Mom passed away Sat. now what to do with their finances?

[JL Sargent]

Seems like these topics have been discussed here before. I searched but didn't find much. Anyway, below is my situation.

Dad is still with us and doing fine health wise at 73. Mom struggled with Non-Hodgkins Lymphoma for 7 years and is finally at rest. They were happily married for 52 years.

My question for the great minds of the Klipsch forum:

How to untangle their finances? Mom had IRAs in her name, Dad has a few in his name, Checking/Savings accounts in bank(s) with both names. Also, some of these IRAs are small sub $2K deals. I don't know why a person would keep starting "new" IRAs but there has to be 1/2 a doz.

Can you consolidate traditional IRAs?

Now I understand that I probably need to remove my deceased moms name from the joint accounts but should I add my name when we do it? Can I even do that? It's looking like I'm going to be writing his bills for him.

My mom didn't like her given name (it was a boys name) so at some point 50ish years ago changed the spelling to suit her but never legally. I'm sure this will stick a burr in our sides when we go to put her IRAs in his name??? So birth cert. and death cert. will have a different spelling than these banking/cd/IRA accounts and Social Security info.

Isn't this good stuff?

Yes, I realize we probably should employ a professional but probably wont. I doubt my father would tolerate it. I doubt he wants a trust, but that would certainly seem to benefit my two brothers and me. We three are my parents only children. To be clear, I want to look out for his best interest in all this.

[odysseyrevolver]

You will probably want to secure Power of Attorney so that you may act on your father's behalf in these matters.

And sorry for your loss.

[CECAA850]

Jeff, I'm sorry for your loss. I recently went through a virtually identical scenario with my mother passing, then roughly a year later my father passing. I can let you know how I handled it, which worked well. PM me if you need my cell # and we can talk. If you still have it, give me a call. You're really not having a problem now. The problem will come if something happens to your father and you haven't acted on your mothers assets.

Carl

[oscarsear]

Much will set with how the accounts were set up. Banks require that beneficiaries be designated on these accounts. Your Mom would have named to whom the funds would go to in the event of her demise. Then the funds may be subject to probate, etc. That is the trouble with not getting these things arranged in advanced. They can fall into a quagmire of regulations and can get chewed up in taxes, etc.

You will not obtain any power of attorney over your mothers business because she would needed to have authorized that personally. She is sadly no longer around. You can ask your Dad for some kind of authority over his affairs as in a specific type of POA or more broadly a Guardianship. But he does not sound very receptive about others doing his business. There are laws established to protect elders from financial abuse by their children. The process will need to be followed legally for your and your fathers protection. This is mostly your fathers to unravel anyway. I suspect that he is the named beneficiary on these accounts. He may or may not need your help. But he should be advised that unless he sets up his estate wisely that his own family can lose out big time. Sorry for your loss and your troubles. FWIW my own parents are just as stubborn about their affairs.

[dtel]

Sorry to hear this and hope you get all worked out, good luck .

We lost my mother Nov 16, luckily when they built there new house any finances had been taken care of and was used for the new house which she got to enjoy for the last years.

[Mallette]

Yes, I realize we probably should employ a professional but probably wont.

Major mistake, IMHO. You need legal advice and counsel.

Dave

[RT FAN]

I agree with the good advice given so far. Your mom probabaly named your dad beneficiary on her IRA a/c's & bank accounts. You will have to prvide the death certificate to the trustee on those accounts to have the proceeds transferred into your dad's name. Probably a good idea to become a co-signer on your father's accounts, a power of attorney is a good idea as well. I have that for my mom and pay most of her bills online for her. As the folks get older, they neglect to pay the bills and start racking up late fes & penalties, not good. Most of this can be done quite easily, include your other siblings in the discussion to avoid any misunderstandings. Sorry for your loss.

[Daddy Dee]

so sorry to hear of your mom's death. others have offered better advice than i can. just want to share a word of support and caring for you and your dad.

[jhoak]

I have no financial advise for you. Simply condolences for your recent loss.

[JL Sargent]

Thanks for the great suggestions and condolences guys. Carl, appreciate the offer, I may give you a call sure enough. I don't think we have any legal issues per say. I'm looking at it more as financial management/planning.

We just had a good meeting with a bank officer who got us going in the right track. The bank has me on his account now so I can handle his bills. Over the next several weeks we hope to get things in order.

[juniper8]

Sorry to hear about your loss, it is truly awful to lose a loved one, good luck.....

[MechMan]

Sorry to hear about your loss JL.

[tigerwoodKhorns]

Sorry about your loss. I do not know if this is applicable, but there are small estate laws in many jurisdictions.

Here is some info that I googled, but don't take it as legal advice.

http://www.fortenberrylaw.com/alabama/small-estate/

[Coytee]

Mom had IRAs in her name, Dad has a few in his name, Checking/Savings accounts in bank(s) with both names. Also, some of these IRAs are small sub $2K deals. I don't know why a person would keep starting "new" IRAs but there has to be 1/2 a doz.

Can you consolidate traditional IRAs?

A phone call is easier... you've received some good comments here already. Some legal help would probably be a good thing, not sure yet what/where. I'd contact the custodian of the accounts where your mothers name is different. See what their requirements are. Perhaps you can minimize the amount of legal fees if you can fix some adminstrative issues yourself.

Starting at the top (and for background, I'm not an attorney, not an engineer nor did I stay at a Holiday Inn last night... that said, I do have 27 years in the inveestment world and ran the back office for a (small) local broker/dealer so I've got some background in some of the issues that are rearing up here)

Your mother had IRA's in her name. Hopefully she had your father as beneficiary (probably did). If so, he SHOULD roll them over into his name. He doesn't 'have' to. I am presuming he's 70 or more? If so he's falling under the requirement to take a minimum distribution out but, this is not why I say he should put them into his name. Reason is so that he can update the beneficiary information to you and your siblings. Why? When a NON-SPOUSE inherits an IRA account, the non-spouse can take full payment when they inherit the funds (and not pay a 10% penalty for early withdrawal) or, the non-spouse can do a 'stretch IRA' where the inherited funds are left INSIDE the parent's decedent IRA account and the child can let the account grow tax deferred as long as the child takes out a required minimum distribution based on the IRS tables. If you don't need the funds (you might be a neurosurgon or something) then you can have your father put YOUR children down as benefiidcary and they can have an even better "stretch" benefit because of their younger age. Main thing here is it's the first non-spouse beneficiary that gets to set the distribution table. if your father converts your mothers IRA account into a spousal distribution account, and then you inherit the account, you are stuck with his tables, not yours. You want to be the "original" beneficiary (and would be if your father rolls your mothers IRA into his and then you inherit his later in life)

Yes you can and perhaps should consolidate IRA's. You can't consolidate traditional and Roth IRA's....so you would have one of each if that is what she had. Still... I think it's always worth talking about and considering. People typically had various $2K IRA's when they would go to the bank and "buy" an IRA. They didn't realize or nobody explained that you can have ONE IRA and keep funding it (like at a brokerage firm) and still buy CD's or something... happens all the time.

Now I understand that I probably need to remove my deceased moms name from the joint accounts but should I add my name when we do it? Can I even do that? It's looking like I'm going to be writing his bills for him.

Yes you should remove your mothers name. Don't view it as erasing her. What you are doing is saving yourself a ton of issues later in life. I had a guy come to office once. Had some certificates (stock). Some were in his mothers/fathers name, some in mothers/son's name and I suppose, some in mothers name (it's been 20 years so I forget). Long story short, his father had passed 20 years prior. He had to go back to his fathers estate to move the securites into his mothers name, then deal with her estate. It took us (him) literally SIX (6) MONTHS to clean up six different stock certificates. Had his mother done "her part" when the father passed away, it would have taken 2-4 weeks.

My mom didn't like her given name (it was a boys name) so at some point 50ish years ago changed the spelling to suit her but never legally. I'm sure this will stick a burr in our sides when we go to put her IRAs in his name??? So birth cert. and death cert. will have a different spelling than these banking/cd/IRA accounts and Social Security info.

I'd first ask the various institutions. They will tell you what their requirements might be. Might not be terribly tough or, might be a real pain in the hiney. Maybe you can have the death certificate state both names as an also known as??? (I have no idea, tossing ideas out)

Isn't this good stuff?

Yes, I realize we probably should employ a professional but probably wont. I doubt my father would tolerate it. I doubt he wants a trust, but that would certainly seem to benefit my two brothers and me. We three are my parents only children. To be clear, I want to look out for his best interest in all this.

Something (in my opinion) that you do NOT want to do is put your name on your fathers accounts as joint owner. I'll tell you why. Let's presume you DO make the account joint. There are reasons why that's nice to do and many people do it. Let's then fast forward 2 years and you are in an accident and run a child over. The parents are likely to sue you and anything you own. If you have your name on your fathers $20,000 checking account then half of it is yours. It would be at risk of being clawed at. They might win some of it, they might not.

What if however, you instead left the account in your fathers name ONLY and did two things. First is have him grant you powers of attorney. Now, you can deal with the account as though it WAS your account and still have that wall of protection for him since it's not legally your account. If that accident now happened, his account could not be clawed at because your name is not on it. The next thing would be to put you and your siblings on the (non-IRA) accounts as TOD or POD beneficiaries. TOD = Transfer on Death, POD = Payable on death

TOD would be used for a brokerage account (stocks/bonds/mutual funds...)

POD would be used at the bank for savings/checking/cd's...

TOD/POD designations are nothing more than beneficiary designations for non-IRA accounts. Assigning those traits to an account allows that account to then bypass the probate process. They also take precedence over a will. So if your father has a will saying that Coytee get's all of my checking accounts because he typed a nice note in blue type.... but if he then named you as a TOD/POD beneficiary, I can cry all I want at court....I'm not getting a dime. Those accounts bypass the probate process and make life MUCH easier for the beneficiaries. When I talk to people about doing this, I try to couch it from the viewpoint as it's more an act of love from the parents than anything. It's the parents who are trying to tidy up their affairs with a stroke of their pen so their children won't have to take those assets through probate and need all the requisite legal work that can otherwise be avoided (with those designations)

If you'd like more info on this stuff, feel free to PM me your phone number and I can explain verbally much better than trying to type it all out. To give a horror story that I once witnessed... we had a retired surgon move to town. Friends with a client so the client referred him to us. He came in and signed the forms to open accounts and move things. Left with "we'll be in touch in a couple weeks"

We never heard back from him....he went home & passed away. Meanwhile, his assets moved over and I was horrified. His daughter called and was going to split the assets between the three daughters. The guy had various assets but what struck me was he had several annuities (which typically have a beneficiary designation). He thought he was doing the right thing making "ESTATE" his beneficiary and his will dictated the estate get split 3 ways among his daughers.

Find & dandy... what he evidently didn't know or nobody cared enough to tell him was the other side of the coin. Because a million dollars was going into his estate it was going to go through probate. When the daughter called me she informed me that the attorney was charging her 2% of the estate value to settle it.

Think this through... there is a milliion dollars heading into the estate. 2% is $20,000 for these contracts. Had her father taken his 29 cent BIC pen and filled a new beneficiary form out naming the three daughters as beneficiary, he would have then allowed the million dollars to bypass probate, saved the daughters $20,000.

Granted in the scheme of inheriting $333K, losing a third of $20K isn't "a big deal". Then again, for the stroke of a pen, why piss it away?

That one really killed me.

[Boxx]

Very sorry for your loss....

I wish that I could give some good advise.

I'm only helpful when it come to timber, oil and gas....

[Coytee]

The bank has me on his account now so I can handle his bills. Over the next several weeks we hope to get things in order.

Point made. Person at bank finds it easier to make a joint account & move on with life rather than try to explain the nuances of what you're causing.

To make another thought... (and I'm going to inflate this to try to clarify the point)

What if you have $500,000 in his checking account, joint with your name on it. He passes away now it's all yours. You have a sister who should get half so you write her a ckeck for $250K.

I'm not an attorney, I'm not a CPA but I think you just gifted her too much and now might be exposed to gift taxes. If instead you were POA with a POD beneficiary, you skirted those issues and accomplished the same goals.

Meanwhile, to set up the account like I suggest, the person at the bank had a lot more paperwork to create....

Call me cynical.

I'll say this... I've lived by my advice. I'm co-trustee on my mothers trust. I also have medical and financial powers of attorney. Myself & 2 sisters are POD beneficiaries on her checking account. My goal is to avoid probate if at all possible. I have all her titled assets in her trust and all her financial assets tied with a beneficiary form.

[Jeff Matthews]

The bank has me on his account now so I can handle his bills. Over the next several weeks we hope to get things in order.

Point made. Person at bank finds it easier to make a joint account & move on with life rather than try to explain the nuances of what you're causing.

To make another thought... (and I'm going to inflate this to try to clarify the point)

What if you have $500,000 in his checking account, joint with your name on it. He passes away now it's all yours. You have a sister who should get half so you write her a ckeck for $250K.

I'm not an attorney, I'm not a CPA but I think you just gifted her too much and now might be exposed to gift taxes. If instead you were POA with a POD beneficiary, you skirted those issues and accomplished the same goals.

Meanwhile, to set up the account like I suggest, the person at the bank had a lot more paperwork to create....

Call me cynical.

I'll say this... I've lived by my advice. I'm co-trustee on my mothers trust. I also have medical and financial powers of attorney. Myself & 2 sisters are POD beneficiaries on her checking account. My goal is to avoid probate if at all possible. I have all her titled assets in her trust and all her financial assets tied with a beneficiary form.

I'm an attorney, and will vouch for the general correctness of Coytee's (Richard's?) advice. If the account is set up to where you are the owner upon dad's death, then you will be the owner, and any chunk you pay out to a sibling (or whomever) can be considered a gift, subject to gift tax laws. If you are a mere signatory, then this is not the case. But pretty much, it will be standard practice for a bank to have you fill in something that spells who will become owner upon dad's death. It may be a "payable upon death" (POD) designation, which is fairly obvious as to the intent (but not necessarily the tax ramification, if any), but in other cases, it may be cryptic to a layperson - such as, "John Smith and John Smith, Jr. (JTWROS)" which would mean "joint tenants with right of survivorship." Right of survivorship means the survivor among the 2 becomes the owner upon death of the former.

However.... that said, it takes a pretty sizable amount of money these days to involve tax considerations.

On another point, if there is any risk that another sibling (or potential beneficiary of dad's estate) might second-guess your integrity at some point, you will be a smart preparer (and a good fiduciary) if you refrain from commingling any of your own money into the account, borrowing any money from it, and keeping all records of all transactions involving the account for a long, long time.

So, now you have some general pointers, and my final point is that if there is any real money involved, a forum response (even from a smart financial manager like Coytee and a lawyer like me) is no substitute for retaining a professional to sit down and know all the details.

[JL Sargent]

Great info and advice guys! I'm very appreciative of it all!

[mustang guy]

Great info and advice guys! I'm very appreciative of it all!

I am very sorry to hear of your loss.

This is indeed a great forum!

[RT FAN]

Great & informative postds by both Coytee & Jeff, they are worth printing out. I know, how analog of me.