Speaker 1:
As a bank that focuses on business, we work with business leaders all day, every day. We have a front-row seat to what's working and what has potential. The First Business Bank Podcast is dedicated to sharing insights to help you work better, smarter, and faster to achieve your goals. Let's get into the show.
Brendan Freeman:
Welcome to the First Business Bank Podcast. I'm Brendan Freeman, President of Private Wealth for First Business Bank, and I'll be your host today as we explore the idea of finding your way financially after a spouse passes away. To help me discuss this further, I've invited a colleague and our current Director of Fiduciary Services and a Trust Advisor at First Business Bank, Cymbre Van Fossen, to join me. Cymbre, would you mind taking a moment and introducing yourself to our guests?
Cymbre Van Fossen:
Sure, Brendan. I've been a Trust Advisor with the Private Wealth group at First Business Bank for over 18 years, and in that role, I work with individuals, families, business owners, on everything from estate planning and business succession planning to trust administration and estate settlement work. More recently, I've moved into a role where I oversee our fiduciary services offerings across four different markets. Prior to First Business, I was an attorney in private practice, focusing on estate planning and probate, real estate and tax work, and that experience certainly lends itself to our discussion today.
Brendan Freeman:
Well, we're glad you're here, and I appreciate you taking the time. Why don't we jump right in? As a Trust Advisor, and maybe it points to a little bit of what you just mentioned, you work in many different situations with clients, where you're helping them through sometimes some pretty challenging events, and so trying to navigate through those life events. Can you talk a little bit about what that's like when you're working with individuals during a couple's lifetime and even after someone passes? Can you talk specifically about the role you play in working with these clients?
Cymbre Van Fossen:
Yeah. So our goal at First Business Bank is to really get to know our clients better than anyone else on the planet, so we work with them not only on investment management of their wealth during their lifetime, but on doing a deep-dive into planning for those significant transition periods that include the death of a spouse and the management and disposition of wealth after death, both for the benefit of the surviving spouse and for their family or charitable entities that they might have named. I regularly speak with clients about their estate planning objectives, and we review their will or their trust. We act as part of their team, their comprehensive team of trusted advisors that may include their family attorney, their CPA, but we play an important role because not only do we advise on the planning objectives, but First Business Bank is often named in a fiduciary capacity in our client's will or their trust, so it's very important for them to understand the exact role that we can play in cases of incapacity or the death of a spouse, and we may be acting as the personal representative of their estate as well. Finally, I'd say in my role as a Trust Advisor, we work closely with clients and their families to make sure that the beneficiary designations on non-probate assets, such as IRAs or life insurance, et cetera, really dovetail seamlessly with the rest of their estate plan.
So that's just a little bit of a flavor of the kind of work that I do with our clients.
Brendan Freeman:
Well, it's a lot, and I know there's an emotional side of it as well, where in helping individuals through these really tough and challenging times, there's a deep connection and they're very, very grateful. I hear about it all the time, of how grateful they are that you and our team are there to help them, to support them, to guide them during that time, so it's important work, and I'm certainly glad you're on our team from that perspective. Jumping in specifically to the topic, and no one really likes to talk about death, but it's important to know that you have resources, and that's why we wanted to bring you this podcast today, but talking about the death of a spouse and certainly with your vast experience and all the different things that you've been able to do over the years, let's start at a very high level. Any lessons learned? Anything that clients wish they knew or they could learn from others that could be helpful as we start to get into this a little bit?
Cymbre Van Fossen:
Yeah. I think this is probably one of the most important topics that we're going to be exploring today, because in my experience, there are a few high-level things that are really critical to remember when a spouse passes away. First of all, as you already mentioned, this is an extremely difficult, emotional time, and yet the surviving spouse is being asked to make very consequential decisions, deal with administrative matters in the middle of what should really just be a grieving process, and instead, they have a lot to deal with. So I would say high-level, the first thing is ask for help. Understand you're not in this alone, you don't have to do everything yourself. Gather your team, which may be family, friends, and your professional advisors, and don't worry about inconveniencing anyone or not knowing everything, you know?
