Here’s a pretty lightweight article with a flow chart showing the major tasks from disposal of the body to funeral to financial. Each item sounds simple but is actually a LOT of preparation.
The article doesn’t mention an even more thorny subject – what to do in case of disability. Death is quick and simple while disability can last many years and be much more stressful and expensive.
When estate planning be sure to consider disability as well as death. (A trust and/ or power of attorney is essential since a will only enables access to assets upon death.) Also look at the state laws since each state is different and the impact on estate planning can be large.
I revised my Revocable Living Trust to create a credit shelter trust to help shield from Washington State estate tax.
TMF has an Estate Planning Board for questions. The best place to start is by reading a book on estate planning. Of the several I read my favorite is “The Complete Book of Wills, Estates and Trusts,” by Alexander A. Bove Jr. Esq. and Melissa Langa Esq.
But this doesn’t cover topics involving disability such as health care powers of attorney and long-term care insurance.
I love my husband very much. One day I remarked, “I hope I die before you.” He answered, “I don’t.”
But it’s impossible to say since I’m a double breast cancer survivor and he has COPD and has already outlived his father. Best to be prepared. We each have a ring binder with our estate documents.
Wendy, my father passed away last fall. The one thing I would add here from my personal experience is to have a Durable Power of Attorney for finances and health decisions. There was a clause on my father’s DPOA that stated that it stays in effect even after his death. Evidently most POA’s expire at death and the executor of the estate takes over. Fortunately, I was also the executor, but it was easier to conduct business with the DPOA.
I should add that my father had a stroke about 10 months before his death. It affected his memory so I was taking care of his affairs before his death.
@gcr2016 thanks for your input. I never heard of a DPOA that extends after death.
Like you, I found that different legal documents were not the same vis-a-vis dealing with my mother’s estate. As trustee of her trust I had easy access to the assets. Anything that was not in the trust had to go through probate and was much more difficult to deal with as executor.
I have titled most of my assets (including material assets like my home and jewelry) in my Revocable Trust. My husband is trustee and also executor of my estate. Assets that aren’t in the trust (such as IRAs) are POD. But there might be other assets that might have to go through probate which would delay them. I will re-write my DPOA to include the “after death” clause you mentioned.
Wendy
One key reminder… Any time you create or alter a will and collect witness signatures, it is not enough simply to collect signatures in front of a notary and have them sign and stamp. That approach will “work” and the will document will be legal and enforceable but may still require the court to contact each witness and the notary to obtain an affidavit confirming their signature and understanding they were witnessing a will. If the court cannot reach those parties or get a response from them, the decision to honor the will is up to the judge and will likely require more time to consider.
You do not want that hassle and possible source of delay.
Estate law in all but three states includes a concept of a “self-proving signature.” This essentially adds extra language to the will reflecting the same facts that would require attestation in an affidavit after the fact so all witnesses are explicitly testifying at the time of signature that they
a) understand they are witnessing a will
b) know each other
c) are signing the document in the mutual presence of the other witnesses and notary
The language required in each state is probably very similar but it is HIGHLY advisable to consult your state’s laws and use the EXACT boilerplate language of your state at the time the will is being created / witnessed.
A will with a self-proving signature requires no hunt for the witnesses or the notary when it is submitted to the court to collect affidavits. This can save weeks in getting the probate process started.
My parents thought they were doing everything conscientiously and well, but nope. Three years of nightmarish dealings with obstructive idiot bank rules.
Talk to whoever you use to help you set up your death documents and emaphasize that, (unless you have nasty quarreling inheritors that need to be iron caged)(heck, disown those) you want to make SURE things will happen EASILY, and without DRAMA. That includes a plan to shift banking assets to the minimum possible number of accounts with explicit orders to give executor maximum power well before you are going to die.
Modernity has made the Dickensian bureaucrat far far more horrible. Beware.
My parents are to be cremated. After both are gone my sisters and I are to fly them back to the Wicklow Hills to scatter their ashes. They return home.
