Post-Mortem Planning
Freeze. If there’s one word that describes what estate planning attorney Jeff Scroggin considers the most critical piece of advice immediately after a client’s death, it’s that. “Do nothing as far as actions or decisions on the estate,” says Scroggin. “You need time to really get a handle on what you know.” And, perhaps more importantly, what you don’t know.
Several years ago, John “Jeff” Scroggin, J.D., AEP, with Scroggin & Company in Roswell, Georgia, had a client whose family discovered $8 million in original stock certificates in four different safety deposit boxes. He hears this sentiment even today from some older-generation clients. “Many of them really never trusted Wall Street, and now they really don’t,” says Scroggin. “You can understand why they like the tangible nature of those certificates. The problem is, there may be no brokerage statement that reflects the holdings because the client is receiving the dividends directly.”
Another too-soon mistake Scroggin sometimes sees is that survivors start immediately moving assets. A recent case involved a spouse receiving the advice from a financial adviser to roll an inherited IRA into her own. The problem? The widow was younger than 59½ and needed regular withdrawals from the IRA to support herself, which meant she had to pay a 10 percent penalty for early withdrawals. And then there are the situations, more routine than we may like to think, with buried but simmering conflict because of jilted spouses, second or third marriages, step-relations, “loans” to children that remain unpaid—and documents not updated to reflect such. “Life is messy,” says Scroggin. “Death and its financial and legal aftermath can be, too. But it doesn’t have to be.”
It’s probably fair to say that in the go-go days of the bull-market 1990s, few planners focused intently on post-mortem planning because few of their clients were aged and dying. Circa 2011, it’s a different world and a different set of demographics. Veteran financial planner Alexandra Armstrong, CFP®, chair of Armstrong, Fleming & Moore Inc. and author of On Your Own: A Widow’s Passage to Emotion and Financial Well-Being, notes, “I hate to even say it, but I recently had four clients die in one month. We planners are an aging group, and if you have clients who are 10 to 15 years older than you are … well, let’s just say we need to get really good at this.”
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.