Lantern is a startup looking to ignite a conversation about how to die well

By Danny Crichton

America is a land of paperwork, and nowhere is that more obvious than at the end of someone’s life. Advanced care directives have to be carefully disseminated to healthcare providers and strictly followed. Property has to be divided and transferred while meeting relevant estate laws. And of course, there are the logistics of a funeral, cremation or other option that has its own serious complexities, costs and choices.

The worst time to figure out how to die is when you die. The best time to figure it out is precisely when you don’t have to.

For New York City-headquartered Lantern, the goal is to initiate those conversations early and give its users significantly better peace-of-mind, particularly in these dolorous times.

The company offers essentially a “how-to” platform for beginning to prepare for end-of-life, offering checklists and monitoring to ensure that the vast majority of details are figured out in advance. In some cases, the startup will handle the underlying details itself, while in other areas like estate planning, it works with partners such as Trust & Will, which we have profiled a number of times on TechCrunch.

Right now, the company has two plans: a simple free one and a $27 / year plan that tracks your progress on end-of-life planning and allows you to collaborate with family, friends or whoever else needs to be part of your decision-making. The company is in the process of adding other à la carte options for additional fees.

Last month, the company raised $1.4 million in a seed round led by Draper Associates with a few other firms involved. Earlier, the company raised a pre-seed round of $890,000 from the likes of 2048 Ventures, Amplify and others, bringing its total raised to date to $2.3 million. The company is organized as a public-benefit corporation and was founded in September 2018, and first launched a year later.

For founders Liz Eddy and Alyssa Ruderman, Lantern was an opportunity to tackle a looming problem in a compassionate and empathetic way. “I started my first company when I was 15,” Eddy, who is CEO, said. That company focused on dating abuse and domestic violence education for high school and later college students. “I really fell in love with the pace and variety of starting something new, but also in creating conversations around topics that people really don’t want to talk about and making it more palatable and comfortable,“ she said.

Later, she joined local suicide prevention nonprofit Crisis Text Line, which has an SMS-based network of crisis counselors who are trained to calm people and begin their process of recovery. She spent more than six years at the organization.

As for Ruderman, who is COO of Lantern, she most recently spent two years at Global Citizen, a nonprofit organization focused on ending extreme poverty. The two connected and incubated Lantern at startup accelerator Grand Central Tech.

The idea for better end-of-life planning came from personal experience. “I lost my dad when I was in elementary school,” Eddy said, “and saw firsthand how loss and grief impacts a family financially, emotionally, logistically, legally — every aspect.”

Today, many of these processes are offline, and the online products mostly available today are focused on individual elements of end-of-life planning, such as estate planning or selecting and purchasing a casket. Eddy and Ruderman saw an opportunity to provide a more holistic experience with a better product while also initiating these conversations earlier.

That pre-planning part of the product was launched just as the pandemic was getting underway last year, and Eddy said that “we had a sort of a really interesting launch where people were starting to come to terms with their own mortality in a way we hadn’t seen in a very long time.” Typical users so far have been between 25 and 35 years old, and many people start planning when they have a major life event. Eddy says that the death of a family member is an obvious trigger, but so is having a baby or starting a company.

One aspect that Eddy emphasized repeatedly was that having a will and pre-planning for end-of-life are not equivalent. “Even if you don’t have a dollar to your name after you pass away, there are a ton of other things that your loved ones, family members, whoever’s responsible has to consider,” she said.

From a product perspective, there are some nuances compared to your more typical SaaS startup. For one, the company needs to engage you regularly, but not too frequently. Unlike, say, a wedding, which is a single event that then is over, your documents and directives need to be occasionally edited and updated as a user’s life circumstances change.

Beyond that, one of the largest challenges with a product that talks about death is building a connection with a user that doesn’t seem cold, and, well, Silicon Valley-like. “Even as a product that is entirely virtual, making sure that you really feel that human connection throughout” is a high priority, Eddy said. “We use a lot of empathetic language, and our imagery, all of the illustrations are done by illustrators who have lost someone in memory of the person who’s lost.”

Longevity startups may remain a thesis for some VC investors, but handling the end — no matter when — is an activity every person faces. Lantern might shine just a bit more light on what is otherwise a debilitating and scary prospect.

Complete Article HERE!

An Overview of Filial Responsibility Laws

By Rebecca Lake

Taking care of aging parents is something you may need to plan for, especially if you think one or both of them might need long-term care. One thing you may not know is that some states have filial responsibility laws that require adult children to help financially with the cost of nursing home care. Whether these laws affect you or not depends largely on where you live and what financial resources your parents have to cover long-term care. But it’s important to understand how these laws work to avoid any financial surprises as your parents age.

Filial Responsibility Laws, Definition

Filial responsibility laws are legal rules that hold adult children financially responsible for their parents’ medical care when parents are unable to pay. More than half of U.S. states have some type of filial support or responsibility law, including:

  • Alaska
  • Arkansas
  • California
  • Connecticut
  • Delaware
  • Georgia
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Massachusetts
  • Mississippi
  • Montana
  • Nevada
  • New Jersey
  • North Carolina
  • North Dakota
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Dakota
  • Tennessee
  • Utah
  • Vermont
  • Virginia
  • West Virginia

Puerto Rico also has laws regarding filial responsibility. Broadly speaking, these laws require adult children to help pay for things like medical care and basic needs when a parent is impoverished. But the way the laws are applied can vary from state to state. For example, some states may include mental health treatment as a situation requiring children to pay while others don’t. States can also place time limitations on how long adult children are required to pay.

When Do Filial Responsibility Laws Apply?

If you live in a state that has filial responsibility guidelines on the books, it’s important to understand when those laws can be applied.

Generally, you may have an obligation to pay for your parents’ medical care if all of the following apply:

  • One or both parents are receiving some type of state government-sponsored financial support to help pay for food, housing, utilities or other expenses
  • One or both parents has nursing home bills they can’t pay
  • One or both parents qualifies for indigent status, which means their Social Security benefits don’t cover their expenses
  • One or both parents are ineligible for Medicaid help to pay for long-term care
  • It’s established that you have the ability to pay outstanding nursing home bills

If you live in a state with filial responsibility laws, it’s possible that the nursing home providing care to one or both of your parents could come after you personally to collect on any outstanding bills owed. This means the nursing home would have to sue you in small claims court.

If the lawsuit is successful, the nursing home would then be able to take additional collection actions against you. That might include garnishing your wages or levying your bank account, depending on what your state allows.

Whether you’re actually subject to any of those actions or a lawsuit depends on whether the nursing home or care provider believes that you have the ability to pay. If you’re sued by a nursing home, you may be able to avoid further collection actions if you can show that because of your income, liabilities or other circumstances, you’re not able to pay any medical bills owed by your parents.

Filial Responsibility Laws and Medicaid

While Medicare does not pay for long-term care expenses, Medicaid can. Medicaid eligibility guidelines vary from state to state but generally, aging seniors need to be income- and asset-eligible to qualify. If your aging parents are able to get Medicaid to help pay for long-term care, then filial responsibility laws don’t apply. Instead, Medicaid can paid for long-term care costs.

There is, however, a potential wrinkle to be aware of. Medicaid estate recovery laws allow nursing homes and long-term care providers to seek reimbursement for long-term care costs from the deceased person’s estate. Specifically, if your parents transferred assets to a trust then your state’s Medicaid program may be able to recover funds from the trust.

You wouldn’t have to worry about being sued personally in that case. But if your parents used a trust as part of their estate plan, any Medicaid recovery efforts could shrink the pool of assets you stand to inherit.

Talk to Your Parents About Estate Planning and Long-Term Care

If you live in a state with filial responsibility laws (or even if you don’t), it’s important to have an ongoing conversation with your parents about estate planning, end-of-life care and where that fits into your financial plans.

You can start with the basics and discuss what kind of care your parents expect to need and who they want to provide it. For example, they may want or expect you to care for them in your home or be allowed to stay in their own home with the help of a nursing aide. If that’s the case, it’s important to discuss whether that’s feasible financially.

If you believe that a nursing home stay is likely then you may want to talk to them about purchasing long-term care insurance or a hybrid life insurance policy that includes long-term care coverage. A hybrid policy can help pay for long-term care if needed and leave a death benefit for you (and your siblings if you have them) if your parents don’t require nursing home care.

Speaking of siblings, you may also want to discuss shared responsibility for caregiving, financial or otherwise, if you have brothers and sisters. This can help prevent resentment from arising later if one of you is taking on more of the financial or emotional burdens associated with caring for aging parents.

If your parents took out a reverse mortgage to provide income in retirement, it’s also important to discuss the implications of moving to a nursing home. Reverse mortgages generally must be repaid in full if long-term care means moving out of the home. In that instance, you may have to sell the home to repay a reverse mortgage.

Filial responsibility laws could hold you responsible for your parents’ medical bills if they’re unable to pay what’s owed. If you live in a state that has these laws, it’s important to know when you may be subject to them. Helping your parents to plan ahead financially for long-term needs can help reduce the possibility of you being on the hook for nursing care costs unexpectedly.

  • Consider talking to a financial advisor about what filial responsibility laws could mean for you if you live in a state that enforces them. If you don’t have a financial advisor yet, finding one doesn’t have to be a complicated process. SmartAsset’s financial advisor matching tool can help you connect, in just minutes, with professional advisors in your local area. If you’re ready, get started now.
  • When discussing financial planning with your parents, there are other things you may want to cover in addition to long-term care. For example, you might ask whether they’ve drafted a will yet or if they think they may need a trust for Medicaid planning. Helping them to draft an advance healthcare directive and a power of attorney can ensure that you or another family member has the authority to make medical and financial decisions on your parents’ behalf if they’re unable to do so.

Complete Article HERE!

Not all end-of-life decisions are covered in a will.

Here’s what else you need

By Sarah O’Brien

With the number of deaths from the coronavirus continuing to mount, your own mortality may be more on your mind than usual.

In fact, The Covid-19 pandemic has produced a rise in estate planning, according to certified financial planner Stacy Francis, president and CEO of Francis Financial.

Pandemic or not, though, part of that contemplation should include making a plan for when you die, experts say. That is, you should give thought to what would happen to your home, your bank accounts and belongings, as well as, perhaps, your dependents.

That planning should start with a will. If you pass away without one — called dying intestate — a state court generally decides who gets your assets and, if you have children, who will care for them.

“In every jurisdiction, if there isn’t a valid will, assets will pass on to your heirs by law, who may or may not be who you would have provided for in a will,” said Samantha Weyrauch Davis, an estate planning attorney and director with the law firm Hall Estill in Tulsa, Oklahoma. “It also lets you name a guardian for children.”

However, a will is just one piece of an “estate plan.” An estate just refers to what you own — your financial accounts, possessions and any real estate. Putting a plan in place for those assets helps ensure that upon your death, your wishes are carried out and that family squabbles don’t evolve into destroyed relationships.

In other words, it’s partly about making things easier for your loved ones during an already difficult time.

Here’s what else you should consider if you want to prepare.

Limitations of a will

A will is a document that lets you relay who gets what when you pass away. You can get as specific as you want (you leave a certain family heirloom to a particular person) or keep it more general (you want your surviving spouse to get everything).

However, there are some assets that pass outside of the will, including retirement accounts such as 401(k) plans and individual retirement accounts, as well as life insurance policies.

This means the person named as a beneficiary on those accounts will generally receive the money no matter what your will says. Be aware that 401(k) plans require your current spouse to be the beneficiary unless they legally agree otherwise.

Regular bank accounts, too, can have beneficiaries listed on a payable-on-death form, which your bank can supply.

If no beneficiary is listed on those non-will items or that person has already passed away (and there is no contingent beneficiary listed), the assets automatically go into probate. That’s the process by which all of your debt is paid off and the remaining assets are distributed to heirs. This can last several months to a year or more, depending on state laws and the complexity of your estate.

If you own a home, be sure to find out how it should be titled to ensure it ends up with the person (or people) you intend, because applicable laws can vary from state to state. Moreover, there can be other considerations when it comes to how a house is titled, including protection from potential creditors or for tax reasons when the home is sold.

A big decision

As part of the will-making process, you’ll need to pick an executor of your will (sometimes called a personal representative).

This can be a big job, experts say. Things such as liquidating accounts, ensuring your assets go to the proper beneficiaries, paying any debts not discharged (i.e., taxes owed to the IRS), and even selling your home could be among the duties undertaken by the executor.

In other words, just because you’ve known your best friend since elementary school doesn’t mean handling the challenge of being an executor is up their alley.

Where to get a will

To prepare a will, you can turn to an estate planning attorney in your local area — to ensure familiarity with state laws — or use an online option. However, be aware that not all web-based alternatives will necessarily reflect the specifics of your state’s law.

“There’s risk in doing it that way,” Davis said. “Those forms or software may not be compliant with your local law, so look at the fine print.”

If an online option ends up being appropriate for your situation, you may be able to find a form to download for free. Software will-making options can run about $60 or more, depending on what else is included. Setting up an estate plan with an attorney could run several hundred dollars to more than $1,000, depending on the complexity of your situation.

Also, you’ll need to have a witness and/or notary sign it and make the document official, depending on the state where you live. The American College of Trust and Estate Counsel’s website offers a guide to laws and accommodations in every state if in-person meetings are not permitted due to the pandemic.

Other key documents

Typically, estate planning also includes preparing a few other legal documents. This includes an advance health-care directive, also known as a living will.

This document outlines your wishes if you become incapacitated due to illness or injury.

Say you are on life support. Instead of a loved one making the agonizing decision whether to end all life-saving measures, your wishes would be specified in a legal record.

I tell my clients it’s really important to carefully consider the individuals you name.
Samantha Weyrauch Davis
Estate planning attorney and director with Hall Estill

It’s also worth assigning powers of attorney. If you become incapacitated, the people to whom you grant powers of attorney will handle your medical and financial affairs if you cannot.

Often, the person who is given this responsibility when it comes to your health care is different from whom you would name to handle your financial affairs.

As with choosing an executor, make sure whoever you hand the financial reins to is trustworthy and smart.

“I tell my clients it’s really important to carefully consider the individuals you name,” Davis said. “You want to make sure they have the ability, skill set, time and desire to make such decisions and do these sorts of things.”

Make a master list

While it can be hard to imagine your own death, picture your family having to search through drawers for your original will, documents regarding your bank accounts and other assets, and maybe even your Social Security number.

The best way to avoid forcing them to deal with that task on top of mourning is to leave an organized list of information that the will’s executor will need to settle your estate, experts say. Be sure this includes passwords so your online accounts can be accessed.

Consider a trust

If you want your kids to receive money but don’t want to give a young adult — or one prone to poor money management — unfettered access to a sudden windfall, you can consider creating a trust to be the beneficiary of a particular asset.

A trust holds assets on behalf of your beneficiary or beneficiaries, and is a legal entity dictated by the documents creating it. If you go that route, the assets go into the trust instead of directly to your heirs. They can only receive money according to how (or when) you’ve stipulated in the trust documents.

The average cost to set up a trust using an attorney ranges from $1,000 to $1,500 for an individual and $1,200 to $1,500 for a couple, according to LegalZoom.com. Doing it yourself with online software could run at least several hundreds of dollars.

Complete Article HERE!

If a loved one dies, beware the ‘renter’s death penalty’

Landlord can legally ask for remaining rent on lease

By: John Matarese

If someone you love who lived in an apartment dies, you might assume the landlord will just tear up the lease.

But many grieving families find that is often not the case.

Carrie Davis is mourning the loss of her beloved mother and battling her mom’s apartment complex at the same time.

Despite her mother’s passing, Davis said Northwest Woods in Springfield Township, Ohio, still wants the equivalent of six months rent.

“They said we needed to sign a buyout agreement,” Davis said. “That could leave us paying a total of six months rent in order to get out of that one-year lease.”

She can’t believe the family has to keep paying for an empty apartment.

“The grandkids are not going to get the gifts bequested to them this Christmas in my mom’s will because we have to pay an apartment complex,” she said.

Law is on landlord’s side in most states

Although this might seem unfair, most states have laws to protect the landlord, not the deceased person’s family, when this happens.

Although the survivors are not billed directly, the dying person’s estate is, and sometimes their estate must pay 10 or 11 months rent on an apartment that will not be used.

Family law attorney Pavan Parikh said this is often called the “renter’s death penalty” — a penalty for dying.

“The law is pretty clear on this that when someone passes away, the decedent’s estate is still responsible for the full term of the lease,” he explained.

A handful of states such as Pennsylvania and Colorado have recently outlawed this, but Ohio, Indiana and Kentucky have not.

Parikh said he believes more states should look at changing the law out of compassion for grieving families.

“It is a scenario where the law needs to do a better job of contemplating,” he said.

We contacted the complex owner, Nexus Property Management, but were told “we have no comment” by the woman who answered. She would not put us in touch with the complex’s attorney.

Although Northwest Woods and Nexus Property Management has done nothing wrong in this case and legally have every right to ask for the remaining rent, Carrie Davis would like to see tougher laws to protect the survivors of those who pass away.

“We should protect our residents, our elderly, our disabled, and even our COVID victims, from incurring thousands of dollars in debt just for dying,” she said.

Attorney Parikh, meantime, says taking an apartment complex to court could cost more than the rent.

He suggests negotiating with the landlord, so you don’t waste your money.

Complete Article HERE!

Resources for end-of-life planning, from wills to emergency health plans

By Sarina Trangle

The pandemic has prompted people of all ages to consider wills and emergency health plans.

At a minimum, lawyers recommend New Yorkers complete a health care proxy and consider a power of attorney, which, respectively, allow others to steer their treatment and finances, if necessary.

Here are definitions and resources to help with end-of-life planning:

Definitions and documents

When and why

Consider and codify your preferences when you’re healthy because documents cannot be finalized if there are questions about your ability to understand what you’re signing, said Maria Hunter, director of the public benefits unit at New York Legal Assistance Group, which provides free financial planning and legal assistance to low-income New Yorkers.

Be aware that if your wishes do not match the state’s framework, you will want to draft your own plans. Working with an attorney becomes more important when your preferences are “jumping the line,” according to Erika Verrill, attorney for the adult home unit at Nassau Suffolk Law Services, a nonprofit.

Health care-focused documents

Advanced directives guide care for people when doctors determine they cannot make their own decisions. Without advanced directives, state law lays out who may act as a surrogate and make decisions on your behalf in institutionalized settings. A court-appointed guardian would be the first person to assume that role. If that’s not feasible, the surrogate power shifts to a spouse, then an adult child, a parent, an adult sibling, and finally, a close friend.

A health care proxy empowers an agent to act on your behalf, when necessary, and may include specific preferences. A health care proxy can often be completed independently of a lawyer. The state Department of Health has forms available online at on.ny.gov/3je85hS, which must be signed by two witnesses.

Another option is a living will, which focuses on specific personal choices and may be used to advise an agent, caregivers or medical professionals.

Financial and administrative concerns

Estate planning refers to tools for managing financial, legal and administrative affairs.

A power of attorney document appoints an agent who can execute transactions and handle administrative affairs on your behalf. For instance, an agent could pay your bills if you were hospitalized.

A trust can be set up to ensure you meet financial eligibility requirements for certain government care programs and to protect loved ones, such as children, attorneys said.

Wills specify what will be done with your possessions after your death. Wills may be able to ensure that certain expenses are covered before your assets are used to pay debt, Hunter said. Absent a will, state law includes a formula for divvying up possessions after death. Default rules are outlined at HERE. For example, if you die with no spouse and no children, your parents inherit everything.

Complete Article HERE!

What happens to a bank account when someone dies?

By

The old saying goes “you can’t take it with you,” but that leaves the question: What happens to the bank accounts that you leave behind? While the departed aren’t concerned, their heirs are affected by how the deceased set up their bank accounts.

What happens if the sole owner of an account dies?

If someone is the sole owner of a bank account, what happens next depends on a few factors.