You do have resources there to help you, and certainly, I always welcome the opportunity to assist my clients when they call, even if we're not named in any specific legal capacity. I'm happy to be a resource to answer questions about next steps, to just sort of talk through what the process looks like. Again, since we know these individuals and their families quite well, it can be helpful to have that context to the discussions about sort of the practicalities of what you're going to go through. So step one, ask for help. The second, I would say, don't be in a hurry to make big decisions that you're not required to make. So for example, you don't need to, nor should you make the decision to sell the family home right away.
Take the time you need to assess your situation, to speak with your family and others that you trust, and consider just taking a little time to make decisions at a less emotional moment rather than sort of trying to get everything done at once. I've noticed this, that oftentimes, there's a sense of urgency by families to get everything done at once. They're like, "Well, the kids are going to be in town for the funeral this week. This is our opportunity to make all of these decisions," and I would encourage people to remember that this is a process, and no matter how efficient you are, there's no way to get it done in the first week to kind of get everything squared away, so take the time, and again, don't be in a hurry to make those really big decisions Without further context. I think the last thing I would say is be careful about making major purchases or making large gifts right away.
Certainly, this is a time where we're feeling closer to family. You might be thinking it's a great time to make large gifts to children or grandchildren, and in fact, that may be appropriate in the big picture, but right upfront, I would encourage surviving spouses to take the time to truly understand, what is their financial situation? What are the assets going to look like? What are the debts of the decedent? What does the estate plan mandate?
There's plenty of time to make considered decisions about how to be generous with family, with charities that your spouse might have valued, and so again, that would be the third thing, is don't be in a rush on the financial decisions.
Brendan Freeman:
I think that's really sound advice objectively for the surviving spouse's mental health. I think many of the points you mentioned really make sense to me, getting that team, having those individuals that you can talk to, that you can work with, giving yourself a little time before you rush into anything, and allowing yourself that time to grieve is probably really important, and so that's good advice, and I know that's advice you've given many times over. Practically, if you had to lay out a timeline, and maybe for one of our listeners that recently lost a spouse or perhaps a close loved one or maybe they're providing counsel to someone else that might be in this situation, get into the details a little bit. What really needs to be done right away, versus what can be done a little later as you start to think about it?
Cymbre Van Fossen:
Right. Well, there are lots of sort of good checklists out there, and it can feel a little overwhelming as you look at the long list of things that ultimately do need to be done. To my earlier point, it is a process, so sort of one thing at a time. I think the first thing, of course, is you're going to want to contact the funeral home and make arrangements with them for whatever feels appropriate for you and your family. I mentioned that also, because they can be a very good resource in terms of ordering death certificates for you, and that is what you're going to need to start off the process of settling somebody's estate.
The next thing I would say is contact your attorney. Even if you think you're not going to have a probate, you have a revocable trust in place, or perhaps most of your assets you already know are going to pass by a beneficiary designation, you still should probably speak with your family attorney about what legal matters apply in your particular situation. I've seen people make unforced errors that could have been avoided if they had just spoken with a competent counsel early on, so I would suggest that. It is possible, of course, that if your estate plan is governed by a will, that you are going to initiate a probate, and your attorney will want to get you started on what that looks like, getting some of that paperwork prepared, because again, sort of nothing else can happen until you are named as a personal representative by the court. So step one, contact the funeral home, get those death certificates going, and obviously, establish a memorial for your spouse, and bring the family into that conversation. Second, call an attorney.
If you do have a trust, I would encourage you to call your trust advisor. Call someone like myself. This is especially critical if you've named a corporate fiduciary as your successor trustee. We have a lot of clients who know that at death, they really don't want to deal with all of the details, the logistics, the bill pay, et cetera, that go into settling an estate, and so they may have named our bank as the successor trustee at the death of a first spouse. Because that is an important role, it's very important that you reach out with the information of a spouse's passing, and that also gets a lot of things off of your plate right off the bat because that successor trustee is going to handle everything, from paying for the funeral to collecting assets, to handling bill pay, to talking with creditors, coordinating with attorneys and CPAs, you name it.
Again, the reason that you would have a partner like that is to take these things off your plate, so that would be the next critical step, I would say. Next on the list would be contact social security. That's going to be something you need to do yourself to inform them of the death of a spouse. We'll get into what some of the options are for surviving spouses later, but suffice it to say, that social security does not want to keep paying a benefit into an account that is going to be closed, so you want to do that fairly timely and make sure that decedent's benefit is terminated and that you speak with them about what your options are as a surviving spouse. In that first 30 days, you're going to want to locate life insurance policies, any contracts that you have in your important files, and pull those out.
