Money Matters | Estate planning wards off problems later on

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Susan’s voice quavered when she called me. “Jake has a terminal illness.”

I met with her to review the couple’s finances and see what was required so Susan would meet the financial goals they’d set.

“Settling an estate seems so involved,” she said.

“It is,” I responded, “and more challenging after losing a loved one. But it can be done effectively and on a timely basis.”

I’m not an attorney, and I don’t provide legal advice. But a financial adviser plays a key role. So I reviewed with Susan simple steps and resources available to guide the estate-resolution process.

First, create a comprehensive estate plan. When is the best time to do this? When the need seems far off. Your written plan enables you to express your legacy goals clearly and thus maintain control. If it includes one or more trusts, you can avoid going through probate — which is costly, establishes a public record and thus eliminates privacy and puts decisions in the hands of the court. Remember, wills do pass through probate, but trusts avoid it as long as assets are properly titled.

At the passing of the first spouse, a trust creates vehicles to control assets based on the provisions you establish. You have choices for these vehicles, which depend on individual personal and financial factors along with changing personal status and estate-tax provisions in the law.

I noted some essential steps that a couple should follow, preferably while both partners are in good health, but still invaluable if one takes ill.

• Inventory all your assets and make sure they’re titled correctly. If you have a revocable trust, make sure your assets are properly titled to your trust. Review your trust with an estate-planning attorney to make sure it’s up to date with legal and tax changes, and your personal circumstances.

• Since retirement accounts are passed directly to named beneficiaries, check each account to make sure the beneficiaries are up to date and correctly named.

• Visit California Courts online to see if you’ll need to file in probate court. Then consult Nolo Press for step-by-step directions to manage your responsibilities as estate executor.  Contact your estate-planning attorney for guidance.

• At the death of the first spouse, secure at least six copies of the death certificate. You will be required to produce this document for brokerage forms, banks and other institutions where you have accounts.

• If you’re overwhelmed or unprepared to undertake all the tasks required, consult with a professional fiduciary. These specialists are trained to act as executors and/or trustees and are required by law to represent only your interests.

• Notify credit card companies, Social Security and pension administrators of the death of your spouse.

• If you’re eligible for a pension, choose carefully how you want to take distributions when you initiate benefits. Generally, you can select the highest distribution, called “single life only,” or other choices that give the survivor all or a portion of the deceased’s distribution over the survivor’s lifetime. To make the best decision, consider your total picture. Make sure you have documentation of your choice so you can continue to receive benefits.

“I guess I’ll be facing really big changes,” said Susan.

“Yes,” I answered. “But give yourself time to sort things out.” For example, I recommend not selling your home or moving to another location within the first year after a death. If you do have changes in mind, try them out first: If you’re thinking of living in a different city, take an extended vacation there or rent a condo for several months.

Also plan for long-term care lifestyle, as well as finances. As we age, the possibility of physical or medical limitations grows.

“Jake and I have loosely discussed that,” Susan said. “Planning my options will be on my to-do list.”

Ira Fateman is a certified financial planner at SAS in San Francisco who conducts free personal finance workshops for Hebrew Free Loan.

Ira Fateman

Ira Fateman is a certified financial planner at SAS Financial Advisors in San Francisco. He can be reached at (415) 277-5955 or [email protected].