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Settling the Estate of a Loved One

I have spent a lot of time in Michigan these past three years with my elderly mother. My clients knew immediately where I was based upon the antique china and crystal displayed in the cabinet that was my Zoom background. 

The last few years were difficult for my mother, a woman who was fiercely independent and lived life to the fullest. A series of unfortunate health events diminished her strength and energy. Wet macular degeneration took away her vision; Covid shut down the world. My mother’s rich life of travel, golf, knitting, needlepoint, card clubs, and friends became almost solitary confinement. 

In my article about Long Term Care, you can read about the financial challenges surrounding elder care and home care. After writing the article, my mom’s health stabilized enough that she transitioned to part-time caregivers who assisted with the activities of daily living. This allowed her to stay in her home with manageable costs since many were friends or friends of friends. My mother also had the most amazing neighbours; one family said they would never move while she was alive. Another family shared their cat during the days, bringing her great joy.

In June, my mother was rushed to the hospital ultimately diagnosed with pneumonia and a lung infection. We went to Michigan to be by her side and to be her advocate. Her pneumonia and infection cleared up but left her too weak to feed herself and on permanent oxygen support. This is when the doctors started talking about end-of-life care and hospice. As a wealth planner, we cover these topics with our clients; you are seldom prepared when it involves your loved ones. 

All discussions surrounding end-of-life and hospice included her. My mother was as sharp as a tack; knowing all and forgetting nothing, but her body was failing. This was quite a contrast to my father who was in great health but had Alzheimer’s; not knowing anyone in the end. She made the choice to go on hospice and watched me sign the forms after triple checking she was at peace with her decision. I was literally signing her life away; it was awful. We had two options for hospice—care at an assisted living center or bring her home. My mother was concerned about the cost of 24/7 care at home (having been through it already) and the quality of care at a center where family would not always be available. She sat in the hospital wringing her hands struggling to decide, then worried if she made the right decision to go home.

I told my mom what we say to clients: a successful financial plan is if their last check bounces the day they die. My mother’s last check wasn’t going to bounce. I reminded her that she had the financial means and that we should at least try home care. Plan B was always an option. We brought her home and within a couple of weeks she passed away surrounded by family at the age of 93 ½. As heartbreaking as it was to watch her die, we know she is in a better place.

Luckily, my mother was organized. Her house, bank accounts, and investments were held in her revocable living trust. Investments that could not be owned by her trust had the trust as beneficiary. In Michigan, if you have over $24,000 USD of assets in your own name, the estate must be probated. This could take approximately seven months to a year after the courts appoint a personal representative before assets can be sold, retitled, or transferred. By placing assets into her trust, she did not have over $24,000 of assets in her name.

As trustee and executor, I had agreed to settle her affairs. When a person with a Revocable Living Trust dies, the trust becomes Irrevocable. A living trust is the alter ego of someone who is alive; they can move assets in and out, buy, sell, or spend. It is their money to use. The trust keeps their assets private and out of probate. The Mom Living Trust dated April 5, 2000, using her Social Security became the Mom Living Trust UAD1 April 5, 2000, using a tax ID assigned to the trust by the IRS upon her death.

Our initial focus was the house in Michigan since none of us live there or even near. We went through the house making snap decisions: keep, donate, try to sell, throw away, or deal with later, which meant pack and move to one of our homes. While my mother had beautiful wood furniture, her dining room set was by Ethan Allen, it has minimal value second-hand unless you have the time to find the perfect buyer. There are phone apps that instantly pull up the same or similar items across the web that gave us an idea of what things were and the potential value. We had estate agents come over and were offered such a low amount we decided the tax deduction was more valuable for her estate than the cash we would have received. In just over two weeks, a home containing a lifetime was an empty shell awaiting a new family to make it a home again.

Then one by one, I contacted the financial institutions. Each financial institution assigned a transition specialist to walk me through the steps. They all have different processes; some being vague as to what is needed, even for me as a CFP professional. There is an abundance of paperwork to be completed, signed, notarized, or stamped with a Medallion Guarantee2 and in some cases, both. Depending upon the institution, the completed paperwork is faxed, uploaded through a secure link, or sent via an overnight service to ensure receipt of confidential information. From an operational standpoint, the assets need to be retitled into the name of the Irrevocable Trust then will be distributed per the articles of the trust. 

While going through boxes of documents, I found life insurance policies purchased by my grandmother in the 1930s on my mom’s life for $500 each. The online death notifications were very easy to submit, the documentation that arrived in the mail will take a couple hours to complete. Two of the companies demutualized, so there are also shares of stock to be transferred. One insurance company is Canadian, which has a different estate settlement process than the US. My head was spinning by the time their representative finished; this has moved to the bottom of my list for now. 

During estate planning conversations with our clients, we ask them to consider executors and trustees carefully. A non-US person who is not familiar with US finances nor fluent in English may not be the right person to settle the estate of a US taxperson. In Singapore, you can have documents notarized only at the US Embassy; they do not have medallion guarantees. There are online services for notaries and medallion signature guarantees, but you need to check with each financial institution and insurance company if they’ll accept an online service. Most likely the trustee or executor will need to be physically present at some point to settle the estate if there is real property. Hiring lawyers is an option from afar if there is no physical home in the US to be emptied and sold.

I am grateful for my mother’s attention to detail. Most of her recurring bills were set to autopay using her credit card or debited from a non-primary bank account. I didn’t have to contact the utility companies immediately for a change of payment. After each amendment to her trust, she made sure she followed up with the financial institutions. As trustee, I had online access to most investments and bank accounts along with her primary asset list. These last few years, I paid the bills as necessary and filed her tax returns, so there were not many surprises in her estate.

My key takeaway is to revisit your estate plan annually. Ensure the parties identified have a copy of your most recent estate documents as well as a copy of your assets and liabilities. Even if you are uncomfortable sharing how much you have, the location of the assets is very important. Make sure new and old accounts have beneficiary designations where possible and they are correct. Know the probate limits in the state for which your estate may be probated. Know that in Singapore, your primary bank account may be frozen, based upon how it is titled, unless you have a Singapore will that encompasses only Singapore assets (and doesn’t void your US estate plan). 

Settling the estate of a loved one is challenging. Avrio advisors can work with you and your estate professional to help you make educated decisions that are best for your family, easing the burden on those left behind. 

1 Under Agreement Dated

2 https://www.investopedia.com/terms/m/medallionsignatureguarantee.asp  

This material is intended for educational and informational purposes only. It is not intended to provide specific advice or recommendations for any individual. Additionally, you should consult with your Financial Advisor, Tax Advisor, or Attorney on your specific situation. The views expressed in the material are that of the author and do not necessarily reflect those of any market, regulatory body, State or Federal Agency, or Association. All efforts have been made to report or share true and accurate information. However, the information may become materially outdated or otherwise rendered incorrect due to subsequent new research or other changes, without notice. The author nor the firm are able to always verify the content from third-party sources. For additional information about the firm, please visit the MAS Website at https://www.mas.gov.sg/ and the SEC Website at www.adviserinfo.sec.gov. For a copy of the firm's ADV Part 2 Brochure, please contact us at info@avriowealth.com.