Now You Are Executor of your Spouse’s Estate, What Happens Next?
Frustrated widow as exector

Now You Are Executor of your Spouse’s Estate, What Happens Next?

The loss of a spouse after decades of marriage is crushing enough, but then you are thrust into the role of executor. There comes a tsunami of decisions about your deceased spouse’s estate. What does an executor do? There are decisions about finances and tasks that demand attention, when you are least able to manage it. Even highly successful business owners can find themselves overwhelmed, says The New York Times in the article “You’re a Widow, Now What?”

Most couples tend to divide up tasks, where one handles investments and the other pays the bills.  However, moving from a team effort to a solo one is not easy. For one widow, the task was made even harder by the fact that her husband opted to keep his portfolio in paper certificates, which he kept in his desk. His widow had to hire a financial advisor and a bookkeeper, and it took nearly a year to determine the value of nearly 120 certificates. That was just one of many issues.

She had to settle the affairs of the estate as executor, deal with insurance companies, banks and credit cards that had to be cancelled. Her husband was also a partner in a business, which added another layer of complexity.

She decided to approach the chaos of being executor as if it were a business. She worked on it six to eight hours a day for many months, starting with organizing all the paperwork. That meant a filing system. A grief therapist advised her to get up, get dressed as if she was going to work and to make sure she ate regular meals. This often falls by the wayside, when the structure of a life is gone.

This widow opened a consulting business to advise other widows on handling the practical aspects of settling an estate and also wrote a book about it.

A spouse’s death is one of the most emotionally wrenching events in a person’s life. Women live longer statistically, so they are more likely than men to lose a spouse and have to get their financial lives organized. The loss of a key breadwinner’s income can be a big blow for those who have never lived on their own. The tasks come fast and furious, in a terribly emotional time.

Widows may not realize how vulnerable they are, after the death of their long-time spouses. They need to hold off on any big decisions and attack their to-do list in stages. The first task is to contact the Social Security administration, call the life insurance company and pay important bills, like utilities and property insurance premiums. If your husband was working, contact his employer for any unpaid salary, accrued vacation days and retirement plan benefits.

Next, name your adult children, trusted family members, or friends as agents for your financial and health care power of attorney.

How to take the proceeds from any life insurance policies, depends upon your immediate cash needs and whether you can earn more from the payout by investing the lump sum. Make this decision part of your overall financial strategy, ideally with a trusted financial advisor.

Determining a Social Security claiming strategy comes next. Depending on your age and income level, you may be able to increase your benefit. If you wait until your full retirement, you can claim the full survivor benefit, which is 100% of the spouse’s benefit. You could claim a survivor benefit at age 60, but it will be reduced for each month you claim before your full retirement age. If both spouses are at least 70 when the husband dies, a widow should switch to a survivor benefit, if her benefit is smaller than his.

Expect it to be a while, until you feel like you are on solid ground. If you were working when your spouse passed, consider continuing to work to keep yourself out and about in a familiar world. Anything that you can do to maintain your old life, like staying in the family home, if finances permit, will help as you go through the grief process.

Learn how a revocable living trust can avoid thrusting your widowed spouse into the role of executor.

Reference: The New York Times (April 11, 2019) “You’re a Widow, Now What?”

What a Durable Power of Attorney Can Do

Helping aging parents with daily tasks can become a challenge, if the parent has limited mobility. A trip to the bank, for example, will require coordinating the adult child’s responsibilities with the aging parent’s limitations. If the parent has more energy in the morning, for instance, but the adult child is working, this can become a bigger challenge than if the adult child can go to the bank on behalf of the parent, when it’s convenient for them — at a lunch break, for instance.

In this situation, as noted in The Daily Sentinel’s article “Tools to help your aging parent,” having a durable power of attorney will help. This type of power of attorney is a legal document that permits a child or other named individual to handle certain responsibilities, like banking. Granting a power of attorney to a child doesn’t mean giving up total control, which is often a concern of aging parents. It simply means that the child is now legally allowed to handle these tasks.

The durable power of attorney is different than the “general medical power of attorney.” As implied by its name, this is limited to making decisions about the parent’s health care and is usually used only when the parent is not able to make these decisions on their own.

