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Dealing with finances after the death of a loved one
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"They could have a flexible spending account with money in it or retirement money that could be used for the spouse," Evans says.

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Think about tax implications
That's also true of funds in an individual retirement account or 401(k). Any money in the account goes to the person's beneficiary. Evans cautions people to take their time in accessing those funds.

"Go slow; don't grab the money," he says. "There are options, so you can do some tax planning."

May Kay Foss, a CPA in Danville, Calif., recalls a woman who was the beneficiary of her husband's IRA. She was 49 and rolled it over into her own retirement account. That was a mistake, she says.

"She moved too fast," Foss says. "You can draw on these IRAs as a beneficiary. If she ever needed to take money out, she'd have a penalty. If it had been left in her husband's name, she could have used it as an emergency fund, and there wouldn't be a penalty involved."

Foss also recommends that before family members start disposing of personal items, such as clothes and books, check to make sure there isn't spare cash in them. She remembered being involved in closing one estate in which an elderly woman had passed away. Her children found rows of $100 bills under the lining paper of the kitchen cupboards.

She also remembered what her own family went through when her mother passed away. Like many people, her mother never talked to her children about her will, her life insurance or any other financial subjects. After she died, Foss and her siblings found a booklet in her home with all the pertinent details.

"We found that she'd changed the title of her property, so my brothers and sisters immediately inherited without going through anything," she says. "It would have been nice to know. When she became ill, we'd hired an attorney to address her care issues. She'd already taken care of it, and we didn't know."

To help families deal with the inevitable, Brezik recommends that all her clients create a "family notebook" with personal and business information. The personal section has sections for family members and friends to contact, as well as the names and numbers of their CPA, attorney, physician and other advisers.

There's a section for credit cards. Just line them up and make copies of the fronts and backs.

Then there's a checklist that tells where everything is -- your life insurance policy, the safe-deposit box, birth and marriage certificates, deeds, homeowners insurance, car titles, anything that someone would have to hunt for later on.

There's also a section for funeral issues.

"A lot of my clients won't complete this section," Brezik says. "It's too difficult for them. But just as many will."

If a business is involved
On the business side, she tells them to include copies of investment accounts and bank statements, wills, trusts, a general and medical power of attorney, an up-to-date net-worth statement, and any business documents, such as a company buy-sell agreement.

"Then what I like clients to do is write a little letter, and stick it on top," Brezik says. "Give some more personal instructions. 'Here are our wishes, why we did it.' It softens the blow a little.

"You're already dealing with a very stressful situation. We've worked with clients where things were in such disarray. They have to worry about going through boxes and put together a funeral at the same time."

Bankrate.com's corrections policy -- Posted: July 2, 2002
 
 
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