Episode 45: When a loved one passes away—what families need to know

Oscarlyn Elder:

The death of a loved one, whether a spouse or family member, is one of life’s most difficult experiences. Along with the emotional impact of a loss, there are often logistical and financial responsibilities demanding attention at exactly the time we might feel least able to handle them. I’m Oscarlyn Elder, head of Investment Management at Truist Wealth. And this is I’ve Been Meaning to Do That, a podcast from Truist Wealth, a purpose-driven financial services organization. We appreciate you listening. On today's episode, we're going to talk about ways families can prepare for the death of a loved one. The right support can make a challenging transition a little easier to navigate. Joining me are Truist Wealth colleagues who work with families throughout that process. Ashley Alderman is a senior wealth strategist who helps clients think through estate planning decisions. Tom Martyn is estate managing director and he helps guide families through the estate settlement process after a death. Ashley and Tom, thank you both for being here.

Ashley Alderman:

Thanks, Oscarlyn. Looking forward to the conversation.

Tom Martyn:

Same here. Thank you, Oscarlyn, for including me today.

Oscarlyn Elder:

Ashley, let's start with why it's important to think ahead about death, even though it can be difficult to contemplate and face. And I'll say most of us don't want to think about it at all. So we've talked about difficult topics, such as long-term care and dementia, on the podcast before. And a common theme that I've heard has been that planning is a way to lessen the burden on the people we care about. How does that apply when we're talking about death?

Ashley Alderman:

Yeah, Oscarlyn, I think it's exactly the same that planning can help lessen that burden after the death. When a loved one passes away, there's going to be a long list of things that they need to do. Some are going to be immediate, like funeral plans, figuring out how to pay those upcoming bills, dealing with a house perhaps, and others are going to be more long-term, like funding a trust or filing tax returns. But I always tell clients that as much as we're doing the planning for ourselves, we're doing it for our loved ones. And they're going to be grieving and navigating additional banking, investment, and legal tax implications with no guidance could be completely overwhelming. And so really planning could be in one way that final gift that you end up giving your loved ones.

Oscarlyn Elder:

Let's start with a person who would like to address this topic with perhaps an aging or ailing parent or loved one in mind. Do you have any advice about starting what might be a very hard conversation?

Ashley Alderman:

Yeah. I think the main thing is show empathy. It's a hard topic, especially for an aging parent that is honestly getting closer to that time. And you need to meet the person where they are at their comfort level, but maybe be willing to push them a little if they haven't done planning or they haven't reviewed it in a long time or you don't know anything about your parents' plan. And again, focus on wanting to make sure that their wishes are carried out. And then I think the other thing to remember is it doesn't have to be an all-or-nothing conversation, depending on the situation. So, if the parent isn't ready to reveal the whole plan, maybe just ease into it on, OK, where are your documents? Who would I call? Who are your advisors? Maybe how the estate will transfer in general. And then once you've opened the door for the conversation, you can keep going into deeper details with them.

Oscarlyn Elder:

Ashley, that's really, I think, insightful advice. Lead with empathy. Remember this really isn't about you; it's about them.

Ashley Alderman:

Exactly.

Oscarlyn Elder:

And what I'm hearing you say is it's really important to take a step back and to approach this as a journey and an ongoing conversation, not a one and done.

Ashley Alderman:

And it's not just the logistics, but there's so many emotions wrapped into those logistics that you have to keep both in mind.

Oscarlyn Elder:

Right. I think sometimes we forget perhaps that our loved one has more than likely experienced loss, and how they're approaching this topic is influenced not only perhaps by how they're feeling physically, but also the experiences that they've lived through in grief processes. And so all of us usually come to these conversations with some type of history, and it's just important again, I think, to keep the person you're having that conversation with at the center of the dialogue. Tom, let me turn to you. Once families get into the estate settlement process, have you seen the difference between those that have had these kinds of difficult conversations and follow through with the planning and those that have not? What's been your experience?

Tom Martyn:

Absolutely, Oscarlyn, there's distinction there. The families who have had these conversations as a group, as a family before that untimely death, they are much more calm, less anxious. And that's because there's less confusion, anxiety. They might know, hopefully, where the documents are as opposed to those families that I've seen who are in a panic because they just don't know where to start. They don't know who has the will. They don't know where the financial records are. And they didn't have any idea what their family member's wishes were. And that brings even more anxiety because they had these preconceived notions of what was going to happen, and now they see it's not. And that just creates a little chaos.

