When my dad fell ill and passed away earlier this year, I received a crash course in end-of-life decisions and estate settlement. While my parents thankfully had a complete set of estate documents and the family generally agreed on what was best for my dad, I realized this was just the tip of the iceberg when it comes to end-of-life matters. Here are a few things I wish I had known:
1. Review estate documents regularly.
My parents’ trust was established in 2012, when estate laws were different. The trust required the creation of an irrevocable bypass trust at the first death, funded with half of the community property. This separate trust necessitated complicated decisions about which assets to allocate to each trust and will require filing an additional annual tax return for the foreseeable future. While the trust was set up to protect my siblings’ and my inheritance, it added unnecessary complexity given my parents’ financial situation. In hindsight, carefully reviewing the terms of the trust with my father and stepmother, before he became incapacitated, would have been beneficial.
2. Ensure the surviving spouse knows where key documents are.
When my dad fell ill, and later passed away, my stepmom didn’t know where the originals copies of their estate documents were located. We eventually found the necessary documents, but she was also unaware of some details regarding their finances. It is crucial for the spouse who manages the finances to ensure that the other spouse knows where important documents are kept and is familiar with all assets and liabilities.
3. Estate settlement is a marathon, not a sprint.
The time required to settle an estate can vary greatly depending on its complexity and whether everything is in good order (e.g., beneficiary designations on all retirement accounts, a complete set of estate documents, etc.). Be prepared for the process to take a long time. There will be many forms to sign and numerous steps to take to properly account for and transfer assets. Each financial institution has its own procedures, which can seem overwhelming and unnecessarily complex. If you encounter obstacles, don’t hesitate to ask for a manager, as we found that junior customer service representatives often provided incorrect information. Draw on your inner reserves of patience and perseverance. Make a list and focus on tackling one task at a time. While it may be tempting to settle the estate quickly so the surviving spouse can move forward, the process will take time, and trying to do too much too quickly can leave the survivor emotionally and physically depleted.
There is never a good time to lose a loved one, but with some advance preparation and an understanding that estate settlement takes time, the process can go more smoothly and cause less stress for everyone involved.