That, again, is something that you can review with your attorney or with your trust officer if that is relevant in your situation, and you're going to want to start filing claim forms. Life insurance is a great source of liquidity right upfront, and that's something you can get going pretty quickly as soon as you have death certificates in hand. Brendan, longer term, there's, just as I said, almost it seems like an endless list, but if you have a probate, you're going to be working on that. You're going to be looking at retitling assets for real estate for your vehicles. You're going to be meeting with your financial advisor to speak about options that you have for elections when it comes to tax-deferred assets, such as IRAs or plan assets. There is a lot, but as I said, one step at a time, and you have a team out there to support you.
Brendan Freeman:
Giving yourself that grace, I think is really important. You outlined a lot of different steps that are really good to think about, but not getting overwhelmed with all of them at once and handling them one by one. I've watched you counsel clients in the past, and one of the things we talk a lot about is just being organized and kind of setting up files and that kind of thing. Can you talk just a moment on that and kind of the importance of not necessarily worrying about social security benefits when you're talking about life insurance. I mean, there might be some commonality as far as a need for a death certificate or something like that, but can you talk about just the importance of being organized and maybe some tips there?
Cymbre Van Fossen:
Yeah, ideally, you've had an opportunity to go through a planning discussion with a competent advisor ahead of time, and so you have a fairly good sense of, what are your critical documents? You have a file that includes copies of beneficiary designations for things like IRAs or insurance policies. You have a file that gives you information about accounts that may be titled jointly. You have a file that may have social security information and other financial information. Again, I would just say that it's kind of a one-step-at-a-time.
You want to put together files that include important legal documents. You certainly want to locate an original trust or will if you have it in your home. Oftentimes, people will have that will in a safe deposit box or on file with their attorney, but finding that will is, of course, critically important as a first step, and that should be part of what you do to have your affairs in good order. I would say that having a professional corporate trustee or personal representative is going to be part of what could help you really be organized and have the efficiency of a process that can account for all of those different pieces of paper that you mentioned, Brendan.
Brendan Freeman:
For sure. That's something that we do every day, and working closely, we've kind of developed that process for our clients. Everyone's situation is different, so this is really good information to think about and maybe just get the conversation going. Obviously, there's an emotional side of this, and so again, giving yourself grace, but trying to be organized, looking for the team, and trying to take it one step at a time. You kind of mentioned there might be some things that you can put off till later if you have that flexibility, like purchases, like selling a home, that kind of thing. Anything else further that you'd mentioned that doesn't have to be decided in that first 30 days that maybe you can put for a little further down the road, that kind of thing?
Cymbre Van Fossen:
Right. Well, today, we're talking really high-level about sort of basic estate settlement, but of course, as people have more complex estates and have trusts in place, there are all kinds of decisions that have to be made about how the assets are going to flow through your estate plan. You may be a business owner. The surviving spouse may have been a business owner. There may be decisions that have to be made about very complex assets, and again, valuations, determining sort of what trust, what asset is going to go into as part of a much bigger and more complex planning conversation. Even on a sort of more simple level, making an election as a surviving spouse about how you want to take your spouse's IRA.
Do you take it as your own? Do you take it as a beneficiary? What elections do you make? Those are the kinds of decisions that really require some input from your financial advisor, from your trust team, that kind of thing. You mentioned real estate.
That's very significant and it has impacts, again, in terms of how the estate is settled, but you may have bill paid to do in the meantime. You may have improvements you need to make to real estate. There's a reason that this process often takes up to a year or even more, depending on the situation that you have, because there are so many decisions to make.
Brendan Freeman:
Sure, you don't have to make all those decisions at once, but you do have to address them, and so relying on key advisors, teammates, family members, individuals within the company, if you're in a business. There's just a lot of things to consider. Okay. Well, let's try something different. Practically speaking, I'd like to maybe call this a speed round, thinking about several different topics that might be on the minds of our listeners, especially if they have just lost a spouse and they're trying to figure out and navigate these kind of choppy waters maybe for the first time, maybe for the only time in their life that they'll ever have to deal with something like this, and so I'll throw out a topic and you just tell me some things that come to mind relative to being beneficial to our listeners here. So life insurance proceeds, let's start with that one.
