Explaining Your Estate to your Spouse and Future Steps to Settle the Estate

Two weeks ago, I discussed the importance of documenting and explaining your estate to your spouse (and also possibly your executors). I noted that while documentation was vital (using an estate summary type document), it was only the first step in trying to reduce the stress your spouse will have in settling your estate. 

 

A second crucial step is explaining in “plain English” and practical terms what the documentation means. Today, I will expand on what you may want to consider explaining to your spouse and the future steps they may need to take to settle your estate.

Note: I will be providing some links that provide details on how to deal with some of these estate issues. I do not have the expertise or the time to confirm all the information in these links is up-to-date and accurate. I do not know any of the authors of the articles, so I'm unable to endorse them. Please use this information as a starting point only, it may or may not, be the gospel.

Introduction to Your Advisory Team

Depending upon your personal situation, you may have an accountant, lawyer (maybe even multiple lawyers -one for estate, one for corporate etc.), a private banker, an insurance advisor, an investment manager, or investment advisor. It is one thing to document who these people are, it is another to explain what each of these people do for you and your family and to get your spouse comfortable with them while you are alive.

I suggest you try and do the following with your spouse:

1. Review the section of your estate summary that lists your advisors with your spouse. This section should include the name of the advisor and their contact information. I would then verbally discuss with your spouse what services each of these advisors undertakes for you and your family (i.e. your accountant provides personal tax services, files the family trust, prepares financial statements for your family corporation etc.). This will provide some context to your spouse. After you discuss this with your spouse, you may want to consider writing up a brief summation of your discussions and attach it to your estate summary document.

2. Depending upon how open you are about your financial affairs with your spouse, consider including your spouse at a minimum in your yearly meeting with each of your advisors. This will ensure they get to know these individuals and will provide your spouse a comfort level should they need to contact them about your estate. It will also provide them a greater clarity of your financial affairs. If you are not comfortable with your spouse knowing all the financial details of your life, then arrange lunches or more opaque meetings with these advisors, so your spouse will have some level of comfort with them.

3. After meeting these individuals, it is useful to ensure your spouse understands the granular details of how these people would help them if you passed away. For example, it is not enough for your spouse to know the investment manager is the person who manages your investments. They also need to understand that if you pass away, this is the person who they will contact to ensure they have money coming in to pay the bills and that this person would assist them in understanding their financial situation going forward.

4. My last point on this topic is that if you are a professional advisor and provide these services for your family, you need to clarify who will take over for you. I had not thought of this until my wife asked me who would prepare the family tax returns going forward if I passed away.

Contact Person

When a spouse passes away, the surviving spouse is grieving and overwhelmed. While it is vital to introduce your spouse to all the above professionals, it is even better if you have a financially savvy family member, friend, or executor whom your spouse knows intimately and is comfortable with, to initially assist your spouse, to get their bearings in dealing with the estate. In a best-case scenario, this person is an executor of the estate. However, this does not necessarily have to be the case, as this person is hopefully someone who can provide both emotional support and financial direction.

If you are lucky enough to have such a person in your life, ensure they are okay assisting and let your spouse know who this person is. To be clear, I am not suggesting this person take on executor like responsibilities (it they are not the executor), but just be a sympathetic friendly ear who acts as the initial quarterback until your spouse gets their feet underneath them. This person for example would help direct your spouse who to contact immediately and what matters can wait.

Funeral Costs

While any estate summary should include your burial wishes and details, a practical matter is paying for the funeral costs. Most banks will allow you to pay for the funeral costs from an estate account before probate, but it can be an administrative headache. So, discuss the best way to ensure your spouse has the funds to pay for the funeral. That is often as simply opening a joint bank account (if you do not have one) and ensuring there is always a minimum amount in the account to cover funeral expenses and a month or two household expenses.

Insurance

Ensure that your estate summary includes all insurance policy details and specifically where to find the original policies. Hopefully, you have introduced your spouse to your insurance advisor, and they can help or guide your spouse to navigate the various steps and forms to obtain the insurance proceeds. I know with one estate I was an executor, the insurance company initially balked at paying the proceeds and we needed a lawyer to get involved to get the proceeds paid. In most cases it is smoother than that, but you never know.

Here is a link on how to claim an insurance benefit after death. As noted above, I do not have the time or expertise to ensure the information is correct and up to date. Again, this link should be at worst a good starting point, as I do not know or endorse the writer (I just googled to find an article on the topic).

Investment, Real Estate and Tax Information

You likely have a virtual or physical filing system for your historical investment, real estate and tax information (as well as current information accumulated during the year for tax and other purposes). It is not enough to just document this information in your estate summary, you need to also note the location of this information in your summary. Furthermore, to ensure clarity, physically show your spouse where you keep this information even if you think they know where it is.

Historical investment and real estate purchase information may be required for future cost base purposes, so you need to ensure there is a summary in your estate file.

Personal Items

In a perfect world all personal items are easily accessible and included in your will. One of the biggest issues with families is not documenting who receives your personal items or even worse, telling a beneficiary they are to receive an item and then it is not allocated in your will. It is therefore very important to ensure your spouse has a list of your personal items and where they are located. If for some reason you do not wish to list these items in your will, at least make a list for your spouse of these items and who should receive them. It is my understanding this list may not be legally binding if not in your will (you should confirm with an estate lawyer), but at least you would have your wishes known. Again, to ensure family harmony, your will/list must be consistent with what you have verbally told your children, grandchildren etc. about the items they will inherit.

Mortgage Life Insurance

Lenders typically require mortgage life insurance and upon death, the insurance will typically clear the debt. Ensure your spouse is aware of the insurance and where details of the mortgage and related insurance can be found.

Loyalty Points

We all love our loyalty points. I have seen loyalty points addressed in wills (although I have read some providers will not respect the will), but they are often overlooked. There are far too many loyalty programs to review, but here is a link to a 2019 blog post on many of the most popular loyalty program. It is possible given the date of the article; some policies have been changed by the providers.

You will want to ensure the passwords for these programs and account numbers are included in your estate summary.

Supplementary Credit Cards

Often a spouse will have a supplementary credit card. This article discusses what happens when there is a joint (supplementary card) in step #4 and goes into depth what to do about credit cards in the deceased spouses name. 

 

Telephones and Two-Step Verification

 

Yesterday I was provided a great piece of advice I had never considered. So many services we use now require two-step verification. If you are too quick to cancel a deceased spouse's telephone, you will not be able to access certain services to update or cancel those services if second-step verification is a text to the deceased spouse's phone.

 

Digital World

We live in a digital world. From cryptocurrency to cloud vaults, to blogs, to social media platforms, we are all very much involved in the digital world. It is very important all digital information is listed along with associated passwords in your estate summary. Again, there are so many digital platforms I could not even try to cover a tenth of them. But here are summaries of what happens to your accounts when your spouse passes away for three of the most popular, Gmail, LinkedIn and Facebook.

What Happens to Your Gmail When you Die?
What Happens to Your LinkedIn Account After Death?
What will happen to my Facebook account if I pass away?
 

The scary thing about this blog post is that it is shockingly far from exhaustive. However, it's a good start to help explain your estate to your spouse and the steps that may need to be taken upon your death.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation. Please note the blog post is time sensitive and subject to changes in legislation or law.