Most families aren’t prepared for the unexpected death of a loved one. About 10,000 of the 325,000 Americans who die of sudden cardiac arrest annually are young adults, according to the American Heart Association. In addition, 40,000 people of all ages suffered unplanned, deadly traffic accidents in 2018. A close relative of ours discovered her 56-year-old husband dead, although a medical examination one week earlier revealed no significant health problems. Her trauma deepened as she discovered that because she wasn’t listed as a beneficiary or joint owner of their assets and didn’t know his passwords, she couldn’t access her husband’s accounts. His bank, employer, digital account representatives, and creditors refused to speak to her because of privacy laws. She had to hire a CPA, lawyer, and other experts to extensively document the death and to receive his assets which took months to resolve.
When a sudden death occurs, the people left behind not only grieve, but also face the nightmare of settling financial affairs. However, individuals of all ages can develop clear roadmaps for their families that will reduce stress, insecurity, and frustration if they were to die suddenly. I’ve worked with knowledgeable experts on the following strategies to build security for my wife, children, and employees in the event of my passing:
First, ask yourself, “What would happen if I died today?” Have honest conversations with your spouse and children about anticipated needs following your death and develop plans to provide for them and future generations. Spouses should be aware of each other’s assets and liabilities.
Strive to be debt free and live within your means. Many families have experienced financial ruin and even bankruptcy because of many liabilities and overwhelming debt which occurred after a family member died.
Develop a will. This document dictates the allocation of your assets when you die (and who becomes the guardian of any underage children), yet half of Americans with children don’t have them, according to a US News and World Report. As Saabira Chaudhuri wrote in the Wall Street Journal, “Dying without a will means losing control of how your assets are distributed.” To ensure that your directions are executed correctly, decide how you want to divide your estate amongst your loved ones and charities. Then, employ an experienced estate attorney to craft your will. Also, consider establishing a healthcare Power of Attorney, living will, and organ donor directive in case you’re incapacitated. Update them every few years to comply with changing laws and regulations.
Examine your assets and accounts to ensure that you have both primary (your spouse) and secondary beneficiaries (such as your children or trust) in case you and your spouse die simultaneously. You must sign forms with employers, banks, life insurance companies, retirement firms, etc. to make beneficiaries legally official. Some assets, like retirement accounts, could bypass a will or probate court if beneficiaries are listed.
Place valuable properties in joint ownership. When people die, their assets are appraised. The estate tax exemption has increased which benefits most wealthy families. To further reduce the IRS or probate court’s involvement in your estate, title your assets in proper names. Ownership of cars, homes, real estate, bank accounts, and anything of value should be in both your name and spouse, plus a trusted designee’s or a formal trust. Otherwise, transferring ownership after a death will waste time, taxes, legal fees, and effort in Probate Court.
If you own business interests, it’s important to have an operating agreement outlining what happens if you die. Without thoughtful planning, successful businesses are vulnerable to failure when their owners pass. According to our accountant, Frank Thomas, CPA, “Working with professionals who are credentialed in estate law and appraising property or businesses can reduce IRS challenges.” We hired Thomas and estate attorney and CPA, Alex Weatherly, to develop trusts and other agreements protecting our assets.
Buy life and disability insurance. Seek economical, long-term policies (20 years) that are price-locked from reputable companies. Many employers offer group plans at reasonable pricing. Whole life insurance is more expensive but should be considered for a long life as I wished I had done.
Store important documents in a safe deposit box and different locations. A spouse, close friend, relative, and/or adult child should cosign with you as an owner and know where the key is. Important information includes: life insurance policies; marriage license; retirement and bank account information; birth certificates; Social Security cards; Power of Attorney; personal property titles; life insurance or disability policies; business operating agreements; signed beneficiary forms; and three years’ of tax returns. Add notes detailing physical addresses of: any tangible assets; updated balance sheet of assets and liabilities; and, current usernames and passwords. Document your property by videotaping personal (like home’s contents) and business assets. Then, save the footage in a secure online location and a flash drive. My home burned down when I was 12 years old and we lost everything.
Plan your funeral. Shield your family from the hardship of buying your casket, writing your obituary, and planning the funeral procession by dictating your desires in advance. We used funeral planning forms and have already purchased family member cemetery plots.
Lead a peaceful, loving, and forgiving life so you can die without any regrets and bitterness. Don’t leave unresolved conflicts and broken relationships behind (especially with relatives). In your will, try to be fair and equal amongst your beneficiaries. Above all, don’t leave hard feelings by having favorites.
Upon the death of a loved one, promote emotional health: Everyone, no matter how well-prepared, experiences an emotional roller coaster when a loved one dies. The stages of grief are shock, denial, pain, guilt, and anger; depression, reflection, and loneliness; an upward turn; reconstruction of one’s life and purpose; and acceptance and hope. The stages may not follow any order, and time spent in each stage varies from person to person. Consider taking grief recovery classes and/or see a trained grief counselor to protect your mental health. You never resolve a death, but you can get through it. Our church, St. Andrews Presbyterian, offers grief counselling and classes.
Life isn’t always fair, and it’s never guaranteed. We may be unable to designate when and how we die, but we can plan what happens afterwards. Hope for the best and plan for the worst.
Mike DuBose—Visit his nonprofit website www.mikedubose.com for a free copy of his book, The Art of Building a Great Business, and published business, travel, retirement, and personal articles, as well as health research written with Surb Guram, MD.