Cymbre Van Fossen:
I'd say they're often the first and the last asset that you're going to deal with. Maybe one of the first, because as I said, a claim process can be very straightforward as long as you contact the company, fill out a claim form and have a death certificate to attach. It can be an important way of having the liquidity that you need very quickly in order to pay for funeral expenses, debts of the decedent, handling ongoing payments on, say a mortgage, that kind of thing. A lot of times, people have done some good insurance planning as part of their estate plan, and again, hopefully that's a conversation that you've had well in advance, but it can be a critical part of the whole process and one that often comes up very early. I also mentioned it can also be one of the last assets that you deal with, because oddly enough, lots of people have small miscellaneous insurance policies that they find as they're kind of going through their important paper's file.
Maybe somebody had purchased a little policy on the decedent's life and it's a $5,000 policy and they don't find it until nine months into the process. Just for whatever reason, it seems like these policies do turn up even at the last minute, and it's never too late. You certainly don't have to worry about any kind of time expiring on your ability to file a claim for insurance, and that's life insurance. Just as an aside, it's important to also contact your health insurance provider and make sure that you're clear on how your own healthcare benefits continue after the death of a spouse. Let them know about that death. Make sure that premiums are adjusted to take into account the death of that individual, and each healthcare provider is a bit different, but that is an important early step.
Brendan Freeman:
Well, thanks for that perspective on insurance. Next one is social security benefits.
Cymbre Van Fossen:
Well, we talked about these just a little bit earlier, but for a surviving spouse, you have what's called a survivor's benefit. So if you have a husband and wife, and they're both getting Social Security, at the death of one, the survivor gets the higher of either their own benefit or the deceased spouse's benefit. The bad news is you don't have two social security payments coming in anymore, but the good news is that you do lock in the higher of the two. It's important to make a call to Social Security and to let them know about the death, and to start the process for making sure that your spousal benefit is activated. You can get that spousal benefit as early as 60 if you're at full retirement age.
You can also, again, make that claim. You'll want to speak to the Social Security administration about any unique circumstances that you may have, depending on the time of marriage, whether it's a second marriage, that kind of thing, but in most cases, the survivor's benefit is very straightforward, and it's an important part of financial security for a spouse to know that that is going to come in uninterrupted. Social Security that pays on the decedent's record for several months after death is going to be pulled back by the Social Security administration, so that's something you want to deal with relatively early because if you want to close, say a checking account, retitle it into your own name, you need to make sure that that automatic payment into that account has stopped timely. So lots to do, but I would encourage early contact of Social Security.
Brendan Freeman:
That's good advice. That's good advice. Reach out to them as quickly as you can and see what options you have depending upon your situation, and get that stream of cash flow coming in. That can be really helpful. So that actually can provide some relief, especially if there's any uncertainty for that surviving spouse.
Okay, next one, and this could take many different forms, is debt, mortgage debt, credit cards, any unpaid taxes, that kind of thing. Any advice or thoughts around the topic of debt?
Cymbre Van Fossen:
Well, I would say that for most surviving spouses, anything that you have to set up with sort of an automatic payment out of a joint account, you don't have to worry about that. With a joint account, the survivor is automatically the owner. Those payments can continue on uninterrupted. It's a little bit more complicated if you have some of these payments coming out of an account that is titled solely in the name of the decedent because, really, those kinds of things should stop as soon as possible after death, so you're going to need to contact the mortgage company, these credit card companies, and make arrangements for any changes in payment method, methodology, that kind of thing. I've found that most mortgage companies are understanding about situations like the death of a spouse, but it's important to have clear communication with them, because otherwise, you can very quickly get into a situation where you've done some harm to your credit. You want to make sure to keep those payments going uninterrupted, or else have that contact with the mortgage or credit card companies.
In terms of taxes, that is something that unfolds over a little bit longer-term. Usually, spouses who are filing jointly are going to have to file a final year income tax return. You're going to work with your CPA on that. As you get to much larger estates, you have issues like estate taxes, gift tax returns, and so on. That's maybe a bit beyond the scope of what we're talking about today, but again, getting that sort of qualified team together to help you understand what those filing deadlines are, make sure that you have the resources to pay them, and what the timing on all of that looks like is very critically important.