Oscarlyn Elder:

The reality of it all hits them very quickly.

Tom Martyn:

The reality sets in, yes, very quickly. And those that have done a lot of planning and have had these conversations who have done it successfully also have introduced the family to their key advisors. So, that first moment that they're meeting their key advisors is not at the funeral, if you will.

Oscarlyn Elder:

Right. Tom, I'll say I have a memory of a client that I worked with who was in her mid 80s who had three children, and she passed away and two of the children called me on the way to the funeral home and they didn't know any of the logistics. They didn't know the financial logistics. They didn't know how the services were going to be paid for, and they were already disagreeing around who was going to sign the contract. And this was happening in a moment where if they had had that space to probably just be reflective around what was occurring, it would've been better and not stressed about the financial elements of the funeral. So, that's really seared in my memory that we really want that journey to be as calm and peaceful as possible for those who are still here.

Ashley, once a family has started having these conversations, then what are some of the most important things that they should review or put in place? And we want to note as we have this discussion that we might get into some issues around taxes and law, and we at Truist, our representatives don't offer tax or legal advice. So, it's really important that you talk to a tax or legal professional so that they can give you specific advice to your situation. So, Ashley, with that, let's talk about what is the most important to-do list for folks who are engaging in this planning?

Ashley Alderman:

It's not just going to your attorney and getting the documents signed and then putting them in a drawer and saying you're done. There's often a lot of follow-up that needs to be done and coordination. So, it might be checking all of your designated beneficiaries on your retirement accounts, your life insurance accounts, any other accounts with beneficiaries. Making sure that you work with your advisors, your attorneys, CPAs, other advisors to make sure that the titling is correct and matches the estate document flow. For instance, if a couple owns everything as joint with right of survivorship, then everything passes to the survivor on the death of the first spouse without going through a will. So, any provisions in the will are completely ignored and don't get implemented because of the way the titling worked, even though the documents might be beautifully drafted documents. And then also making sure that all of your fiduciaries are the correct fiduciaries that you want and make sure that those people know that they're named and how they can get to your documents. So, don't put them in a safe deposit box where no one can get to it after you're gone.

Oscarlyn Elder:

Ashley, let's break out: What do you mean by fiduciaries? Which roles specifically are you talking about there?

Ashley Alderman:

Fiduciaries can be your agents under your financial and healthcare power of attorney. They can be your executors under your will, your guardians for any minor children if you pass away with minor children, and then trustees under your trust, any trusts that are created. And each of those have unique roles and distinct responsibilities that will be important to understand, as you're making those decisions, a different person in your life might be the right person for each of those different roles based on their abilities.

Oscarlyn Elder:

And folks often think that being appointed the executor or the trustee, that it is definitely an honor. It indicates you are trusted and that you've been bestowed with this very important duty, but it is a duty and there is work involved. So, what would you all share with our listeners around the calculus around deciding who fills those roles?

Ashley Alderman:

So, I would say don't just name your oldest child because they're your oldest child. That's something that we commonly see. But make sure that there's someone who obviously you trust, that they care about your decisions, but importantly that they have the time, the skill, the willingness to be able to enact the duties that are going to come with those roles. So maybe you have a loved one who would not be able to make a hard medical decision. Don't name them as your healthcare power of attorney. That wouldn't be fair to you or them, honestly. And, similarly, when you're thinking about the executor roles or trustee roles, make sure it's somebody who's going to be responsible with money and organized and be able to meet certain deadlines that the attorneys and the CPAs are going to have for them to enact. And then, on guardians, we talked to parents to think about who in your life you would want caring for your children and raising them as you would have them raised. Is it someone who already has so many children that having additional children would be unfeasible? Would the children have to relocate? It's a lot of hard decisions that come with these, but they're vitally important conversations that you have to have as part of your planning.

Tom Martyn:

I completely agree. And I think, Oscarlyn, you've hit on it. So often people make the selection like selecting their best man or the maid of honor, and it's not really focusing on whether those people have the time, the aptitude to serve as an executor because an executor's role is a full-time job. It's a lot of work and responsibility. And then, do they have the temperament to work with the family members? And when they find out that the terms of the documents are not distributing the assets as they all expected and there's now arguments as to who wants what, there are a lot of challenges that are faced by the executor and those are things that people should take into account when making that decision.

Oscarlyn Elder:

That's a great point, Tom. And I'll point out maybe not only in the executorship, but also in the trustee decision as well, if there is a surviving trust especially if a family situation is complex or if there is already estrangement between or among siblings, if there's any kind of dependency issues present in the family, someone may actually opt to have an entity like Truist or someone independent and away from the family in that trustee role because it's somewhat unfair to expect a sibling to have to deal with those types of complex issues. So, thinking through the actual responsibilities and the dynamics and the actual weight and the burden that will be placed on those fiduciary roles is super critical, I think, as we're going through this planning. So, Ashley, let's talk about what are some of the most common mistakes people make in this planning process?

Ashley Alderman:

Sure. So, we've already touched on some of them, like making sure you check your titling, the beneficiary designations. But I think sometimes, too, we think about large accounts and big pieces of real estate, but sometimes it's the tangible personal property, your stuff, the jewelry, the art, the furniture, that might have sentimental meanings to multiple family members. And those can often be where the most contention happens later on if they're not addressed in your documents or in your plan. And then another big mistake I see is an overarching theme of just not following the formalities of the plan. So, an attorney often is going to give you an instruction letter with your documents, and it might say that now that you have these documents, you need to retitle these accounts a certain way. Maybe it's how to make proper payments from certain trust accounts as the attorney instructs. And, although these might seem like administrative issues, they can actually make a huge difference in the plan. And I think the biggest mistake is that people just don't review their documents frequently enough. We say at least every three to five years, if not earlier, and certainly after there are any life changes, the death of a spouse or another family member that's named in your documents, a divorce. Any major life changes, your documents need to be looked at.

Oscarlyn Elder:

And, Ashley, we've had some pretty significant changes to tax code recently, recent history in the last couple of years. So maybe talk about how that impacts how we all should be thinking about reviewing our estate plans.

Ashley Alderman:

Sure. Yeah. For clients that did their planning when the estate tax exemption was $5 million or even further back at $1 and a half million or $600,000 even, if they haven't looked at them in a long time, they need to make sure that the flow of assets and their documents still make sense. So, we've still come across old documents that have formulas in them where maybe a certain gift is funded to a trust, and it was clearly done with the intention of a smaller exemption amount. But now those formulas might not make sense anymore, and a beneficiary could inadvertently be cut out.

Oscarlyn Elder:

Right. So, it is really important that folks make sure that the funding mechanism for the surviving trust actually accomplishes what they want to accomplish.

Ashley Alderman:

Exactly. And that the tax benefits that they're taking advantage of in the documents are the best tax advantage that they can take. And they might need to work with their attorney on having a different type of funding mechanism than they did previously.

Oscarlyn Elder:

So, we really encourage folks to connect with their tax and legal expert for these types of reviews and decisions that they need to make. Tom, when these kinds of details that Ashley’s talked to us about, when they don't get addressed ahead of time, how does that affect the family after a death?

Tom Martyn:

Well, Oscarlyn, it creates more anxiety and confusion unnecessarily. We've seen where beneficiary designations named someone who already passed away or a document was drafted under different tax laws, and now a spouse who is in need of income or cashflow is not given directly the cashflow that's necessary to sustain their lifestyle. And it creates more work because then it brings back the advisors, the lawyers, the CPAs to try to navigate the court system, to try to put things back in place the way it was intended to be. And often you can't get there. And that creates more grief, which really is what the family members should be focusing on is grieving process and not these unnecessary anxious moments.

Oscarlyn Elder:

Ashley, let me ask one more question: How do you help our clients think through those immediate needs and how to prepare for those?

Ashley Alderman:

And that's where we do a lot of cash flow modeling and liquidity analysis to make sure that the surviving spouse is going to have sufficient liquidity based on how the estate's going to flow. Unfortunately, I’ve seen situations before where maybe all the assets were in the husband’s name and the wife didn’t even have access to a checking account in her own name to pay the funeral bills or the probate court fees. And so that’s where it’s important at looking at where could that surviving spouse have that immediate access? Do they have it in their own name already or is there going to be a joint account that could be transferred to them quickly?