Many banks allow their customers to name a beneficiary or set the account as Payable on Death (POD) or Transferable on Death (TOD) to another person. If the account holder established someone as a beneficiary or POD, the bank will release the funds to the named person once it learns of the account holder’s death. After that, the financial institution typically closes the account.

If the owner of the account didn’t name a beneficiary or a POD, the process can get more complicated. The executor, or person who administers a person’s estate when he or she dies, will become responsible for using the money to repay creditors and dividing the remaining funds according to the deceased’s will.

What happens to joint accounts when someone dies?

Most joint bank accounts include automatic rights of survivorship. In short, if one of the signers on the account passes away, the remaining signer (or signers) on the account retain ownership of the money in the account. That means that the surviving account owner can continue using the account, and the money in it, without any interruptions.

It’s worth noting that the death of an account holder can impact the insurance on an account. The Federal Deposit Insurance Corp. will continue to insure an account as if the decedent is alive for six months after his or her death. Once that time passes, the FDIC coverage stops. Joint accounts can receive up to $500,000 in protection; however, that amount will revert to the $250,000 in protection applicable to individual accounts if one of the joint account holders dies.

Still, if you’re a signer on a joint account, it’s worth checking with your bank to make sure that the account has automatic rights of survivorship. Some banks will freeze joint accounts if one of the signers dies, which could be a problem if you rely on the account for regular spending.

What happens to a bank account when someone dies without a will?

If someone dies without a will, the money in his or her bank account will still pass to the named beneficiary or POD for the account. If someone dies without a will and without naming a beneficiary or POD, things get more complicated.

In general, the executor of the state is responsible for handling any assets the deceased owned, including money in bank accounts. If there is no will to name an executor, the state will appoint one based on local law. The executor has to use the funds in the account to pay any of the estate’s creditors and then distributes the money according to local inheritance laws.

In most states, most or all of the money will go to the deceased’s spouse and children.

How do banks discover someone died?

Banks can discover the death of an account holder in a few ways.

Family member

One of the most common ways for a bank to discover that an account holder has died is for the family to inform the bank.

If a loved one has passed away, inform the deceased’s bank by bringing a copy of his or her death certificate, Social Security number, and any other documents provided by the court, such as letters testamentary (a court document giving someone legal power to act on behalf of a deceased person’s estate) provided to the executor.

Informing the bank lets it begin the process of distributing the deceased’s funds and closing the account.

Social Security

Often, funeral directors will take on the task of informing Social Security of a person’s death on behalf of the family. This saves the family the effort of telling Social Security about their loved one’s passing and makes sure that the heirs don’t have to deal with returning Social Security checks that shouldn’t have been issued.

If Social Security sent a payment for a month after the deceased’s death, the payment must be returned. Social Security will contact the bank that received the payment to ask for the return of funds. If the bank didn’t already know about the account holder’s death, receiving that request will inform it that the account holder died.

How to avoid complications

The last thing that people want to think about while grieving the loss of a loved one is money. There are some proactive steps that you can take to help your loved ones avoid complications if you die.

“Always have a will drawn up by an estate attorney and set up beneficiary designations or TOD, but the easiest way to deal with bank accounts is to simply have an authorized signer on the account so they don’t have to wait,” says accountant Eric Nisall, who has recent experience with handling the accounts of a deceased loved one advises. “They can just go in and take the money or wait and remove the decedent at a later time.”

If you have power of attorney for a loved one who is in poor health, you can add a joint account holder or a TOD to their accounts in preparation for the future.

Another important thing to do is to make sure that your family knows about all of your financial accounts. With the rise of online banking, it’s much easier for accounts to get lost in the shuffle.

“I think a common mistake is not knowing about all of the accounts,” says Nicole Rosen, a registered agent. “When my mom passed away, there was one account that didn’t have a POD. I couldn’t access this single bank account and it laid dormant. The bank charged enough fees to drain and overdraw the account.”

So, a good strategy is to consolidate your accounts as much as possible, leaving fewer accounts for your heirs to track down.

If you’re trying to find accounts left behind by a loved one, try checking your state’s unclaimed money database. Banks have to surrender unused accounts to the state after a period of time set by local law. The state then lists that unclaimed money for the original owners to find before escheating it for public use. You might be able to use these databases to find money that you or your loved one forgot about.

