How to be prepared for a death in the family, emotionally and financially

I haven’t recorded a video for some time now, but there is a reason for it. I had a sudden death in my family that shook me to my core.

My mother passed away suddenly, and I was not prepared at all for this to happen.

Yes, she was sick, but death was not expected to come that fast. I was emotionally distressed and needed to take some time off and not think about work and my daily tasks and my duties.

I spent some time watching videos when my mum was happy and healthy.

There was lots of crying on my part, but somehow it helped me remember her as a young, healthy, vibrant woman. Like in any family, we had our moments, but she was the person that taught me the value of hard work and the importance of the family. I really miss her.

But the very important thing that my family did, was to organise all legalities long in advance, so there were no legal issues at the time when my mum passed away.

It is hard enough to have to deal with the emotional loss of the loved person, If you need to deal with legal issues and bureaucracy at the same time that can create a great deal of stress.

Based on what I went through emotionally, I thought I would remind you of the importance of setting your estate correctly to help your family in this difficult time. And there are some easy steps that you can take, to remove the legal trauma to some degree and often save money in the process.

Losing a love one can introduce a great deal of emotional trauma, but add to this legal issues and it could be disastrous.

So let’s discuss some major assets that most of us own and how to deal with them from the point of financial and estate planning when preparing for your retirement: 

Family Home

In most cases husband and wife would buy their home together, therefore both should be listed on the title, but sometimes there are situations where only one is listed. Unless there is a specific legal reason, in most cases you would want to have both partners listed on the title. This is what is called joint ownership, meaning you both own the property your home 100%. Therefore, when one partner passes away, the survivor will automatically own the property outright. The jointly owned property does not requires a will, is not distributed by  the will, there is no probate, and no solicitor is required.

This is the easiest way to pass the asset to another person, and save lots of money by not having to pay for any solicitor services.

The reason why the family home might not be jointly owned that I can see often is the situation of the second marriage.

If you are married for the second time or maybe third or fourth, you really need a very solid and detailed financial and estate planning advice to ensure that your estate will be distributed according with your wishes, but also without upsetting anyone, to avoid contesting the will, which can be very expensive and very stressful. 

Money in the bank

Similarly to your family home, I do advice most of my clients to keep all funds in the bank account, your shares, managed funds and other financial assets as joint ownership.

This will simplify your estate planning distribution, with no need again for a solicitor, saving money, with no funds being frozen by the bank when one partner  passes away. 

Superannuation

It is essential that you have a death nomination registered with your superannuation fund. Many super funds will only offer so called non-binding death nomination. This is totally useless, it is simply specifying your wishes, but at the end of the day, the trustee of the super fund have full power to make their own decision and not even take into consideration your nomination.

You need to ensure that your super fund provides you with an option for a binding death nomination.

Once accepted by the super trustee, it binds the trustee to follow and distribute the benefit as instructed by your nomination. This does not mean it is a simple process. There are still legalities to follow and many forms to be completed, but the trustee cannot disregard the accepted biding death nomination.

If you are in a pension phase however, and your wish is to leave your pension to your spouse, then the available option that could save you again lots of legal work is the nomination of the reversionary beneficiary.

Basically, on your passing your pension account will be reverted to your spouse and continue as an income stream.

But before you jump into making all those changes, please organise a meeting with me or with Shaun to re-confirm what is the best option in your situation. 

Will

This legal document is essential to provide your instructions as to what needs to be done with your assets other than those jointly owned or assets owned by your super fund, or any other entity.

If you do not have a will, it will make things very difficult for your family, and can create many dramas that can end up in courts with high legal fees. 

Powers of Attorney

Also an essential legal document that will list a person or persons that in case of your absence can attend to your financial affairs on your behalf, but beware, PoA is a powerful tool allowing the nominated person to make decision about all your money and all your assets. So be very careful who you nominate as your attorney. 

If those documents are not prepared in advance, it could create a great deal of problems and stress for the people that not only have to grief the loss of the loved one, but also have to deal with bureaucracy and legal system.

By taking the listed in this video steps, you can make it so much easier on your surviving family member.

By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement