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