Ask Dana: A Column Where Personal Finance & Life Intersect
“Dana, I’ve recently lost a spouse. On top of an overall feeling of mourning and loss, I find myself overwhelmed with the estate and financial matters and don’t know where to begin. Please help!”
First and foremost, let me acknowledge that the loss of a spouse is one of the most difficult life events and transitions that can occur during our lifetimes. Assisting with estates and transitions has been a service I’ve provided for many years. If and when anyone you know experiences a loss like this, please take the extra time to be kind, compassionate, and express that you care. Being there, simply listening, and even the smallest acts of kindness can go a long way to assist in the healing process.
I understand your feeling of overwhelm. The first thing I’d recommend is to pause each time you approach these matters, breathe, and take a moment to feel grounded. Sometimes in a state of overwhelm, feelings of uncertainty can be paralyzing. You may not be an expert on financial or estate matters, but rest assured that is OK. You can do this. Whether you enlist the help of your professional advisors, or you complete the process on your own, be open to the possibility that sorting all of this out might be easier than you anticipate and can actually be quite beneficial to you in the long run. As your awareness of financial and estate matters broadens with this experience, your confidence should get a boost and the state of overwhelm should decrease.
Your initial major focus of time and energy should be on getting organized. It doesn’t matter where you are in the process, organization is key. It will help you effectively prioritize and track various tasks that need to be completed and give you a master list where you can keep notes on progress and to-do’s.
Start by identifying the executor of the will, which may be you. Also, reach out to your professional advisors, your accountant, estate attorney, or investment advisor. Ask them what services might be included to assist you in this process. Coveted financial advisors or planners typically include assistance with estate and financial matters along with the investment or planning services they provide. You could ask your attorney or accountant for a referral or anyone else you trust. My advice is to look for someone with advanced credentials like a CFP® professional, who also operates as a fiduciary so your best interests will be paramount. Have conversations with two or three so that you can select someone who truly cares, is experienced with estates and planning, and that fits with your personality and communication style.
If you prefer to work alone, you will need to gather documentation and begin to make a list of assets, accounts, liabilities, insurance, and pensions. It may be difficult to find all of this at first depending on what was left as tracking or instruction. Account statements usually come monthly or quarterly and may be online. Accessing the primary email would be helpful to see if any accounts have electronic delivery. A copy of the tax return or phone call to the accountant may help identify where income is coming from too. For example, you may find dividend income listed there which may be from stock held direct at transfer agent or even exists in certificate form. Take time to make lists first of all items before tackling the reporting of the death for each account. This is because each one may have a different administrative process and jumping into one may prevent you from finishing the master list. Social Security will need to be notified if the funeral home hasn’t assisted with that yet. Any home or other ongoing service contracts in the deceased’s name would need to be changed over if they will be continuing. Simply add these to the master list and work from there.
Once everything is accounted for; prioritize your efforts. Insurance claims are typically very fast and could provide you (as the beneficiary) with cash faster than other account types. You will find that some assets will need to go through probate in order to be distributed according to the will. Examples of probate assets include accounts owned in single name, some business interests, and personal property. Non-probate assets may not be subject to the court and would be able to pass to the intended recipient by survivorship rights or beneficiary designations. Examples of non-probate assets include accounts with named beneficiaries like TODs, IRAs, 401ks, or insurance, jointly owned accounts and living trusts.
As you move down the list, take notes as far as what is required to claim and process each account. Some will need more forms than others and some will require original copies of the death certificate. Take care and seek qualified tax and investment advice when it comes to investment related accounts. There is something called the step-up in basis which may allow for the cost basis to be updated in taxable accounts to the cost on the date of death. This could be advantageous from a tax perspective for the beneficiary and should not be overlooked.
You may be uncertain about what to do with any current investments you may be inheriting or administering within the estate. A qualified financial advisor or planner would be able to help you with these kinds of questions. Moving forward, you can incorporate any newly inherited assets into your financial plan with careful consideration for your current circumstances, needs for income, tax situation, tolerance for risk, and the outlook for the stock market.
On legal and probate administration questions, an estate attorney would best be able to provide advice and guidance. Some may help you with the final estate tax return down the road. The scope and complexity of actions needed in these areas will depend on your personal details and circumstances.
It is my hope that this feedback is helpful and gives you a starting point for getting organized. If you feel that any of the topic areas are too complex, seeking outside advice from professionals when you need it for tax, legal, or financial advice can make the overall process easier and less stressful for you or anyone in a similar situation. Wishing you peace and universal support in the days ahead, one day at a time.
Dana R. Mascalo CFP®, RLP®, AAMS®, C(k)P® is a Managing Partner with TrinityPoint Wealth, an independent SEC Registered Investment Advisory firm in Milford, CT and Charlotte, NC. Dana advises high net worth clients with complex needs and is sought after by individuals, families, business owners and executives all over CT and the United States. Acting as their personal CFO, Dana looks at a client’s entire financial life with a visionary lens, advising on investment portfolios, retirement planning, stock options, life transitions, exit planning for business owners, customized advanced cash-flow planning and multi-generational wealth transfer strategies.
This material presented is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. TrinityPoint Wealth, nor its investment advisory representatives are permitted to provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice.