“When all is said and done, more is said than done,” the great football coach Lou Holtz once said. And those words resonate with any of us confronting a loved one’s—or even our own—passing. When someone close to us has been diagnosed with a terminal illness, that shock can be as stressful as the time of death itself.
As a loved one is struggling through a terminal illness, his or her failure to have properly documented an estate plan may seem secondary. But that lack of a plan may also result in the family member’s wishes, in terms of bequests to descendants, not being fulfilled. That’s why, as advisors to clients going through this difficult period, we try to show empathy, knowing we cannot truly understand the emotions they are experiencing.
We carefully try to discuss the “financial aspects” of the loved one’s wishes as they deal with his or her life and death. While no one wants to think about death, those aspects are important: Organizing your affairs can be crucial legally, financially and emotionally for your family.
For some of us, estate planning hits home: Recently, I lost a loved one to a terminal illness after a short but courageous battle. In this situation you remove your caregiver’s hat and sit and talk about financial decisions and final requests, to ensure that your loved one’s final wishes are properly documented. It is critical to consult your advisors— investment, legal, tax and insurance— and ensure that documents prepared in the past are up to date.
No one wants to think about death. However, financial aspects are important.
You should have an updated will and trusts, to make sure things go smoothly for survivors and benefactors, and to ensure the deceased’s wishes are honored. Additionally, a medical power of attorney, a living will and medical privacy release and durable power of attorney documents should be in place. And because state laws have different nuances, be sure to consult an estate-planning attorney in whichever state(s) you live in all or part of the year.
Be sure beneficiaries on your insurance policies and IRAs are current. These assets need not pass by will in your estate plan. Also, consolidating investment accounts simplifies things for you and your survivors. And, if you are still working, purchasing additional life insurance through your employer’s group coverage is another way to secure your family. Group coverage usually requires no medical examination.
If you’re in a state that does not have gift taxes, you might consider gifts above the $14,000 exemption. However, be careful what assets you gift. Estates receive a basis in inherited property equal to their date-of-death value (stepped-up basis). We recommend consulting your tax advisor. Further, leave detailed instructions regarding funeral arrangements. Making your own arrangements makes things easier for your family.
Also, update a list of your bank, investment and credit card accounts. Include the locations of safe deposit boxes and their keys. How you title your safe deposit box is important and should be discussed with your legal advisor. Include the names and numbers of your investment, legal, tax and insurance advisors.
Finally, because today we conduct most financial transactions through the internet, be sure passwords are properly documented and updated and your family members know where they are. If you have hotel, credit card or airlines mileage points, provide that information along with usernames and passwords. Most companies will transfer points to a spouse after death, with proper documentation. Remember, too, to document assets stored on cloud services, such as your music or photo libraries.
Planning for your own or a loved one’s death is never easy. But having control of your final wishes and making things easier for your family can be your last act of love and compassion, and one that will surely be remembered.
This article is not intended as investment, legal, accounting or tax advice. Any opinions, recommendations or indications of past performance contained in this article may be subject to risks and uncertainties beyond the control of Hallmark Capital Management, Inc. (Hallmark) and are no guarantee of future returns. Hallmark does not guarantee or certify the accuracy, completeness, or timeliness of the information presented in this article. Hallmark is an investment advisor registered with the U.S. Securities and Exchange Commission. Registration with the SEC does not imply that Hallmark or any individual providing investment advisory services on behalf of Hallmark possesses a certain level of skill or training. © Hallmark Capital Management, Inc. All rights reserved.
This article was originally published in the June/July 2016 issue of Worth.