Navigating Financial Decisions After Losing a Loved One
About the Guest(s):
Amy Irvine
Amy Irvine is a renowned financial expert and the host of "Money Roots," a podcast dedicated to demystifying personal finance. She has a background in financial planning and is the founder of Rooted Planning Group, an organization committed to helping individuals build secure financial futures. Amy's approach is warm and inviting, making complex financial topics accessible to listeners of all levels. Her passion for teaching and empowering people on their financial journeys is the beating heart of the "Money Roots" podcast.
Episode Summary:
In this heartfelt episode of "Money Roots," host Amy Irvine addresses the sensitive topic of dealing with the financial implications following the loss of a loved one during the month of February—a month typically associated with love due to Valentine's Day. She offers guidance on navigating the intricate financial decisions that arise after such a loss, recognizing the unique emotional and logistical challenges of this time.
Listeners are guided through key aspects of managing finances amidst grief. From understanding social security and pensions to handling estate taxes and investment accounts, this episode serves as an essential guide for those who find themselves in the difficult position of managing these necessities. Amy presents two detailed checklists to help listeners through the complexities of estate and cash flow management, ensuring that important decisions are made thoughtfully and without haste.
Key Takeaways:
- Grief can complicate financial decision-making; delaying major financial choices for at least a year after a loss is advisable.
- Evaluating cash flow is crucial; assess whether adjustments to social security and pension distributions are needed.
- Estate settlement requires attention to asset transfers, potential estate taxes, and ensuring that all accounts are properly managed.
- Consider digital and physical assets, including any unclaimed property, and protect against identity theft by closing the accounts of the deceased.
- Awareness of potential scams during vulnerable times is crucial, especially in months like February, when emotions might run high.
Notable Quotes:
- "February is full of flowers and love, but for some, it's a painful reminder of loss."
- "We cannot, we do not make the best financial decisions when we are struggling with emotional feelings."
- "Do not make any major decisions the first year after somebody passing away, especially if it’s your spouse."
- "If your parent was a veteran, there may be some death and burial benefits or survivor pensions that need exploring."
- "Be cautious and careful; this is when we also see a bunch of scams happen."
Resources:
Documents referred to in this episode:
- What Issues Should I Consider If My Parent Passed Away
- What Issues Should I Consider If My Spouse Passed Away
Rooted Planning Group - The sponsor of the show, specializing in financial planning and guidance. Find more resources on their website or follow them on social media.
- Facebook: Rooted Planning Group
- Instagram: @rootedpg
Tune in to this episode of "Money Roots" for valuable insights into coping with the intersection of grief and financial responsibilities. Subscribe to stay updated with more enriching content that supports your financial growth journey.
Transcript
Welcome to Money Roots, the podcast where personal finance gets personal.
Speaker A:Each week, Amy and her guests dig deep into the world of finance, making it more approachable and understandable for everyone.
Speaker A:No matter where you are on your financial journey, from savings and investments to budgeting and planning, we'll bring you practical advice, inspiring stories, and expert insights.
Speaker A:We believe that everyone has the potential to grow a healthy financial future, and we're here to help you nurture it.
Speaker A:So whether you're a financial guru or just starting to plant the seeds of your financial knowledge, this is the place for you.
Speaker A:Get ready to uncover the tools and strategies that can help you thrive financially.
Speaker A:So without further ado, let's dive into today's episode of Money Roots.
Speaker B:Hello, mind and time listeners.
Speaker B:Welcome back to the show.
Speaker B:This week's show takes on a bit of a serious tone, but, you know, whenever we think of February, we often think of it as the month of love, right?
Speaker B:Valentine's Day.
Speaker B:It's all roses and kisses and the joy of being in love.
Speaker B:But what if you're one of those individuals that has lost a loved one, whether it's a parent, whether it's a spouse, perhaps it's even a child?
Speaker B:That makes February a very challenging and difficult month.
Speaker B:And so I thought I would take this opportunity in this show to talk about some of the things that you might want to consider if you are one of those individuals that loses a spouse or a loved one during this particular month.
Speaker B:And I know that that seems counterproductive to the idea, or contrary is probably a better word to the idea of February.
Speaker B:But let me explain why I think this is an important month to be talk about this.
Speaker B:February is that month I already mentioned.
Speaker B:It's full of flowers and love.
Speaker B:And, you know, all of that's in the air.
Speaker B:But if you're struggling with the emotional challenge of losing a loved one, and maybe it wasn't this month, maybe it was last year, two years ago, or 10 years ago, it's that you really miss them sometimes.
Speaker B:We cannot, we do not make the best financial decisions when we are struggling with those kinds of emotional, I guess, emotional feelings.
Speaker B:Right.
