How to Build an Estate Team When Managing a Parent’s Death

Sometimes death is sudden and unexpected. Other times, there is time to prepare. With my mother’s recent death, I was at an odd juncture between the both. She had serious health issues but the doctors gave her a two year prognosis. Upon the startling news, we initiated the process to clean up her affairs. Upon her death 3 weeks following the cancer diagnosis, I was immediately launched into the process of settling my mother’s estate.

When my father died 4 years ago, the estate process (for me) wasn’t as involved since my mother was still alive and managing their shared accounts. Being naïve, I wasn’t too concerned as my mother appeared to have “her ducks in a row.” However, I quickly realized that the process is different and more complex with the death of the remaining parent as we shift from one generation to another. This shift includes moving from shared and individual accounts to trustee, successor trustee, beneficiary, and executor.

Word of caution: if these tasks were not managed upon the death of the first parent, be prepared for extra paperwork, legal red tape, and lots of telephone time, based on my experience. NOTE: I am not an attorney, an accountant, or a financial advisor. I am the oldest child, suddenly transformed…

From Power of Attorney to Executor

The first jolt of reality was learning that my POA designation was no longer valid. One financial institution enlightened me:

“A Power of Attorney designating another to act on behalf of the account owner (principal) is valid only during that account owner’s lifetime; the power to act ends with the account owner’s death.”

The same is true for medical power of attorney.

Upon learning this, I was immediately tasked by all financial institutions and creditors to provide various proofs of who I am in relationship to the deceased. Even though everyone was helpful and understanding, beginning every conversation with, “Please accept our condolences on your loss,” I was bombarded with legal, financial, and tax-related questions and documentation requests. It was evident I needed those experts to build an estate team.

First Contact: Estate Planning Attorney

Following my divorce in 2009, I was referred to my estate attorney by my newly appointed financial planner. I had already worked with this attorney and could immediately begin my mother’s estate processes with him rather than taking time to find an attorney during this emotional period. I recommend you do the same, especially at a time when there is no immediate, emotional need.

Ironically, my mother and I already had an appointment scheduled with him to update her documents. Three days after her death, I showed up for our scheduled meeting with what I thought would be enough to close her estate out easily. Sadly, it wasn’t. My mother was very private and reluctant to reveal her finances. As her POA, I knew a great deal; however, my knowledge was complete. Following this discovery, the estate attorney arranged a conversation with his paralegal and I was given the following tasks:

• Locate all wills, living wills, and existing estate documents
• Locate all financial institution information: create print and digital (PDF) copies for all:
  • Retirement funds
  • IRAs
  • Banking accounts
  • Trusts
  • Taxable accounts
• Identify beneficiaries
• Contact creditors
• Contact insurance companies

In addition, it is quite helpful to have the following documents at the ready—in print and electronic (PDF) format:

• Death certificate(s)—official documents (provided by funeral home) plus digital and paper copies. Everyone will want one!
• Most recent tax return
• Wills
• Trust paperwork
• Birth certificates—for the deceased and all beneficiaries (luckily, my mother was a genealogist and these were the easiest to find!)
• Marriage certificate
• Deeds
• Stock certificates (the accountant and financial advisor will need this information to better perform their duties)
• Safe deposit box key or home safe key or combination (this is a tough one: my mother had both and I had no idea where she kept the keys or the combination.)
• Military discharge papers
• Insurance policies and paperwork
• Titles (vehicles, motorcycles, motorhomes, etc)
• Divorce decrees (to verify name change of beneficiaries)
• Name change documents (to verify name change of children, particularly following divorce or adoption)

While these items are collected, the attorney and paralegal will review documents as they become available and will update you on their findings and next steps. Among the first things to occur is to create an EIN (employer identification number) for a parent’s estate. This is important for tax purposes and it removes the deceased parent’s social security number from the estate documents. Your attorney and accountant will need this information so add it to your document list! Secondly, they will perform the tasks necessary to name you as executor, successor trustee, trustee, or other required designation to help complete the process.

