradley recommends prioritizing urgent matters, such as getting access to cash and filing taxes, before moving on to other important tasks, such as re-titling a car or devising a budget. 

Decisions that are difficult or expensive to reverse, such as moving or giving money away, should wait until the surviving spouse is no longer in shockand understands his or her financial needs. “I have seen people give money to the kids and then realize they need it,” Ms. Bradley said. “Once you have enough cash to pay the bills, there’s usually no hurry” to make other decisions.