I have a living will. I need to set up a will this year. I am 60 now.
My situation I can prepare to die but it is more important for me to prepare to live over 30 years more.
Thanks for this topic, Wendy…for both the book recommendation and the flowchart. Both topics that are thought provoking at 2 am on a sleepless night and might help me find a few gaps in what I believe to be well thought out plans ahead of time.
Something else that I am playing catch-up on (and causing the sleepless nights) is the ramifications of what looks set to be a hugely acrimonious divorce for my daughter. Complicated by joint ownership of a business (a large specialty veterinary hospital) that the toss pot (Google will help you expand your vocabulary) she married has been systematically embezzling funds from. A forensic accountant began his investigation this last week. Most of my online searches turn up ads for these services as opposed to a basic description of what is involved and how the process differs from “regular” accountancy (as in, how come red flags didn’t show earlier???) Anyone know of books available? Dh and I have a potential for financial exposure here.
I’m thinking the old TMF format would’ve had a few places to ask these questions…or let me know what questions I should ask (probably even more important). It looks like some of the shenanigans date back that far!!
If you own significant assets you should set up a Revocable Living Trust in addition to a will. The Trust enables your trustee to tap into your assets to take care of you should you be disabled temporarily or permanently. A will only transfers assets on death. If you don’t want to set up a trust you should consider a Durable Power of Attorney for this situation.
Wendy
My mom was sold a trust. All it did was make more paperwork for me. I could do anything I needed to do, by my power of attorney. When mom was certified incompetent, my aunt and I headed downtown to the bank. I waved the POA form, and signed another POA form for my aunt, so she could pay mom’s bills, sell her house, and get her moved back to Michigan, while I flew home because I had a job back then.
My other aunt had not been sold a trust, and was not demented. I filled out a signature card for her bank account, and a change of address card. When she went into the nursing home, I paid her bills and had the post office forward her mail to me.
When I saw the title, 2 things went through my mind.
Princess Bride, of course; Hello. My name is Inigo Montoya. You killed my father. Prepare to die.
And CCR’s Bad Moon Rising:
Hope you got your things together
Hope you are quite prepared to die
Looks like we’re in for nasty weather
One eye is taken for an eye
On a more serious note, not only should all your wishes be spelled out, they should be discussed in detail with your estate executor(s) (in our case, our sons are co-executors). Sure, they’re out of state, but let the little buggers earn their inheritance.
As an accountant, let’s see if I can help a bit. I’ll start with gross oversimplifications.
Bookkeeping is the process of taking original records (things like invoices and check records) and organizing them into various fairly standard categories in a general ledger - which is the record of all of an organization’s financial transactions. Accounting takes that bookkeeping and turns it into financial statements (typically some kind of statement of assets and liabilities, along with a statement of income and expenses).
Both of these activities generally operate on the principle that the management of the company is operating honestly and above board, but that ordinary errors are going to happen. So bookkeepers and accountants generally take records at their face value unless something is clearly off. Auditing goes a small step further and attempts to verify that management is honest and those ordinary errors have been caught and corrected. They do this by performing some tests of the records to look for errors and some of the more obvious signs of dishonesty.
Forensic accounting dispenses with any assumptions of management honesty and starts questioning everything. Is that invoice genuine? Did that check actually clear the bank? Are there any connections between vendors and customers and employees? Are individual payments really what they appear to be? Are individual sales what they appear to be? Do these loan payments match up to records of the loan?
Forensic accounting can also deal with shoddy record keeping. (Including deliberately shoddy work.) Forensic accountants will look for missing records - a common problem in closely held businesses. They will try to figure out where the money went that was supposed to be there according to the records. And when given access, they can dig into related businesses or individuals in their search for hidden money, tying the records of multiple entities together to get a bigger picture.
I was looking at taking over a “troubled” publishing company with poor management and what I suspected was a very undervalued subscriber mailing list. I was far along in my due diligence when I became perturbed by some contradictions. I brought in a forensic accountant rec’d by my business attorney and was stunned by the rapidity with which he sniffed out various frauds, but especially the looting of the IRS tax accounts!