Peace of Mind: Of most value to me was the ability to contact the paralegal freely with any questions or concerns—and I had plenty! She was available easily and cheered me on as I frequently became overwhelmed. I even appreciated her encouraging me to take the rest of the week off as she finished her tasks. As for cost, I am grateful for their expertise and knowledge! I paid a retainer of $3000 and 8 weeks later, they have used only 10% of that amount while accomplishing many tasks. The stress and headaches avoided make this expense a very worthwhile service.

Second Contact: Financial Advisor

As mentioned earlier, I had connected with a financial advisor several years ago. I contacted my advisor the same day of my appointment with the attorney and we arranged a meeting to discuss the following:

• Will assist in beneficiary claims on all retirement accounts.
• Assist with distribution of assets following the legal clarifications.
• Help arrange Required Minimum Distributions (RMDs) on IRAs and other assets.
• Will assist in distribution of assets following payment of all expenses.
• Will work in tandem with the attorney to ensure processes and procedures are performed in a timely manner.
• He will help guide me on best uses for assets from my mother’s estate.

Peace of Mind: My financial advisor was prompt, extremely helpful, and understanding. The advice and suggestions supplied were critical to the smooth flow during the process. Because I was frustrated and overwhelmed by the endless supply of forms, documentation, and notarization, his wisdom and friendly reminders were a huge benefit. His primary word of advice was, “We do this every day and we know the best process forward. I’ll get you through this in one piece.” His words were so comforting, I hugged him on the spot. He chuckled and added, “I get a lot of hugs, too.” It’s helpful to know the majority of documents he needs are the same as listed above. My advice: don’t do this alone!

Third Contact: Accountant/Tax Advisor

Following contact with the attorney and the financial advisor, I recognized a trend in expectations and requirements. I made an appointment with my accountant two weeks later. We discussed the situation, the processes she would perform, and the documents needed. While the accountant did not require as extensive a list as the financial institutions or the other experts, I would soon have them in hand. All I had to do was gather them and send them in an email! Once these documents were received, she would accomplish the following:

• Complete the final income tax return for the deceased, reflecting income through the date of death.
• If applicable, the accountant will create an income tax return for income earned after death. Note: the funeral home will contact the Social Security office upon the death; the accountant will ensure the proper payments are completed.
• If a trustee fee or executor’s fee is expected, the accountant will make recommendations for tracking expenses and reasonable time spent on the process. This is valuable information as a detailed listing of expenses is often required to qualify for this reimbursement.
• Ensure your tax returns reflect income received as a beneficiary, from a RMD (required minimum distribution), and anything else related.

Peace of Mind: Based on my initial conversation with the accountant, she mentioned IRS requirements that I had no idea about. Grieving aside, my brain was already overwhelmed, and I knew this was something to best let this expert handle. Not only that, I did NOT want to handle taxes! The initial visit had no cost associated with it, and with all the tasks she will be performing, I was quite pleased to utilize her knowledge. While she did share her condolences with me, she added, “I love this stuff and will make it easy for you during this difficult time.” That was all the reassurance I needed.

Expert Collaboration

With the experts in place and a check list of tasks from all three, it is helpful to share contact information among your estate team. Sometimes it will be far easier to eliminate the middle man (you) from some of the conversations, and let the experts speak on your behalf. If this is necessary, you may need to write a brief letter authorizing your permission:

“I give permission to [this expert] to contact [this related expert or financial institution] in order to discuss [the deceased person]’s account/estate.”

Your attorney or paralegal will help draft this brief letter and it will make the process easier, especially when you get overwhelmed. (I haven’t had to utilize this yet—though I have been tempted!)

Following this list, the best advice—from me and from my estate team—is to be patient and to not rush. Allow yourself time to grieve. Take time for yourself. Perhaps cut back on extra activities until the emotions have eased and the primary documents have been collected. The entire procedure will take several weeks, and this does not include preparing for a funeral or your own personal grief.

As you wade through this phase of life, take a few minutes to plan a special vacation for yourself. You will appreciate it when the estate closes.

Do you have questions or your own experiences to share?

Kristen