Speaker B:So I like to chat about it when there's a period of time that we can actually think about.
Speaker B:Well, what could I go to?
Speaker B:So I have two checklists that I'm going to share in the show, notes with you that you can turn to if you ever find yourself in a situation where you have a parent that has passed away, a spouse that has passed away, a loved one has passed away in our family.
Speaker B:We unfortunately just lost a family member that was close to us.
Speaker B:And in me trying to help the children deal with the loss of their parent, it just reminded me of the emotional feelings that people have around losing someone.
Speaker B:Yes, there's a numbers component to it, but there's a big emotional component.
Speaker B:One of the things that's important to be thinking about is the cash flow side of things.
Speaker B:We try to tell people, do not make any major decisions the first year after somebody passing away, especially if it's your spouse.
Speaker B:Do not make any huge decisions.
Speaker B:But there are some things that you need to address immediately.
Speaker B:One of them, in a situation where it's apparent is to really look at the cash flow side of things.
Speaker B:Were they receiving Social Security?
Speaker B:Should they receive the surviving spouse's benefits?
Speaker B:Meaning was the surviving spouse getting a lower Social Security amount than the spouse that passed away?
Speaker B:If that's the case, they will want to make sure that they get a additional a surviving spouse amount and benefits.
Speaker B:Because like I said, if the surviving spouse is receiving a government pension based on earnings that were never subjected to Social Security tax, they may be subject to a government pension offset too.
Speaker B:So it's something that we have to look at and take into consideration.
Speaker B:You also have to think about, did your parents reach their required beginning date?
Speaker B:Because if they were taking RMDs, those required minimum distributions, then it's possible that you, as the surviving child, may have to take that remaining rmd.
Speaker B:So the beneficiary must satisfy any remaining RMD amount on behalf of the parent before the end of the year.
Speaker B:And then from a standpoint of, you know, was your parent receiving a pension?
Speaker B:If so, payments may stop.
Speaker B:And if they're married, you have to look and see what kind of survivor benefits will be coming, if any will be coming.
Speaker B:So that's the cash flow side of things.
Speaker B:And then in addition to that, there's the estate settlement issues that come up.
Speaker B:So do any accounts other than the assets that are owned and just the deceased spouse's name, meaning do we need to get assets transferred over to the surviving spouse?
Speaker B:That's pretty important.
Speaker B:And if not, if everything was a joint or there were beneficiaries, do we need to change any ownerships?
Speaker B:Meaning if it was a joint name, do we need to make it into a single name?
Speaker B:Do we need to update beneficiaries?
Speaker B:Those are really important things.
Speaker B:Also we have to take into consideration does the total estate exceed the gift tax Exclusion amount of 13.99 if there's been no lifetime use, and if there's a married situation, will they combine the, you know, the exclusion amounts for 27.98 million.
Speaker B:Something to take into consideration if there is an estate tax liability, will the total value of the state on the date of death be greater than the value at six months after the date of death?
Speaker B:And if the statement is yes, so they may, you may want to elect on a Form 706 to use an alternative valuation date.
Speaker B:So again, something that needs to be looked at.
Speaker B:In some cases there could be property and assets that are not yet identified.
Speaker B:So we need to look at different things like point features on credit cards and miles with airlines to see if anything's transferable.
Speaker B:Maybe check in safe deposit boxes, but be sure to follow probate rules before opening anything, of course.
Speaker B:And then maybe search some state agencies for unclaimed property sites that may be run by state treasurers.
Speaker B:If you expect to inherit any assets from your parents or you know, the parent was included in their own, I guess, estate plan, how do you coordinate some of those things?
Speaker B:And then a big thing is digital assets.
Speaker B:Is there anything, are there digital assets that should be preserved?
Speaker B:You want to think about insurance issues like was your parent employed at the time of death?
Speaker B:And if so, did they have any benefits group benefits that they may be eligible for?
Speaker B:Even their final pay and compensation they may be eligible for if the death was accidental or work related, then there might be some financial institutions and professional associations that may offer some small lump sum benefit or perhaps there's additional death benefit.
Speaker B:So something to be aware of.
Speaker B:And if your parent was married, the spouse may be eligible for workers compensation if it was a work related item.
Speaker B:Also some life insurance policies have some additional accidental death provisions for higher benefits.
Speaker B:So it's something to look at if they have a life insurance policy and if your parent was a veteran, there may be some death and burial benefits or a survivor pension or other benefits that that need to be explored.
Speaker B:And if the parent has any children under the age of 18 or the child is permanently disabled, then your spouse and or your child may be eligible for Social Security benefits.
Speaker B:So it's that child I should say should be maybe eligible for Social Security benefits.
