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What Does It Cost to Die?

Okay, a strange question, but hey if you aren’t thinking about it now, when you die your poor family will be and they won’t like what you have not prepared for. Here’s why…

A recent survey of funeral homes shows the average cost for a funeral is $7,500.  In New York and California it is twice that much! Iowa and Oklahoma is a bit less than this amount. The point is, however, that dying is darned expensive!! 

We all know how emotional it can be to have a loved one pass away, but to put that kind of cash burden on family on top of that emotional stress is awful.

Some time back, I attended a funeral and sat with the surviving family members.  They talked openly about the funeral and burial costs and how they didn’t know anything about how to proceed so they just let the funeral home make all the decisions for them about their father.  In retrospect, they regretted that decision, so they met as a family to talk about what they could have done better to make the death of their father more bearable and less financially taxing.

Here are the things they discussed that they didn’t do or didn’t urge their father to do before he died that would make a difference if they did do them for other family members upon their deaths:

  1. Make a list of all assets and where they were located.
  2. Record who is in charge of each particular asset and the ongoing expenses for that asset.
  3. Determine whether assets can be sold upon death and what the tax implications might be upon sale.

Another thing they had  not planned on was the cost of an attorney to help settle their father’s affairs. They decided they could not navigate the court system, organize a funeral, and meet with the tax preparer all at the same time, so they approached an attorney they knew who said he could handle all these matters for them quickly and simply.  This sounded attractive to each of the four members of the family so they hired this attorney and started to do his assignments. However, they soon found the list of to-do’s becoming longer and longer and the cost to retain this attorney more and more prohibitive. If their father had done some of this work before his death and helped his family members be prepared to settle his estate, hiring an attorney for this length of time would have been totally unnecessary.

The family finally reached out to Money Mastery and we are coaching them on how to gather all the financial information simply, effectively, and without the high cost of an attorney. 

As they have followed the Money Mastery program, their heads are starting to clear and they are more openly discussing as a family what to do going forward as other loved ones pass away. It has created a healthy respect for each other and in the end they have all now recorded what they each want done in the case of their own deaths. They are determined not to let this happen to them again.

For more information on how to properly organize and settle your estate contact me directly:  peter@moneymastery.com.

Planning for Your Own Death Is Important, But Seldom Done…

Carve out some time to discuss your financial situation in the event you die.  What are your wishes?  What cemetery will you be buried in?  Have you titled your property correctly so you don’t have to wait for the probate court to decide things for two years?  How should you designate a beneficiary?  Why and when do you need an attorney?

Beyond these very big, but standard issues let me just point out one other discussion point that perhaps you have never thought to discuss in preparation for your death:  Create a document and determine a location in which to store this document for passwords and other absolutely important information.  Passwords give your surviving family members access to bank accounts, utilities, insurance products, and so forth.  Be sure the document includes account numbers and other vital information to go along with the password. I review my key contacts with my spouse each January so we are both up-to-date about auto and homeowner’s insurance policies. We also review the current Screen shot 2016-06-03 at 1.42.28 PMstatus of our living trust, along with any agreements we may have entered into.  I update the password document and make sure PIN numbers, where to find birth and marriage certificates, titles to the car, where the key to our safety deposit box is kept, and other important information are included. That way, if I die, my spouse knows what’s going on, and when we both die, our kids can more easily settle our estate.

We all pass away, so why not plan for this?  Save time and money by getting organized in advance and do like the elementary schools do by establishing a quarterly financial “fire drill” so to speak.  If the elementary school caught on fire, small children have practiced what they would do to save their life.  Most schools don’t catch on fire, but you will surely die.  This is a certain event just like taxes.  Save grief and headache for your survivors by planning ahead and then review for any changes at least once a year.

Getting to Know Your Financial Adviser Will Bring Peace at Time of Spouse’s Death

Almost 75 percent of all widows fire their financial adviser immediately upon the death of their spouse because there is no relationship of trust.  In over 45 years of meeting with client, I have often seen the wife resist talking about death and will sometimes have an excuse about missing the meeting when we are going to be discussing estate settlement. She will say something like, “My husband will take care of all this.”  Or, “Bill will catch me up to date later.”  This is a serious mistake.

When a spouse passes away,  financial issues must be addressed or the costs of not doing so can destroy the widow’s future.  If you are a woman who has relied a little too much on your husband to take care of the finances, now is the time to get comfortable with estate planning and settlement and especially with how your finances are going to be play out after your spouse’s death.

