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At a Loss: How to Settle a Loved One’s Finances

After Gregg Elmendorf’s mother died in early 2015, he started keeping track of her estate in a slender notebook, writing down whatever details about her finances he could find. “I really didn’t know what I was doing, and she didn’t leave me much to go on,” he recalls.

Gregg’s mom, Virginia, had been a savvy investor, with multiple Schwab accounts. However, like many of us, she’d neglected to put a fully developed estate plan in place (see “Leaving things to chance,” below). As the executor of his mother’s estate, Gregg quickly had to figure out how to meet various legal deadlines and avoid paying late-filing or late-payment tax penalties. By the time her estate was settled, that small notebook had grown into a stack of documents 16 inches high. (Gregg actually measured it.)

Fortunately, his mother’s financial consultant quickly connected Gregg with Schwab Estate Services, a team of specialists dedicated to helping clients and clients’ heirs work through the administrative side of losing a loved one. An Indianapolis-based Schwab Estate Services specialist named Brad Cook “helped me through every inch of that stack,” Gregg says.

Leaving things to chance

Percentage of Americans without an up-to-date last will and testament.

Leaving things to chance

Source: Google Consumer Surveys’ June 2016 poll of 2,012 adults age 18 and older.

Avoiding simple mistakes

It’s remarkable how many estates are hamstrung by relatively simple stumbles, Brad says. Some people fail to designate beneficiaries for their accounts, leaving it to a probate court to decide who will inherit their assets. Others bequeath their Individual Retirement Accounts (IRAs) to their own living trusts, creating unnecessary (and often substantial) tax bills. Worse, some people unintentionally leave assets to their former spouses, simply by failing to update their beneficiary preferences, an oversight that might shortchange rightful heirs and create permanent family rifts.

“We’ve seen everything, from easily resolvable issues to downright nightmares,” says Brad, who notes that access to Schwab Estate Services is provided free of charge to Schwab clients or their heirs, and that a single specialist is assigned to each family for the amount of time required to settle the estate.

Taking control

Gregg’s first order of business was to deliver a certified death certificate to each of the financial institutions with whom his mother did business in order to gain access to her accounts. He learned that several accounts lacked beneficiary designations and/or proper titling to specify who actually owned the assets, an oversight that required a trip to probate court—part of the legal process that establishes the validity of a will and ensures that holdings pass into the correct hands.

Once the estate had made it through probate, Brad helped Gregg roll all of his mother’s accounts into a single “estate account” to simplify matters. The estate account included check-writing privileges so that Gregg could pay the slew of bills that began arriving soon after his mom’s death—with estate taxes topping the list.

The rapid response allowed him to save a considerable amount in estate taxes (to say nothing of late fees). For example, the state where his mother lived offers a 5% discount on any estate taxes paid within three months of the deceased’s passing. Because Gregg was able to write a check within the 90-day window, he saved money not only for himself but also for the other heirs.

Settling the estate

With the most-pressing legal matters behind him, Gregg then worked with Brad to formulate a way to distribute his mom’s assets. Her IRA alone had eight beneficiaries, and each person had to decide whether to take a cash payment or roll the money into an inherited IRA.

Within 18 months, Gregg had succeeded in disbursing all of the proceeds from his mother’s estate to her heirs—which, in addition to the primaries, included 26 secondary beneficiaries, most of them nonprofits.

“Ideally, the account holder has proactively taken steps prior to her or his death to make the process of settling the estate as simple and straightforward as possible,” Brad says. “However, even the best-laid plans can fail to anticipate every eventuality—and that’s where we come in,” he continues. “Losing a loved one is burden enough without adding unnecessary financial complications to the mix. Our job is to help you think through that process, so you can focus on what’s truly important.”

What you can do

  • Share this article with a loved one by going to the bar at the top left of this article and clicking the email icon.
  • If a living person has designated you as their estate executor, talk with them and get to know their financial advisor now. A little bit of preparation today can save a lot of heartache and hassle later on.
  • If you’re a Schwab client or an heir to one, we can help you through the financial aspects of losing a loved one. Call us at 800-355-2162 to speak with a Schwab investment professional today.
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Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

This information is not intended to be a substitute for specific individualized tax, legal or estate-planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner or attorney.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

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