By Jeffrey Barnett, Founder and Managing Principal, Fintegrity® LLC
Originally informed by a Wall Street Journal article (March 2019), updated for current practices.
The following estate planning tips for couples and surviving spouses draw on guidance originally published in the Wall Street Journal (March 30, 2019). I have updated and expanded this checklist to reflect current practices and tools. For the original article, see the WSJ piece here.
Key Steps for Advance Planning
Hire an estate attorney to draft or update wills and other estate-planning documents.
Hire a fiduciary financial adviser, such as Fintegrity®, that both spouses like.
Make sure each spouse’s will gives the executor permission to manage digital assets.
Use a financial aggregation tool, such as Empower Personal Dashboard or Fintegrity’s account aggregation tool, to track all accounts and assets—and be sure both spouses have the password.
Use an electronic password aggregator to keep track of log-in information for online accounts, including photo sites, and keep the password with your wills.
Review Accounts and Assets for Advance Planning
Set up bank and other financial accounts a surviving spouse will need immediate access to in both spouses’ names or as “transferable on death” from one spouse to the other. Some types of accounts held in one spouse’s name alone typically go through probate and may not be immediately accessible. Consult with an estate attorney before retitling accounts if you think you may owe federal or state estate tax.
When the first spouse dies, his or her estate is required to use assets held in the deceased spouse’s name alone to settle his or her individual debt. Assets that are jointly held or are held in the survivor’s name alone are protected, unless the survivor co-signed or guaranteed the debts.
A Surviving Spouse Should Take These Steps
Order at least 15 copies of the death certificate to use to retitle financial accounts and settle the estate.
Contact the estate attorney, accountant, and financial adviser.
Gather household bills and bank, brokerage, insurance, and credit-card statements.
Retrieve electronic statements from the deceased spouse’s email account or petition the email provider for access.
Start the probate process by having the executor submit the death certificate and any will that exists to the court.
File with Social Security for a $255 death benefit.
Consult someone who knows the rules for claiming monthly Social Security survivor benefits, based on the amount your spouse would have received. A survivor can claim as early as age 60 (or 50 if disabled).
Retitle household bills in your name.
Change the beneficiaries on your retirement or other accounts or insurance policies if necessary.
Update your will.
Create a new financial plan once you understand what you own and owe and are able to make long-term decisions.
Surviving Spouses Need to Locate Accounts and Assets
Call the deceased spouse’s employer, if he or she was working, to ask about a 401(k), traditional pension, stock options, and life insurance and the cost to continue health coverage under the company plan.
Check the most recently filed tax return for the names of the financial firms that house the household’s accounts. Financial firms provide 1099s when bank, retirement, and taxable accounts generate income, capital gains, dividends, or interest.
Present the death certificate and proof of identity to get your share of a spouse’s IRAs, 401(k)s, and life insurance. Be aware of the rules surrounding penalties before transferring money from a spouse’s 401(k) or IRA to your own.
Look for statements in the mail for accounts that don’t show up on the tax returns, including pensions, IRAs, annuities, and 401(k)s no one is contributing to or taking withdrawals from. Because companies can lose track of former employees, call your spouse’s previous employers, too.
Ask for free help if you believe your spouse was entitled to a pension from a company you cannot locate. Sources include the Department of Labor and the Pension Benefit Guaranty Corporation.
Search for missing life insurance and annuity contracts through the Life Insurance Policy Locator Service sponsored by the National Association of Insurance Commissioners, or check your state’s unclaimed property fund.
Source: Wall Street Journal and Kathleen Rehl, author of “Moving Forward on Your Own: A Financial Guidebook for Widows.”
Disclaimer
This article is for informational and educational purposes only and does not constitute legal, tax, or investment advice. Estate planning involves complex legal and tax considerations specific to your situation. Consult qualified estate planning attorneys, CPAs, and financial advisers before making estate planning decisions. Fintegrity LLC is a registered investment adviser regulated by the New Jersey Bureau of Securities.