Here are some of the issues widows and widowers must deal with after death:

  1. Titling of property.
  2. The need for at least 12 death certificates (many people order just one but find they must submit an original in order to claim Social Security benefits, or life insurance proceeds, and so forth. If you do not get an appropriate amount at death and have to reorder, it can take months before additional ones are issued. Meanwhile, you can’t file insurance claims or get Social Security income.
  3. The need for a joint banking account. So, for example, if a refund check in the name of her spouse arrives from a magazine subscription  six months later, she can deposit it.  Perhaps a refund check is sent in the name of her deceased husband from an over payment on an insurance contract, or a business debt is paid.  There are many examples of why a joint banking account is needed.

All of these things and many more are reasons why having a good relationship with a qualified financial adviser can help you when your spouse dies.  Using the old “trial-and-error” technique on 50 financial issues upon the death of your spouse is a horrible experience.  Find a good adviser you trust, then review ALL financial issues annually. Planning ahead will help you find peace at a time of grieving. 

For more information about financial coaching and how it can help you even more than just a good financial adviser, contact me: peter@moneymastery.com.

Organize Your Finances to Create Additional Wealth

Many people have had experience using an estate planning system, which includes help in organizing asset schedules and planning for estate distribution and settlement upon death. But planning the way you want your assets and money to be distributed at your death is only one part of a good financial organization system. The right one will do much more, extending that organization to  other areas of personal finance, allowing you to master plan every aspect of your financial life, including the way you spend, borrow, save, and pay taxes while you are living.  Using such an estate planning tool is vital if you want to create wealth on ANY income.

A comprehensive approach to financial planning aids in accurately predicting how your spending, borrowing, savings, and taxes will affect your overall financial well being. A good organizational system should help you create the following:

  • Spending Plan
  • Debt Payoff Plan
  • Savings/Retirement Plan
  • Tax Reduction Plan
  • Estate Planning and Settlement

Organizing the way you spend through a Spending Plan. A good master planning tool should prompt you to answer questions about your personal, social, and financial feelings about money and toshutterstock_283185716 create a history of the way you have spent money in the past. It should also help you analyze how spending money makes you feel so that you can prioritize your values, create realistic spending goals that you can track, and help you get in control of your spending within the first month of applying the plan.

Organizing your debt payoff.  A good financial organization system should also help you create a debt elimination plan. It should prompt you to pull your credit history, review your current debt load, Debtdetermine how to prioritize debts for quickest payoffs, and show you how to power down your debt so you can get out of ALL debt in under 10 years.

Organizing your retirement. Financial organization should also include powerful savings and retirement planning tools that prompt you to observe how saving for emotional, emergency, and long-term needs is affecting your overall financial well being. And of course it should help you accurately predict how muchshutterstock_128683532 (534x800) money you will need for retirement — enough that you cannot outlive that amount.

Organizing the way you pay taxes in order to reduce them. A good master planning organizational tool will also include information on how to take advantage of tax deductions and of course include all the estate planning forms and schedules typically found in standard estate organizer. It should also provide storage to help organize important legal documents your loved ones will need to quickly and easily settle your estate upon your death.

We have found that clients who master plan every aspect of their finances, from the way they spend and borrow, to the way they save and pay taxes, have a much easier time accurately predicting their future and remaining in control of changing events than those who do not.

For information on how to obtain a comprehensive master planning organizational system that will help you get in control of every aspect of your financial life, call the Money Mastery offices today:  (801) 292-1099.

4 Horrible Ways to Avoid Probate

I have been helping my clients get organized financially for over 45 years.  I have seen many successes and some disasters. One of the worst disasters is to not take action against having your estate probated in court.  Probate, which is where the court must “prove” or settle your estate for you since you did not take any action to settle it for yourself before your death, is an expensive process. It’s better to avoid but some people, in an effort to get out of probate and not wanting to take the time and trouble to set up a will or trust, try to do estate planning themselves and end up hurting the ones they love.  

I love the following 2009 article by Jack Helgesen about the four bad ways to avoid probate in the state of Utah. Although it is specific to this state, the ideas Helgesen conveys about the wrong way to go about avoiding probate can be applied across almost all states. 

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Bad way # 1: Put your kids on the deed.  Marie’s heard she could avoid probate by putting her four children on the deed to her home. The deed cost her a fortune. Five years later, Marie’s daughter Terry filed bankruptcy after an accident. Her creditors discovered Marie’s deed and the court ordered a sale of Marie’s home to pay Terry’s debts. To save the home, Marie’s other children jointly signed a new mortgage to pay Terry’s creditors. The IRS discovered the deed and mortgage and denied Marie the tax IRS Rulesdeductions for the mortgage interest. The IRS also required a gift tax return for the value of the house. When she sold the house to pay the mortgage, Marie lost the once-in-a-lifetime tax exemption
for most of the house. She and her children paid over $30,000 in capital gains tax caused by the deed.

Bad way # 2: Sign an unrecorded deed for your property. Some Utahns think they can avoid the problems above by signing a deed but not recording it in the county records. This is risky. A deed which is recorded years after its signing can cause title problems. Living in a property for years after you deed it to another can suggest the deed is invalid, and may open the deed to an attack by creditors or other heirs. If the deed is accepted, large taxes may result from a transfer on the signature date.  Sometimes, the deeds are not found or are discarded by heirs who do not like the result. In other cases, they are forgotten and contradict estate plans created after the deed.   

 Bad way # 3:  Give away your property just before death.  Death-bed transfers of property are common. Two weeks before his Cemeterydeath, Robert signed deeds transferring his rental property and farm land to his children. He died not knowing his deeds had cost his family more than $100,000 in capital gains taxes on all of Robert’s gain on the property. If Robert had let the property pass through his will or trust – just two weeks later –  his heirs would have had no tax. 

 Bad way # 4.  Make one of your heirs the co-owner of your bank or brokerage account.  Thousands of Utah citizens have done this without realizing the heir will be treated as the sole legal owner of the account after the original owner dies. This creates the risks and problems described above. Don’t do it.  

 If you want to avoid probate, create a living trust, which satisfies Utah law.  (Published October 1, 2009, © 2009 UtahElderLaw.com)

What to Do about Your Parents’ “Stuff” When they Die

Just last week I was listening to an estate planning attorney, Lee S. McCullough, III, tell of his discovery of the best system to divide up possessions after both parents have passed away.  Considering he has had tons of experience with hundreds of family settlements, I took very good notes.

McCullough has observed over the years how dividing up stuff after the death of a parent is emotional…very emotional. Hearts are saddened.  Time is short and there are many things to do. Surviving children must plan the funeral, prepare the obituary, take care of the parents’ house, be sure items that have been given by parents to surviving family members via wills/trusts have been  distributed, and so forth.

But what about all the other items in a household that have not been 8268bequeathed to anyone in particular but will still need to be divided up, such as kitchen appliances, furniture, dishes, etc.? To bring order to all this chaos, McCullough suggests holding a “family auction” where items that have not already been bequeathed can be bid on using fake money.

Here are his suggestions for holding the family auction:

  1. Establish ground rules.  Print them and have everyone review them in advance of holding an auction.
  2. Make a comprehensive list of all assets to be auctioned off.  Be sure each surviving child, or grandchild, reviews this list and knows what they really want the most.  Prioritize assets.
  3. Children only. Only have the children (or grandchildren as appropriate) of the deceased parents attend the auction.  No spouses are permitted.  This is very important.
  4. Distribute fake money.  Give out $20,000 of fake money to spend during the bidding process.  Every person gets an equal chance to bid for what they want.  When the $20,000 is spent but8259 more assets are available, only then consider distributing another $10,000 to each participant.  Everyone gets the same amount of fake money.

McCullough stresses that because surviving children will never have equal incomes and equal cash assets, the fake money auction is the best way to go in order to avoid hurt feelings among siblings.  Some families decide to hold an actual real-money auction where siblings bid against the “real evaluation” of the assets.  For example, there may be a baby-grand piano, which may have a value set at $5,000.  A cash-rich child can dominate the auction trying to buy the piano and create hurt feelings among other siblings.   Fake money levels the playing field.

McCullough has watched this play out over and over again.  He said that children learn very quickly how to prioritize the fake $20,000 so they can get what they want.  Also, he said there has not been the usual remorse after an auction is over, because if one of the surviving children really wanted something, they could have raised their bid amount and spent more of their $20,000 to get it.

We all know that money is emotional.  We all hear about how families get torn apart trying to divide up their parents’ stuff after a funeral.  By using fake money, holding  an auction, and keeping spouses out of the picture, you can keep your family members grounded emotionally and help set the tone for family harmony at a time when hearts are tender.