Why Estate Planning Matters

As financial advisors, we tend to tout a multitude of services and components of advice but we don't always do a good job explaining the importance of our advice. No matter how many definitions or laymen's explanations are given, the age-old adage will always be true: Facts Tell, Stories Sell.

Take into consideration, this story, from AARP that explains one executors two year nightmare (a copy and paste is written below)

So what should both advisors and clients take away from this? Its a cautionary tale of how loose ends in finance create big problems for other people. Consider how expenses can pile up and create cash flow problems for loved ones, such as burial expenses, house mortgage payments, or even old debt, but don't take my word for it, take it from a woman whose Ordeal made a headline at AARP.

https://www.aarp.org/publications/magazines/aarp-the-magazine-august-september-2024/page23/

Story Below

My Mom Died. Then Came the Ordeal

WHEN MY mother asked me to be her executor, I thought I knew

what that would entail: Gather up the money in her accounts, dole

it out as directed by her will and tie up other loose ends. My

mother had been my father’s executor when he died, and the process had

seemed straightforward. I imagined that this sad task would take less than a

year.

How wrong I was. It’s been nearly two years since my mother died, and I’m

still not done. Mom did many things right. She had a will, a power of attorney

and a health care power of attorney. She let me know who should get certain

items after her death. Her estate was not complex. Still, it’s been an exhausting

cascade of notarized forms, phone calls, faxes and difficulties. But I’ve learned

a lot about how my mother and I could have made this easier. Whether you’re

doing your own estate planning or you’re in line to be an executor one day, I

have lessons for you.

Prepare for the cost of dying.

Most funeral and burial costs can be covered by a person’s estate, but belatedly;

when a loved one dies, you have to pay up quickly and, if there’s money in the

estate, get reimbursed later. I had two days to hand over $17,500 for Mom’s

funeral, wake and casket because the funeral home required up-front payment

and didn’t take credit cards. They suggested a company that lends money for

funerals, but those lenders might charge 30 percent interest or demand your

car’s title as collateral. Luckily, my siblings and I could afford the $25,000 total

cost of Mom’s funeral and associated expenses without borrowing.

Life-and-Death Lesson 1: It would have been great if Mom had set up a joint

bank account with me, so I could access the money for the funeral.

Get ready for more up-front expenses.

When you’re the executor, companies will let you report the death, but they

won’t share account balances or make any transactions unless you have letters

testamentary—legal proof of your authority to act on behalf of the estate. So

until you probate the will and obtain letters testamentary, you have to pay the

estate’s bills with your own funds, assuming you have any. In New Jersey,

where Mom died, it took nearly six weeks to get the letters and another four to

get access to her accounts, during which time I paid her bills—power, property

taxes and more—out of my own pocket.

Life-and-Death Lesson 2: Here again, a joint account with Mom would have

helped.

Your bank may drive you nuts.

Upon receiving my letters testamentary, I needed to open an estate checking

account for receiving money owed the estate and paying its expenses. This was

easy at PNC Bank, where Mom had a savings account.

Things didn’t go so well at Capital One, where Mom had bank accounts, a

credit card and a car loan.

First, the bank accounts. At Mom’s local branch, an employee scanned the

death certificate and my letters testamentary, and I filled out a form indicating

how I wanted to receive the money. I was told that the estate department,

which had no number I could call, would be in touch. Then came weeks of

back-and-forth communication: a request from the bank for more information

or another form, my response, a five-day delay, then another request. When,

after nearly two weeks of silence, I still hadn’t received the money, I wrote to

say I would be filing a complaint with the Consumer Financial Protection

Bureau and the New Jersey attorney general. That got me a speedy—and

classic—response: The check was in the mail. Nearly two months after my visit

to the bank, that check finally arrived. Meanwhile, the bank’s credit card

department was calling me constantly about my mother’s small credit card

balance.

The auto loan was another source of frustration. At the time of her death,

Mom’s monthly payments were being automatically deducted from her

checking account. When a regular payment was deducted from her account a

week after she died, Capital One reversed the transaction. I tried to make the

payment with my own funds, but was rejected. As soon as I received my letters

testamentary, I prepared to pay off the loan—which is when I saw the late fees

for the payments never made because the bank wouldn’t let me. With my

record of attempted payment in hand, I protested. They removed the fees, and

I paid off the car. (I reached out to Capital One for comment. They now

provide a phone number for the estate department, but only for help with bank

and credit card accounts. You still have to call the auto loan department

separately.)

Life-and-Death Lesson 3: Keep detailed records of all calls and conversations

with institutions you deal with. File a complaint with regulators if you are not

being treated fairly.

Utilities aren’t easy either.

Unless you are listed on an account, phone, wireless and internet providers

probably won’t talk to you on the phone. They may tell you to go to one of their

stores and bring a death certificate and letters testamentary. Ironically, soon

after I did that and got added to my mother’s Verizon Fios account, I went to a

store to close it … but was told I had to do that via the phone. 2C3l oofs 4in8g Mom’s

mobile plan took three visits to an AT&T store and happened, miraculously,

even though I didn’t have the account password they expected me to know.

Life-and-Death Lesson 4: Get your name added to utility accounts so they are

easier to manage.

Paperwork can be a pain.

My mother had a brokerage account at TD Ameritrade with a few stock

holdings. Transferring those assets to the estate was easy. Mom also owned

four individual stocks that she had never put in her brokerage account. These

took a lot more work. The beneficiaries had to fill out a form with their tax

information and address. I also had to obtain a “medallion guarantee” from a

bank—a document confirming my identity and legal authority to transfer stock.

The difficulty continued after I mailed all the documents to Computershare,

the transfer agent for the stock. Two weeks later, tracking the package online, I

saw it had stopped dead at a post office. Computershare then told me that the

mailing address on their website was for an office that had been closed for

some time. Luckily, the post office found the package and forwarded it to the

right location.

Life-and-Death Lesson 5: Consider moving directly held stocks into a brokerage

account or use a “transfer on death” (TOD) designation. If you’re the executor,

send important documents using a service that allows you to track shipments.

Try Swedish asset death cleaning.

My parents bought land in Vermont in 1975, intending to build a second home.

They never did, but they never sold the land either. Since it’s in another state, I

had to hire a local attorney, open an ancillary estate and find a real estate

agent. The property finally sold in June.

Life-and-Death Lesson 6: Selling unused assets now will smooth things after

you’re gone. Consolidating financial accounts may help too. People talk about

Swedish death cleaning of one’s home, but no one talks about asset death

cleaning. Sounds morbid, but we should do it.

Get ready for the feelings.

One more challenge is worth mentioning: This is emotional work. Transferring

the hard-earned assets my parents had accumulated over their lifetimes was

sad. Turning off the cell service to a phone I had once called daily was so

painful that I put it off for months. I shed many tears as an executor, some

from frustration but most from the sadness of losing Mom. I was lucky to have

a supportive wife and siblings as well as help from an attorney. If you are an

executor, don’t be afraid to lean on others for help.