Brendan Freeman:
Well, again, good advice. Appreciate that. The last speed round topic might be retirement accounts, and it's kind of what to think about within the context of retirement accounts.
Cymbre Van Fossen:
Well, I think the first question is, "Is your spouse currently employed?," and if so, obviously an early conversation would be to that spouse's employer. They will let you know what benefits you're entitled to. It may go beyond just the obvious of, say, a 401(k). There may be a specific pension plan. There may be other benefits, insurance benefits.
As we mentioned earlier, insurance is important, but through work, there might be term insurance that applies and would pay quickly to the surviving spouse or other beneficiaries, so I'd say certainly, contact your spouse's employer. If your spouse was retired, then you should have a pretty good sense of what the benefits are. You will have made an election, for example, if there was a pension about whether those pension payments continue after the death of a spouse. Do they continue at the same level, or do they continue at a reduced amount, or do they stop? It's going to be an election that you've made earlier on as part of your financial planning at retirement, but again, reach out to that provider, that custodian, and they have experts who are ready to talk to you about what the benefit is, what the balances are, and what your election options are for those assets.
When it comes to a retirement account like an IRA, that's something where our group often is in the position of offering counsel and advice to surviving spouses on how they should take the IRA. By that, I mean do they simply consolidate it with an existing IRA that they have in their own name? They can do that, or is there a reason based on age or other beneficiaries to take it as a beneficiary with a different distribution election? There are a lot of choices. It can get very technical very quickly.
I would say this is not something you need to figure out the first two weeks, or even the first two months. Just remember, you have time. You have until September 30th of the year following death in order to make certain elections relative to your IRA, so you don't have to be in a big rush. Speak to your advisors about your options.
Brendan Freeman:
Great. Well, you covered a lot in a short amount of time there, Cymbre. Thank you for that, and I think that's really good for our listener to listen to, to hear, and good tips to follow, and so maybe in summary, kind of your last question, you've worked with so many individuals, you've worked with families over the course of a great career, Cymbre. Any final thoughts for our listeners today relative to this topic? Anything that we didn't cover or anything that you really want to emphasize?
Cymbre Van Fossen:
The one thing that comes to mind that I haven't mentioned yet is don't forget about your own estate planning. This is actually sort of one of those final steps, but one that's important not to forget. After going through this process, in wrapping up a deceased spouse's estate, you can imagine what the process would be like for your children or whoever else would be handling your estate, and make sure that your own will, and trust, and healthcare, and financial powers of attorney are all in really good shape. Work with that family attorney, or if you need a new advisor, find that new trusted advisor to help you think through, "What are your choices? What options do you have under your current estate plan?"
"Can you make some changes? Are you happy with your charitable beneficiaries, for example? Do you want to add or delete beneficiaries, either family or charitable beneficiaries?" These are important decisions. They're may be not one-time decisions, and they certainly shouldn't be made in any hurry right away, but they should be made with some consideration.
Again, as a trust advisor, I often do have these conversations with surviving spouses about, "What is the structure of their own estate? How will it work with the assets that they now have? Are they clear on the tax impacts of what's going to occur? Are there any adjustments we should make to make the estate plan more tax efficient, more administratively efficient? Is there a role for a corporate trustee, or do you want your oldest child to be dealing with all of this at your death?"
These are all important things to think about. Again, I'd encourage that as one of those final steps along this journey. Again, I guess, just to reiterate what I said originally, don't forget that you have a great team, you have people who are there to support you, you don't have to do it alone, and certainly, the team at First Business Bank welcomes the opportunity to provide information and resources for our clients and be an advisor in those important times.
Brendan Freeman:
We sure do. Well, thank you, Cymbre. I think that's really good comments and thoughts relative to thinking about how you would handle it going forward, having lived it. That's something that maybe we don't spend enough time talking about, but I'm glad you mentioned that. Well, I want to thank you, Cymbre Van Fossen, in joining us today. Did an excellent job in this discussion.
I want to thank our audience members for listening in today. I'd encourage you to visit firstbusiness.bank to learn more about topics like this. There's a wealth of different information in our resources tab within our website. We offer these to individual investors, as well as to business owners, and we invite you to experience the advantage at First Business Bank. If we can help you, please reach out to us. Thank you.
Speaker 1:
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