Speaker B:So it's something to take into consideration.
Speaker B:And then if there's any life insurance owned by your parent or anything like that, then you might want to make sure that that's definitely claimed or hopefully identified from a tax perspective.
Speaker B:Did your parent own a home and were they survived by a spouse?
Speaker B:If so, the surviving spouse will Qualify for a $500,000 capital gain housing exclusion if the home is sold within two years of the parent's death, so you do have a little bit of time there.
Speaker B:And then did your parent own other joint properties such as investment accountants?
Speaker B:So the joint owner may receive a step up basis for the assets passing from your parent.
Speaker B:So that's important to understand how that all flows out.
Speaker B:Another big thing to confirm is that all of your parents prior income tax have been paid.
Speaker B:So you may have to contact the IRS and state taxing authorities to check for any back taxes that are due or make up for anything that might need to be taken care of or get a refund.
Speaker B:That would be really important to and do your parents file as married filing jointly?
Speaker B:If so, the surviving spouse can continue to do married filing jointly in the year that your parent passed away.
Speaker B:Again, something to take into consideration on the investment and asset issues.
Speaker B:If your parents have any kind of stock options, grants, restricted stock units, anything like that, you need to check with your employer documents or their employer documents to understand how these assets are treated after the parent passes away.
Speaker B:And then beneficiaries should be aware of potential tax ramifications of accelerating stock vesting.
Speaker B:Something to be concerned about.
Speaker B:And they'll want to read through the documents and work with somebody who's familiar with those kinds of things.
Speaker B:And has the change in circumstances altered investment objectives or risk tolerance for the family members inheriting the assets?
Speaker B:That's a really important topic that should be covered.
Speaker B:If your parent was married, there might be some sort of carry forward investment loss.
Speaker B:So consider having the surviving spouse realize investment gains in the year of death.
Speaker B:Your parents carry forwards can be used on their final tax return but will be lost thereafter.
Speaker B:And did your parents own any annuities?
Speaker B:If so, consider your parents spouse may be able to inherit a non qualified annuity as their own if they were listed as the beneficiary in the possibly.
Speaker B:And then a non spouse beneficiary will have to take required distributions from a non qualified annuity.
Speaker B:So non qualified annuities do not receive a stepped up basis.
Speaker B:So be aware of the tax ramifications of that.
Speaker B:One other thing that we suggest people take into consideration is to reduce any identity theft.
Speaker B:Cancel any of the email accounts, social media accounts, driver's license, and notify credit bureaus and election boards that your parents have passed away or parent.
Speaker B:And of course if there's any out of state property, maybe talk to your estate planning attorney on how to easily retitle them or probate those particular assets.
Speaker B:I talked a lot about if you have a parent who's passed away.
Speaker B:It's very similar in nature if it's a spouse that has passed away.
Speaker B:And like I said, I will put these checklists in the show notes for you to be able to use or save for future reference.
Speaker B:In closing, I just want to say if you are one of these people that has suffered a loss either this year or in the past couple of years, and you're still experiencing pain from their loss, and it may never go away, it may have been 10 years ago.
Speaker B:Just know that our hearts are out there for you and we know that this particular month of Valentine's Day is Valentine's Month really is one of the more challenging ones, just like some of the other major holidays that you may celebrate.
Speaker B:And from that perspective, you're you're not alone.
Speaker B:And just be cautious and careful.
Speaker B:This is when we also see a bunch of scams happen in the month of February.
Speaker B:This people are feeling a little more vulnerable.
Speaker B:I'm not saying that anybody is, you know, going to fall for them.
Speaker B:Just be cautious and aware of the fact that this tends to be a high month with scams that are out there.
Speaker B:We hope that you found this podcast helpful and again, we're sorry if you're experiencing this kind of loss that you need to find it helpful.
Speaker B:If you have any questions, concerns, comments, or other ideas or podcast topics that you'd like for us to go over, please let us know.
Speaker B:We'd love to include include anything that you are looking for and we always enjoy fulfilling the questions that our listeners have.
Speaker B:And we hope that you continue to reach out to us so that we can come up with new episodes every single month for you to listen to.
Speaker B:Thanks everyone and feel free to share.
Speaker B:If you knew somebody who needs this.
Speaker A:You'Ve been listening to Money Roots your go to podcast for making personal finance accessible and approachable.
Speaker A:Thanks for joining us today.
Speaker A:Amy and her guests have enjoyed guiding you through the roots of your financial journey.
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Speaker A:A big thank you to the sponsor, Rooted Planning Group, for making this show possible.
Speaker A:At Rooted Planning Group, they're committed to helping you cultivate a thriving financial future.
Speaker A:Until next time, keep growing your Money Roots.
