Planning for Death
I read a statistic somewhere – I think it was from Social Security - that said that 25% of the working population dies before age 65.
It is really difficult to kill yourself off mentally. To just sit there and think – what will my loved ones do if I were dead? What will happen to my business? Most people only give it a passing thought.
Yet, widowhood is a most crippling time. I watched my mother go through it and many of my clients have been widowed. The emotional trauma is awful – you can’t do too much about that. What you can do something about is the financial trauma.
Did you ever think that having a financial planning advisor was a safety hatch – like buying life insurance – to protect your family?
If you are the survivor, it is equally hard to think what you would do. Calculating the emotional trauma and it’s effect on your decision-making capabilities is elusive at best.
Even if you know that your spouse is very ill – until you actually experience the death – the loss – your reaction is just a big question mark.
Will you step in and take charge? Will you want to run home to Mom? Will you just do your best? Will you beat yourself up mentally?
I often play a what if game with clients when we are discussing the need to protect against risks – death being a big one. Maybe you should try this. Pretend you died last night. I’m your executor or planner. Your spouse is coming in to see me in an hour. What is he or she going to ask? What will they want to know? How do you want those questions answered?
Talk about this and plan while you are healthy. When someone gets sick or is injured, often those types of conversations become too uncomfortable.
There are nearly 300 colleges who offer financial planning degree programs
With 300 college turning out real financial planners – young though they may be - it should begin to make it easier to find a planner who is a problem solver instead of a salesperson.
True Financial Planning is art and science. The importance of having a real financial planner comes out in the devastating times after a loved one dies.
There are three main stages you will go through if you are a widow or child dependant on the support of someone who dies.
How does a planner help with these things?
Funeral – you could get sticker shock – and because of the death trauma, your decision-making brain cells may go off line for awhile. Your planner can help make sure you don’t spend too much on funeral arrangements (generally about $10,000 with a stone and plot).
Transition – immediate income needs, collecting and organizing, short term goals
Moving on – can be complex. Some decisions have to be made, and some should be deferred. Wills may need to be redrawn, insurances considered, living location, relational issues.
A mentor or coach or just someone to talk to, to make sure you are considering all the appropriate options. Wouldn’t it be good if you already knew this person, already had a good working relationship and sense of trust over a period of years? Otherwise, those who gather around you – good intentioned as they may be – may confuse and make you anxious about too many options.
There are a couple of things about funerals you need to know.
The first thing is the cost. Average funeral cost a few years ago was $6000. That doesn’t include anything at the cemetery.
The next thing to know is that you could end up paying a lot more than $6000. T get your thinking oriented in the right direction, you need to ask the funeral home for a “general price list” that is required to be made available by the FTC. It may not be offered, but it is important to ask if it’s not. The general price list gives you the ability to pick the services you want and compare costs from one funeral parlor to another.
There are some governmental benefits that may be available. $255 is available toward funeral expenses from Social Security to a surviving spouse who was living with the decedent. Sometimes your funeral director will help get that. If not you can call Social Security at 800-7721213 to get things rolling.
There may be Veterans benefits available as well. For example, reimbursement of burial plot costs. There may be health benefits – such as prescription coverage - available to the surviving spouse depending on the type of military service.
Make sure you get all the benefits you are eligible for.
About the time you are making funeral arrangements, you need to order 10 to 25 death certificates – depending on how complex the assets are. Death certificates can take some time to arrive and you’ll need them for the next stage of the process.
After someone dies and the basic things, like funeral and paying the bills this month, are taken care of – what next?
The financial transition time – going from a couple to solo – involves a lot of thought, education and decision-making.
Social Security eligibility is a big thing – many who are eligible do not apply.
A widow or widower can receive the decedent’s full benefit at 65-67. Reduced benefits can be taken as early as 60. If the survivor is disabled, benefits can start as early as age 50. Medicare can start early also – sometimes after two years of collecting benefits. If the survivor is not working or not earning too much money and there are children under age 16 – there can be a benefit payable regardless of age.
If there is a disabled child in the home who was disabled before age 22, benefits can be paid. Unmarried children under age 18 (19 if still in HS) can receive benefits. Benefits may also be payable to step-children, adopted children and grandchildren in the home. Even dependent parents 62 or older could collect. It pays to check up on it.
When your spouse dies and it’s time to be moving on, what needs done?
Assess assets and liabilities
Create a budget – are you going to run out of resources? Can you afford some down time?
Begin to rebuild your finances and your dreams – how much insurance was there? Is it going to get you the income boost you need going to a single earned income – or no earned income? Try to leave the retirement assets alone - but if you think you may need them – and if you are under 59½ - don’t roll the assets into an account in your name until you are sure. You can change locations, just keep it in the name of the decedent at a beneficiary continuation option account.
Prepare for your own death with funeral (or party) plans and documents and insurance. Review all you beneficiaries on your group insurance, personal insurance, pension plans, IRAs and any payable on death designation on accounts with brokerage firms or banks.
Get some counseling – or someone to talk to – your pastor, your rabbi, Hope for Bereaved, join a group where you can talk about it. It can help to hear how others have survived the trauma.
Be careful with money – at least for awhile. Do your budget and start to learn more about money.
Ask for help. Don’t give any money to relatives or friends. Understand your resources and your needs. And cry.