Bottom line

No one likes to contemplate their mortality but making basic preparations with your finances can save your loved ones from financial stress while grieving your loss. Make sure to use beneficiary and POD designations whenever possible and have a will drawn up by an attorney to outline your final wishes.

Complete Article HERE!

5 Considerations For Managing an Inheritance

Integrating new money into a financial plan while navigating the loss of a loved one is often a complicated process.

by Sam Swenson, CFA, CPA

The period leading up to and shortly after losing a close relative is often one of the most emotionally demanding times we, as humans, experience. The crippling grief of loss, coupled with the toll of anticipatory grief, can make it difficult to think clearly and function effectively. When an inheritance is involved, it is especially important to be a responsible steward of the money you’ve received and do your best to integrate new funds into your broader financial plan. Below, you’ll find four considerations for managing inherited money.

1. Pause to organize your thoughts and future actions

Aside from attending immediate events such as a funeral or memorial service, it’s important and necessary to take time to grieve and reflect on the loss of your loved one. It’s also important to avoid the urge to make any sudden, large changes to your life if you’ve inherited a windfall. Once a bit of time has passed, you should have a candid discussion with other heirs to determine the full list of responsibilities at hand and who will manage each one. The pre-appointed executor, or court-appointed administrator, should spearhead this process.

2. Create a plan (and don’t forget to act)

While this can be done as a team, take a full and complete inventory of the assets in your loved one’s estate — both probate (assets without a named beneficiary) and non-probate (assets with a named beneficiary). Remember to discontinue any of your loved one’s subscription services and recurring household expenses (i.e., cable and electric) when the executor has deemed it appropriate to do so. Once you’ve paid final expenses, created an action plan, and assigned responsibilities, it’s time to act on distributing assets to heirs.

3. Integrate to avoid mental accounting

It might seem convenient to keep your inheritance separate from your existing portfolio, but new money should be integrated into your own financial plan as if it were earned income. According to a variety of behavioral finance studies, we tend to view inherited money as eligible to be spent on discretionary items — we consider this money to be “found money.” We also tend to mentally view inheritances as “separate” from previously earned money. The truth is, although it was not earned at a job or side gig, this money is very much yours and should be integrated into your existing financial plan — if you have one! If you don’t yet have a written financial plan, it’s best to meet with a fee-only financial planner who charges by the hour or on a fixed-fee basis.

4. Ensure your financial priorities are met

Consider your inheritance an important opportunity to change the trajectory of your net worth. Use it to pay off or reduce long-standing debts, such as credit cards or student loans. Work on building an emergency fund — at least six months’ worth of living expenses — that will cushion you from unforeseen circumstances, including a pandemic-era-like job loss. Ensure that Roth (or Backdoor Roth for those who exceed income limits for Roth) contributions are made for this year and last year, if you’re still within the previous year’s tax filing deadline. Investing in a taxable brokerage account is a great idea if any money remains after priorities have been addressed. Bigger goals, like paying off an entire mortgage, can be deferred if you’re young and have locked in a favorable interest rate.

5. Be creative

It may be the case that you’ve inherited non-financial assets, like a car, artwork, or antiques. Strive to be open and honest with fellow heirs — if you can truly use one of the items, say so. Separately, if you aren’t ready to part with some of the items, offer them to extended family or friends. It can be comforting to know that otherwise unused belongings are put to good use by people you know. Alternatively, inherited artwork or antiques can often be repurposed or sold, and if you can afford to insure and maintain an additional vehicle — and you want one — inheriting one is a fortunate outcome. Try to avoid storing inherited items unless there is a plan to remove them within a specified timeframe, as storage charges can add up quickly over long periods of time.

Losing a close relative is difficult enough, but the need to prudently manage any inheritance will nonetheless loom large. In a perfect world, every family would have updated estate planning documents in place, with every family member agreeing as to the contents of said documents. This is rarely how it works out in practice, and it’s important to take a deep breath, take your time, and do your best to be realistic, practical, and a bit creative in absorbing inherited assets into your own life.

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