Oscarlyn Elder:

The other thing that I’ve seen as I’ve worked with clients is that, often, especially with couples as they're coming in to meet with us, they may have a vision, a belief as to who is going to pass away first. But, as we all know, life can unfold in a multitude of ways and it’s really important that the planning be looked at from every possible angle. And I just want to encourage folks to not get caught in that trap because we just don't ever know exactly how it’s going to work out.

Ashley Alderman:

Yeah. Life doesn’t happen in a linear manner all the time. So that’s part of our job, too, as advisors helping ask those hard questions when those situations arise.

Tom Martyn:

Completely agree.

Oscarlyn Elder:

The loss of a loved one is hard, no matter how thorough the planning has been. We'll talk about effectively supporting a family after a death when we come right back.

Tom, you’ve supported many families after the death of a loved one. What tends to surprise families the most in those first hard days and weeks afterward?

Tom Martyn:

I think what surprises people the most is just the sheer number of decisions that have to be made so immediately. Most people don't deal with this on a regular basis. And whether it be from making the funeral arrangements, writing a new obituary, making decisions regarding a memorial service, a burial, a cremation, how many death certificates will I need? How am I going to pay the bills? And figuring out the next steps among other things. My stepdad passed away unexpectedly, and my mom experienced this. We planned well, as you might expect because I'm in this business, but at the same time, it doesn't remove the fear and anxiety. Where is the money going to come from to pay the bills? Who's going to pay for the funeral? In our case, my stepdad did pay the regular bills. And so day-to-day life was very different. It just comes and pours on top of you, and no one can be ready for it.

Even if you've experienced it before, for those of us who are in this business, you deal with it every day, you know how to guide. And that's the goal of advisors is to guide families through this and take a pause and realize that let me let someone else make a phone call and let them know that we're tending to the situation and we'll call you next week or someone will call you next week to help navigate the minutiae of things that are coming at you.

Oscarlyn Elder:

I know I experienced this when my mom passed away. For me, I was doing all I could to hold myself together. Her death was unexpected. Shaking hands and hugging people and comforting actually a lot of people who were coming our way there was as much reciprocal comfort. And yet, on top of it, there were these decisions about, well, what type of casket and what type of vault and what does dad want? What do my siblings want? And I think our family was really lucky in that moment in that there was a lot of agreement among us as to how certain things would go, but there were places where there was disagreement and it was all happening in this moment where we were in complete shock around what had just happened. And so I want to point out that this moment of overwhelm can really happen in all types of deaths and passing. And just having your items in order, having that checklist, having had the conversations really help carry you through a time of immediate intense grief. This is a deeper, intensely personal topic that we're talking about. What are the most important ways we think to support a family during this time? And just to reiterate what we said earlier, Truist doesn’t offer tax or legal advice. So, you need to talk to a tax or legal professional about those kinds of issues.

Tom Martyn:

The ideal situation is where wealth advisors are positioned so that they can act as that quarterback, lifeguard, navigating a family and organizing all of the advisors, the attorneys, the CPAs, even your long-term care insurance provider and to say, let’s put a game plan together. You deal with what you have to deal with. I will protect you in this regard. And then we'll come back and set out what are the next steps, what are then the long-term steps, and who’s going to own them?

Oscarlyn Elder:

So, Tom, I'd like to touch on the mechanics of estate settlement. And most of us have seen some type of reading of the will—seen, whether it's a movie or a TV show. And for some people, that may be all that they know of settling an estate. So, give us some insight into the process and what it looks like and how long it can take.

Tom Martyn:

It's such a foreign area for most people, and those readings of the wills that we see on TV in some cases actually do happen. But the reality is people often think that they might leave that room with a check. No. It's a very complex process, which is why it takes a village in organizing and guiding families through this. And, in fact, large complex estates, it takes not the days, the weeks, months. It’s likely going to take a year or more in order to fully distribute assets and complete the process. And why? Well, there are tax returns that are likely required. Our team of estate advisors, they're detectives. They’re going in and they're trying to identify all the assets, all the liabilities that a person might have had an interest in at the time of their death. And they're gathering all this information. They’re valuing those assets, paying the bills, all for the purpose of the estate tax return, which isn't due until nine months from the date of death. So that gives you a sense as to the timing.

