In August 2023, my mom passed away unexpectedly. The turnaround from diagnosis to her passing was less than a week. Luckily for me, I was able to fly across the country to see and talk to her during her last waking hours.
I didn’t know the severity of her medical issue leading up to her surgery. In hindsight, I know she did. In my final minutes with her before she was wheeled away to the operating room, she directed me to a notebook in the attic that provided all of the financial information I needed to set my dad up for financial success should the outcome of surgery not be a positive one.
After my mom passed away and taking a week to decompress, I found myself in the attic looking for the notebook. When I found it, I thought to myself, “I’m really happy she had this information readily available.” I opened the notebook and to no surprise my mom had handwritten their household income sources and expenses line by line. #koreanmom
Social Security checks are deposited every 3rd week of each month. My mom had a pension with the state that also was deposited on the 1st of every month. She wrote out her expenses and detailed the amount, when the payment was due, and what account it was debited from. Expenses ranged from monthly payments like the phone bill to quarterly water bills that needed to be paid by check.
Once I had a better understanding of cash flow, my dad and I started the process of retitling accounts, updating income records such as her pension and Social Security, contacting insurance providers, and completing an estate plan.
As a financial planner, I’ve handled the estates and financial affairs of many clients throughout my professional career. Despite that experience, I still found out a lot about administering the death of a loved one.
Below I share 7 steps for anyone else who embarks on this journey.
Step 1: Order death certificates.
The funeral home for my mom’s celebration of life had ordered original death certificates for us. This document was essential for changing ownership of accounts and updating income sources such as the pension and Social Security. We also ordered several original copies of the death certificates from the local county office. None of the steps listed below were allowed to start until we provided a copy of her death certificate.
Step 2: Go to the bank.
My parents bank at a local credit union. My dad and I set an appointment up with a local branch to sit with a representative and update the ownership on the accounts. Their bank accounts were all in joint ownership so the process of converting to individual ownership was straightforward.
Once my dad signed off on the ownership paperwork, the next step was listing beneficiaries as Transfer on Death (TOD) on his individual bank account. By adding TOD to his bank account we were setting it up so that if he were to pass away his beneficiaries would be listed directly on the account, therefore avoiding probate.
After we completed all of the required paperwork to change ownership and add TOD, we got a new debit card for my dad. We tested it out in the branch lobby ATM and going through the drive thru ATM machine. We wanted him to feel comfortable using the card.
The drive thru ATM machine also reminded me of when he taught me how to drive, only this time I was the one yelling, “You’re too close to the wall!”
Step 3: Updating beneficiaries on retirement accounts.
My parents have worked with a financial professional for many years. My dad called the professional to make sure the beneficiaries on his retirement accounts were updated. My mom was listed as his primary beneficiary. He needed this to change. My dad filled out forms to update his primary beneficiary and his contingent beneficiary on his retirement accounts.
My mom did not have any retirement accounts as she received monthly pension income from her former employer.
Step 4: Contacting insurance providers.
My mom worked for a state institution for most of her career. When she retired they provided lower-cost options for health and dental insurance. We contacted the health insurance provider and were informed that my dad was still eligible for medical coverage even though my mom was the one that received the policy. Phew!
My dad had to fill out a form to remove my mom from the policy and the health insurance provider confirmed he would not need to re-enroll in the policy. The exact same process took place with their dental insurance provider.
Step 5: Updating Social Security and pension income.
We called the Social Security office to confirm my mom’s death. The representative we spoke with mentioned that the funeral home had already contacted them on our behalf so they had it updated in their records. This was news to me!
My mom’s monthly Social Security benefit was higher than my dad’s monthly benefit. We scheduled an appointment with the local Social Security office to make sure my dad applied for spousal benefits. His monthly benefit would now be increased to my mom’s monthly benefit, while his original benefit fell off.
We mailed in their marriage certificate to prove that he qualified for spousal benefits and were able to increase his benefits by a few hundred dollars per month. Social Security also made a one-time payment of $255 which is done when a spouse passes away. They must want the surviving spouse to be able to order takeout for a few days.
Next, we contacted my mom’s pension to inform them of her passing. Her account was coded as deceased as they said they read an obituary. I was not aware that institutions would be scanning obituaries for pension holders!
We had found the original application that my mom filled out when first making her pension election. The box for 100% joint survivor benefits was checked. That was good news for my dad. This option allows the monthly income that she received to switch to my dad in the event that she passed away. The monthly benefit is lower than if she has selected the single life option. This may entice people, but the peace of mind that your partner is provided for in retirement should you pass away is worth something.
The pension company stated that they would be mailing physical checks to my dad until he completed the paperwork to move the pension income into his Social Security Number. After a few months, the payments started flowing to his individual bank account on a regular basis.
Step 6: Get an estate plan.
I had been on my parents to get an estate plan for several years. An estate plan is not only for the ultra-wealthy. It is for everyone. It only took my mom’s death to get my dad to move forward with completing an estate plan.
We contacted a local estate attorney and met virtually to complete a questionnaire. After the meeting, the estate attorney mailed my dad a will, health care directive, and power of attorney to sign. We also updated the TODD on their house. This allows the house to pass to the listed beneficiaries instead of being tied up in probate when he passes away.
Step 7: Simplify everything!
I was able to simplify my dad’s financial life once the income was flowing in as normal and the accounts were registered in individual name. We reviewed his monthly, quarterly, and annual expenses and set up payments to be auto drafted from his checking account as opposed to random credit cards, checks, and bank accounts. The income flowing into his bank accounts would more than cover monthly expenses. He preferred to have a buffer in checking above his living expenses knowing he would transfer money from savings to cover one-time large purchases. By consolidating where his payments are coming from, he doesn’t have to worry about paying off multiple cards or making sure there are enough funds available in his account.
After the finances were figured out, we needed to document and save all of his login information. We developed a plan on where to store the information so that if anything happens to him, we are equipped to help.
Many of our clients are in or entering the sandwich generation. Defined as those of us that will be caretakers for our parents and for our children. Sandwiched in the middle, there isn’t a lot of breathing room. So the best thing you can do is be prepared for the unexpected. If this sounds like you then it is time to start having a conversation with your parents about their finances and their plans for the future.
I hope this blog is insightful and can serve as a roadmap for you and your family.
Please don’t hesitate to reach out if you or your loved ones would like assistance through this process.
Disclaimer: This article is for informational purposes only and is not a recommendation of Fyooz Financial Planning, Natalie Slagle CFP®, or Daniel Slagle CFP®. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment or financial planning strategy. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.
