My wife and I received some heartbreaking news the day after
Christmas. One of our friends in Bowie
passed away unexpectedly. He left behind
his wife and two school-aged children.
Along with experiencing overwhelming grief and sadness, his
widow had to sort through all of the assets and financial accounts – including
some accounts where no beneficiary was designated. She had a message for all of her friends: take steps to be prepared - just in case.
It was about the same time that I was exchanging messages
with friend of Bowie Living, Denise Martin.
Denise is an estate planning and probate attorney practicing in Bowie at
McChesney & Dale, P.C. She agreed to
write a blog post with recommended steps to take to be prepared for the untimely
death of a spouse. The subject matter is too big to tackle in a single blog
post, so Denise decided to focus on how to ensure a surviving spouse isn’t left
with a financial crisis by making sure assets will be available in a timely
manner.
Preventing a Financial Crisis after the Death of a Spouse
By Denise Martin
A few months ago, I received a call from a
man whose wife had passed away unexpectedly at a young age. Beyond overwhelming grief, the surviving
husband and their young children simultaneously faced a financial crisis. The wife was the primary breadwinner and also
the sole owner of many of the couple’s assets.
Here are some tips that will help prevent your family from facing such
an emotional and financial crisis simultaneously:
1. Any assets
individually titled in a person’s name without a beneficiary designation must pass through probate; it can take
months and sometimes years for probate assets to be distributed to heirs or
beneficiaries. As such, make sure there is a liquid asset available
immediately for surviving family members to pay bills, funeral expenses, etc.
Such liquid assets may include:
a.
A
joint bank account (the surviving joint owner, such as a spouse or adult child,
typically becomes the immediate sole owner);
b.
A
bank account with a payable on death (POD) or transfer on death (TOD)
designation;
c.
A
brokerage account (not a retirement account) that is either (1) jointly titled
with a spouse or adult child, or (2) has a spouse or adult child designated as
beneficiary; or
d.
Life
insurance (won’t be available immediately, as typically the insurer must
receive a copy of the death certificate before proceeds are disbursed).
2. Make sure beneficiary designations are current. And, unless a tax professional tells you otherwise,
name an adult person(s) as the beneficiary, not
your estate.
3. If you want
control over how your assets pass, have
a will (and/or trust) prepared.
Otherwise probated assets will pass according to state law to closest
relatives.
The author of this article, Denise Martin,
is an estate planning and probate attorney practicing in Bowie, Maryland, at McChesney & Dale, P.C. For more information, feel free to contact
Denise at (301) 805-6080 or denise@dalelaw.com.
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| When will assets become available? See the Asset Availability Timeline. |