And of course, after filing, you're not then going to close the estate. You are waiting now to hear from the taxing authorities as to whether they have questions or whether they're going to accept that. And all the while, what's happening, people own real estate, people have business interests, personal property, and the real estate has to be appraised to be potentially sold. It takes a long, arduous process in order to complete the estate administration. And it's really important at the outset to actually lay this out for the family members.

Oscarlyn Elder:

Thank you for sharing that. I’d like to close this episode, bringing it around to the planning stage. When you think about the families that you’ve worked with who seem to get through this transition the most successfully, or maybe at least with the least amount of heartache, what did they do beforehand that made the biggest difference?

Tom Martyn:

I think most successful situations are those who do have the conversations and in fact have those conversations with a regular cadence and share the location of all of your relevant documents, introduce the advisors, and ensure the plan works and ensure all of the I's are dotted. Beneficiary designations are correct. Ensure that the assets will flow as intended to the extent you’re comfortable sharing some nuances with your beneficiaries so that you remove the surprises and the fighting because that's what becomes the most challenging. Communication—a lot of communication at a regular cadence is critical.

Oscarlyn Elder:

Ashley, how about you? What would you add? Tom’s given us a very comprehensive answer there, but what would you add?

Ashley Alderman:

I would say ditto on everything Tom has said. But one thing that I could add is that working with your advisors to keep an updated balance sheet of all of your assets and liabilities can be very helpful as a guide of where to go and what institutions would need to be contacted after someone passes away. And then just to reiterate what we’ve said a thousand times, just keep reviewing the plan. We like to say that it’s not a plan—it’s planning, and it’s an ongoing process that you keep going through your entire life and make sure that it’s continually updated.

Oscarlyn Elder:

As we all know, the death of a loved one is never easy, and it can be hard to manage financially and emotionally. You've both given us a lot to think about and some actions to take. So, I thank you both for being here. But you can't go quite yet because there's a question we always ask our guests, and I'd love for you both to answer it too. We ask: What's the one thing that you've been meaning to do that you haven't done yet and that you're willing to commit to doing now with our audience listening? Ashley, why don't you go first?

Ashley Alderman:

All right. So, I am an avid traveler, and I take photographs everywhere I go. And, years ago when digital photography started and we weren't developing film anymore, I realized that I wasn't looking at my pictures enough. So, I started making photo books for each of my trips. And, unfortunately, I am woefully behind on making my photo books for my last couple of trips, to Morocco and Scandinavia, so that is on my to-do list to finish up before I take my next trip.

Oscarlyn Elder:

That is a great to-do. I love that. So, I want to hear how that goes and when you get those books finished. And, Tom, how about you?

Tom Martyn:

I was keeping with the theme of our discussion today. So, I have boxes in my closet in my basement here full of my own documents and financial records. I've been meaning to review those and organize them and discard what I don't need, but make sure I'm keeping what's important. And they've been more importantly, making sure my wife knows where they are and reviewing it with her. So that's what I commit to do.

Oscarlyn Elder:

It's a hard thing to get around to, right? But once you get it done, it's going to be a deep breath moment. You're going to feel better about it all. So get on that, Tom. That's the message. Get it done. Well, Tom and Ashley, thank you both again for joining me today.

Tom Martyn:

My pleasure. Thank you for having me.

Ashley Alderman:

Thanks, Oscarlyn.

Oscarlyn Elder:

And, listeners, I want to thank you as well. If you'd liked this episode, please be sure to subscribe, rate, and review the podcast and tell friends and family about it. I also invite you to listen to the podcast from Truist Securities, Navigating Beyond the Expected at Truist.com/BeyondPodcast. If you have a question for me or a suggestion for this podcast, email me at DoThat@truist.com. I'll be back soon for another episode of I've Been Meaning to Do That, the podcast that gets you moving toward fulfilling your purpose and achieving your financial goals. Talk to you soon.

Speaker 4:

Oscarlyn Elder is an investment advisor representative, Truist Advisory Services Incorporated. Any comments or references to taxes herein are informational only. Truist and its representatives do not provide tax or legal advice. You should consult your individual tax or legal professional before taking any action that may have tax or legal consequences.