Planning finances for life's end

9:30 AM, Feb 20, 2013   |    comments
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GOLDEN VALLEY, Minn. - Beyond the lasting emotional impact of losing a spouse, the impact of a spouse's death to your finances and day-to-day details can be a tangled web to wade through.

Planning ahead can provide peace of mind that your loved ones would be in a position to carry on with the least disruption if something were to happen to you.

Dan Ament, Financial Advisor with Morgan Stanley in Wayzata, joined KARE 11 Sunrise to discuss a recent WSJ article on the topic.

Do you have a will? Just over one-third of Americans have a will, and fewer than half have any estate-planning documents at all, according to a 2011 survey conducted for You should ensure you have a proper will or trust in place including the related durable power of attorney designation which will allow your spouse to act on your behalf if you are unable to. This process should also include a review all of your beneficiary designations from retirement accounts, life insurance and POD accounts. In addition, you should confimr that the titles on your accounts and ownership assets you hold fit your plan and wishes.

Protect the Passwords: Tying up a partner's life online is among the toughest chores a grieving spouse must face. Internet providers are reluctant, for privacy reasons, to let loved ones into email and social-media accounts, often leaving families to choose between violating the rules to break into an account or losing decades of email contacts, family photos and other information. When making lists of password-protected digital assets, it is wise to focus first on the ones with monetary value, experts say. Many people now have extensive libraries on iPods and digital readers, and even airline accounts contain frequent-flier miles that could be worth thousands of dollars, says Sally Hurme, an elder-law attorney at AARP in Washington. Your best bet: Keeping an accessible list of your online user names, passwords and other prompts required to tap accounts you would want your family to see. This can be included in your 'Your 'Letter of Instruction' (click for link to Kiplinger article on the topic).

Unwind Joint Accounts With Care: To avoid any surprises, it is important to make sure you understand what happens with a joint account when you want to move it into one person's name following a death-whether any holds are placed on deposits or withdrawals, and whether online banking could be affected. If you are like many people who rely heavily on automatic ACH payments and Bill Pay services, there may be ways to transfer on-line banking information to simplify the process and avoid starting the process over.

Slow Down the Rollover: Following the death of a spouse, common advice is to roll a spouse's individual retirement account into your own after he or she dies-but for younger widows and widowers, that could cause a big, unnecessary tax bill. A "spousal rollover" generally makes sense if you are at least 59½ years old, the age at which you are allowed to start tapping an IRA without paying a 10% penalty on early withdrawals (though you would still owe any income tax due). But many widows are younger than that, and if they need to tap IRA assets rolled over into their own account to supplement their income or cover other expenses, they must pay the 10% penalty. Instead, if funds are needed from the IRA, widows and widowers under age 59½ often are better off transferring the money into an "inherited IRA," which remains in the deceased spouse's name, and then transferring it to their own IRA when they hit 59½ and can make penalty-free withdrawals (not tax-free).

Health-care decisions: Possibly the most important health-care document to fill out in advance is a durable health-care power-of-attorney form. This allows your designee to make health-care decisions on your behalf if you are incapacitated. The document should be compliant with federal health-information privacy laws, so that doctors, hospitals and insurance companies can speak with your designee. You may also need to fill out an Authorization to Release Protected Healthcare Information form.


(Copyright 2013 by KARE. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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