The role of a financial adviser doesn’t just start when you are in the process of accumulating and spending said accumulated wealth. A lot of our time is also spent talking to clients about how to best structure your assets in the event of the unforeseen and unfortunately, the aftermath of someone’s passing.
While the estate planning arrangements provide a structured pathway of who needs to do what, there is also the practical side of death that doesn’t get spoken about as much.
Once the shock has settled and you are going through the motions of celebrating their life and immediate impact of your loved one’s death, comes the “death admin”. No one likes dealing with the administrative burdens of being functioning adults in society, let alone having to worry about this during these times.
The administrative work may be as simple as trying to access a bank account that you don’t know the password to, finding documents that is required for their death notification, paying water bills that you don’t have access to given it was previously going to your spouse’s email, or trying to locate your will with the solicitor that you had it done through 20 years ago (who has since sold his business to his youngest partner that you have never met before).
First Things First
The first thing we like to tell our clients is that there is no rush.
You have just done the hard part, the world will go on in the meantime and can wait for you.
The second point we tell our clients is to call their financial adviser and let us do the rest, don’t make any formal notifications yet.
Why is that?
Joint Assets
The law dictates that the ownership of any assets held in joint names (for example your house, bank accounts) upon one of the owners’ passing will revert to the surviving person’s name. So for a joint bank account, this is handy as you will not lose access to your account. Accounts held in one person’s name may be frozen temporarily as the banks determine the succession path of who needs to be granted access to the account.
This may result in lack of access to cash for a period of time, which we often see where in a relationship one person manages the finances for the family (My colleague Williza has written a fantastic article on this very topic: When only one partner manages the finances – Planning for the unexpected).
Pension/Centrelink
As the surviving spouse/family member, the deceased could have an existing super/pension account. It is important to note that the benefit will be paid according to the nomination put in place by the deceased. In the event that no direction was made, the trustees of the super fund have the discretion to direct the funds to the beneficiary it sees fit. This may have a significant impact to your life if you were relying on said income/capital to be paid out to you.
Another example of a pension that may change your financial day-to-day would be a defined benefit pension, where the surviving beneficiary may only receive a portion of the previous income or may not even be eligible to receive any income post death.
Centrelink payment rates are also assessed differently depending on your circumstances such as being single. This may have a significant impact on your financial position without any future planning done in advance.
Foreign Residencies
Estates that include foreign residencies may have additional complexities involved, such as different taxes applied, limited type of assets that can actually be passed on, or even the additional time and effort required to engage with foreign specialists to work through the requirements of both sides.
For example, certain countries do not allow non-citizens to own property. What happens upon death of a family member who owns properties in this country and has bequeathed the entirety of their estate to a non-citizen?
I have noted some practical tips that may ease the complications of such times:
- Set up a joint email address where all the important life admin communication is done through that email.
- If you have elderly parents, talk to them about their wills and whether those wishes remain current. Make sure to gain access to their Power of Attorney document as well if you are the appointed executor and establish contact with the trusted people in their world (accountant, adviser, lawyer) ahead of time.
- Keep a fireproof safe in the house where all of your important documents are saved. Importantly in this day and age, maintain a password register for all your accounts that gets reviewed every so often. Consider also a password manager such as LastPass to maintain electronic records.
- It may be prudent to either maintain individual and/or joint accounts with your partner, even if you have separate finances.
As hard as it is to touch on this subject, your future selves will thank you for having tough conversation in preparation for hard times ahead. It is also important understanding what will happen to your assets ahead of time allowing you to plan for the best outcomes.
Please also give yourselves the grace and time to work through anything that comes out of this. It is not uncommon for us to see estate wind ups take years, with a standard processing time of 6 months++. Remember that you are in control of this process and that there are professionals out there whose very job is to ensure that you are able to focus on yourself and take away the burden while ensuring the best outcome for you and your family.