A Death In The Family Brings Financial Issues
For Canadian readers
November 25, 2002 -- Here's a list of my top financial
issues to consider when your spouse or common-law partner (CLP) dies.
1. Funeral costs: Costs of a funeral can vary widely.
There will be many decisions to make -- all at a time when you're fragile
emotionally. You'd be wise to ask for the help of a trusted friend or relative
to make the arrangements. Even better: You and your better half should plan your
funerals today to simplify things when you're gone.
2. Deceased's will: Look after the funeral or memorial
first. Then you should focus some attention on finding a copy of the deceased's
will -- it'll be needed to distribute his assets properly. Visit a trusted
lawyer to arrange for probating of the will (which is required in most
provinces).
3. Deceased's assets: You'll need to gather information
on the whereabouts of your spouse's assets, including investments, after his
death. Speak to your spouse's financial and insurance advisers, and accountant
soon after the funeral, to help locate everything. Create your own list of
assets today to make this task easier for your family.
4. Bank accounts: If you held a bank account jointly
with your spouse, you'll be able to access the cash immediately after he dies.
Joint bank accounts make sense for this reason. No joint account? You may not be
able to access that money (often with the exception of paying for funeral
expenses) until the will has been probated.
5. Insurance policies: Be sure to contact your
insurance adviser as soon as possible after the death of your spouse so that he
or she can look after making the insurance claim on any policies. In most cases,
insurance proceeds are paid out quickly after the insured's death.
6. Government benefits: Three types of benefits may be
available if your deceased spouse or CLP contributed to the Canada Pension Plan:
A death benefit (a onetime payment, to a maximum $2,500), a survivor's pension
(a monthly pension paid to you, averaging $265, but can be as high as about
$465), and a children's benefit paid to a surviving child (a monthly benefit of
about $180 per month per child under age 18 or up to age 25 while still a
student). You've got to apply for these benefits -- so do this very soon after
your spouse or CLP's death.
7. Registered plans: Any RRSPs or RRIFs owned by your
spouse or CLP can generally be transferred on a tax-free basis to a registered
plan in your name. This may be true even if your spouse or CLP failed to name
you as beneficiary in the plan documentation.
8. Employment issues: Call the employer of your
deceased spouse to determine if there are any amounts owing such as salary,
vacation pay or bonuses. Enquire as to whether the employer can pay any amounts
as a tax-free death benefit (up to $10,000 can be received tax-free where it is
considered a death benefit in recognition of the employee's service).
9. Cash management: When your spouse dies, keep your
spending in check until you've had a chance to review your affairs with a
trusted financial adviser to ensure you'll be able to manage. Cancel any medical
or disability coverage that is no longer needed.
10. Debt management: Check with your financial
institution to see if mortgage or other insurance had been purchased to pay off
any debts owing upon your spouse's death. Do each other a favour and put this
important insurance in place today.
11. Visit advisers: Soon after the funeral, visit a
lawyer to revise your own will and powers of attorney; a financial adviser to
review your situation and change any beneficiary designations on insurance
policies and your RRSPs or RRIFs; and an accountant to look after the tax
filings for your deceased spouse.
12. Don't rush yourself: Don't make any big financial
decisions immediately after your spouse dies. You may want to wait close to a
year before changing investments, selling your home, or making other big
decisions.
(From the Globe and Mail, Saturday, November 25, 2002 – By
TIM CESTNICK)
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