There are more serious situations, where neither of these types of power of attorney is enough, such as when the parent lacks capacity because of dementia or a medical decision. It is necessary to protect the parent from themselves or anyone who might try to take advantage of their lack of clear mental capacity. This may require that an adult child needs to be appointed as a guardian for their parent.

Being appointed a guardian can be a very emotional event, since the parent and child are not just switching emotional roles, but legal roles. The parent no longer has the capacity to make significant decisions, because a court has found that they no longer have that ability.

You may have heard the term “conservatorship” used. It is similar to guardianship, except that the conservatorship only allows for control over the parent’s financial affairs.

Guardianship is taken very seriously, as it should be. This removes an adult’s right to make any kind of decision on their own. In some states, including Colorado, the court must first be convinced that the parent is unable to effectively receive or evaluate information or to make or communicate decisions. They must be deemed incapacitated, before guardianship can be established. Once that standard has been met, then guardianship is established. If there is a doubt about incapacity, then no guardianship will be established, and the family is faced with finding other ways to help the aging parent.

Aging parents and their children face many issues that are best addressed before incapacity becomes an issue. If the family does not have a plan for the aging parent’s care, it is recommended that the family make an appointment with an estate planning attorney to discuss the various options.

Reference: The Daily Sentinel (March 24, 2019) “Tools to help your aging parent”

Hurt Feelings, Family Battles and A Royal Mess
couple arguing, argument.

Hurt Feelings, Family Battles and A Royal Mess

Without an estate plan in place, and that includes a will, power of attorney, and health care directives, dividing up an estate gets messy, fast. Preparing a will does not really take that much time, but it does require you to do some work, like making a list of your assets and sitting down with an estate planning attorney.

The title of this article from Zing! says it all: “What Happens If You Die Without a Will? You Might Leave Behind Hurt Feelings, Legal Battles and Chaos.” Dying without a will, means that your estate is “intestate,” and the rules of your state will dictate exactly what happens to your assets. You may not want your kid brother or the man you were divorcing to get anything but depending on your state’s laws and your marital state, that could happen.

In most states, your assets will pass to your kids and your spouse. If you don’t have any, your assets are passed on to your nearest living relatives. If your kids are minors, the court will decide who will raise them. A will is also about naming a guardian for your minor children and naming a person who will be in charge of your money to look after them.

When there’s no will, everything is decided by the court.

Having a complete estate plan is like a gift to your survivors. It tells them exactly what you want to have happen to your possessions, who you want to make decisions on your behalf for medical care if you are unable to, who you would want to raise your children and even what kind of funeral you want to have.

Here’s an example, let’s say that an adult is financially supporting a parent, even though the adult does not live with their parent. In New York State, if that person dies, their spouse inherits everything. If that person has a spouse and children, the spouse inherits the first $50,000 plus half the balance of the estate. The children inherit everything else.

The parent who was dependent upon the adult child, is left on their own. The parent would have to hope that her daughter-in-law (or son-in-law) would be willing to continue to help them. Basic estate planning could have set up a trust or other mechanism to support that adult.

Another concern: if you die without a will, it is more likely that people you don’t know, may try to fraudulently make claims on your estate. There may be bitter resentment, if one family member steps up to try to take charge of the process. That person will have to apply to the court to be appointed as the estate administrator. When that happens, your assets will be frozen. If no one wants to become the executor, the court will appoint a public trustee.

What if there’s not enough money to support the family and the family home needs to be sold? That would become a legal and financial nightmare for all concerned.

By sitting down with an experienced estate planning attorney, you protect yourself, your assets and your family and loved ones. You can determine how you want your assets to be distributed. You can also determine who you want to be in charge of your financial life and your health, if you should become incapacitated. With a will, power of attorney, power of attorney for healthcare, and other documents that are used, depending upon your unique situation, you can have a say in what happens and spare your family the legal, financial, and emotional stress that occurs when there is no will.

Reference: Zing! (March 4, 2019) “What Happens If You Die Without a Will? You Might Leave Behind Hurt Feelings, Legal Battles and Chaos”