After a weekend of very careful thought and planning I actually took over the firm to get my hands on the mailing lists, while also taking the company into bankruptcy to make the cheated employees, IRS, and California tax authority whole.
The interview I had with the FBI was extremely not fun, but interesting.
My Forensic Accountant Magician told me that the moment he met the previous owner he knew what to expect – idiot sloppily hidden pilferage to support a burgeoning drug habit. From “frequency of encounter” in 1980’s Hollywood he knew the signs. Now I do too.
There are two types of accounting. Financial accounting keeps you out of jail (by satisfying financial reporting and tax obligations). Managerial accounting keeps you in business (by providing you insight into the operations of your company that aren’t required by financial accounting but better explain HOW your company is actually functioning).
Managerial accounting is vital to internal audit functions. As an example of how they tie together, consider a company that makes small, expensive personal electronics. It’s possible for the financial accounts to all add up so the SEC and government are happy. However, if internal accounting records show that quality control numbers reflect defect rates on 3000 units per month growing over the last 6 months yet labor costs for QA rework are flat, something is amiss. One system is saying that units are being removed from outgoing shipments for sale to dealers yet another internal number is showing no growth in rework labor. Could be a flaw in the design of the two accounting processes or…
…it could be that someone is stealing working units off the line, pegging the units as QA defective then selling them. If you don’t catch this problem, your financial books may continue lining up without error or fraud but you will not learn that someone is stealing finished goods out of inventory, affecting your bottom line.
Wow, lads…thanks so much for putting the effort into such illustrative replies. A big help with sorting out some of the puzzle pieces.
When my daughter first got wind of something amiss (maybe about September time) the albatross bluffed his way out of it. Easy to do at the time as he was the one managing the business side and my daughter had the clinical side to run and the feeling that she didn’t have “business sense”. Since early January she’s acquired it very quickly…and is now kicking herself for not realising sooner.
I’m assuming it’s no surprise to you guys…Peter especially…that embezzlement in the workplace is very common. Since all this began to unravel, just a casual mention (i.e. a diatribe to anyone willing to lend an ear…hey, I’m a mother!!) and I’ve heard of easily half a dozen examples. Two or three eerily similar to my daughter’s circumstances…less well educated spouse (husband) given a role of business manager and trusting business owner.
I was mistaken on the forensic guy’s actual start date. It was Tuesday…and by mid afternoon he’d contacted my daughter with the opening statement “The albatross (my substitution purely for the purpose of anonymity…really!) certainly knows how to spend your money”…and set about bringing her up to speed on the various Red Flags that the first few hours’ work had revealed.
One of my questions…how come the accountant who does their tax stuff at this time of year didn’t spot the signs of embezzlement…was answered easily. The toss pot has been using someone who engages in serious tax evasion strategies and basically criminal accounting practices. Additionally, irregularities with the payroll “company” of which Brain Trust is listed as 100% owner. Can’t quite fathom this one but it seems that close to 10% of what was listed as total payroll (and this is a scary big amount) has systematically been siphoned off into a separate bank account…and used as an additional income source.
Forensic accountancy isn’t something I would have ever thought of if asked what are careers likely to be in demand in the future. I can see I was wrong. Now I’m wondering if it’s possible for anyone to protect their business from someone with a devious enough mind, zero conscience, and who’s bound and determined on theft.
The ways to protect from theft involve strong internal controls. Of course, the smaller the organization, the tougher it is to set up strong internal controls. And a spousal partnership would be extremely difficult to do so unless both agreed to the Reagan doctrine; trust but verify. By nature, a marriage involves trust, so it’s not realistic unless one partner gets burned.
And it’s unlikely to recover much, if any, of the stolen money. I think thieves, by nature, are spenders not savers.
I might recommend theft insurance, but I bet they have spousal exclusions.
I think you did the best you could with the forensic accountant.
The person with authority to pay the bills should be different than the person who reads the statements. That is one of the best checks on where the money is going.
