A man I know died leaving behind an old widow. The husband had paid all the bills, kept all the accounts, planned for retirement, and did everything related to the couple’s finances. The couple had lived through depression, and her husband didn’t trust the bank. He had seen too many bank failures, so he was very careful to make sure no bank kept a lot of his money. He has dozens of accounts. When he died, his wife had no idea where all the accounts were or how to manage his financial problems.
The church group they belonged to actually assigned a team of church members to try to track down all of the widow’s money and help her manage it. It took them over a year to be satisfied that they had found all the accounts and held this poor woman financially accountable. The problem of the poor widow has not been resolved, because all the accounts are only in the name of her dead husband. He must authorize all accounts before they can be transferred to him. This poor woman not only experienced the emotional disaster of losing her husband for life, she was also having a huge financial nightmare. There are several lessons to be learned from this case.
First of all, both partners should be involved in family finances. The husband does not do his wife a favor to “take care of everything.” A wife who pretends to be stupid and “don’t want to know” will probably be very sorry one day, and I’m sure her attitude must be a bit frustrating for the husband. In reversed roles, I have seen husbands who turn a blind eye and say that the wife takes care of everything, and they are quite proud of their ignorance. It’s never too late to start involving both partners in family finances.
The husband may not be stupid not to trust the bank. Banks are failing at a record pace today. Be careful not to exceed the FDIC limit on what will be covered when the bank goes down. I have had several clients and associates burn out for having “a little too much money” in one bank. It is unpatriotic for me to question how long the Federal Government will sustain the FDIC, but I do not believe the government will solve all our problems forever. Careful.
Everyone should keep some kind of ledger detailing where their assets are and what they are. If you’re going to at least keep all of your banking, brokerage, and insurance statements in the same file drawer, your surviving children or spouse can find the drawer and have a place to start after you die. In fact, it is not only death that triggers the need for a transfer of financial control. You have a much greater chance of being out of control of your financial affairs next week than your death. You may have a few dozen things happening to you that will leave you unable to control your own financial affairs.
Assets such as bank accounts, real property, brokerage accounts, safes, cars, timeshares, and many others should not be held in the name of just one person. Co-tenant ownership will work where the husband and wife are joint tenants, but people, other than spouses, are barely allowed to own property together as joint tenants. There are many serious reasons why co-lease ownership is such a bad idea.
Ideally, such assets should be held by a revocable living trust. If you hold assets in the name of your living trust, they do not need to be proven when you die. It saves a lot of frustration, time and money for your heirs. The trustee always has control of the assets. Of course, during your lifetime, you are the sole guardian or you are the co-guardian with your partner. Usually the surviving spouse is referred to as the first successor guardian, and then another person is appointed to take over if there is no surviving spouse or the surviving spouse is unable to manage the trust property for some reason.
A little planning can make the death of a family member far less of a financial disaster. This planning is worth every effort you put in and every penny you spend just to relieve the frustration, expense, and time requirements spent dealing with the estate of a deceased family member.