Things you need to know about death: Money

This has been an interesting ten days or thereabouts. Since my last post, I've learned far more than I ever wanted to about what happens when someone dies. One thing I don't understand is this:

Everyone goes through this with family and friends. Given that that's the case, why doesn't anyone talk about it?

I'm not talking about the emotional part; I like to think I'm the least emotionally constipated of my entire immediate family (yay divorce counseling!), and we've all talked the emotional part to death, no pun intended. What I mean is:

How come no one talks about the practical stuff that survivors need to know?

Well, I'm talking about it. Here's what I've learned about the financial aspects of losing a loved one:

1. The funeral industry is pretty gross.
Yes, it is. It's easy to blow a fortune on caring for a loved one's remains, and funeral homes are more than happy to help you do it. In my family, however, we think of funerals as being more for the survivors than for the deceased. For us, grief is private (I understand the irony here given that I'm blogging about my personal finances to you all), and grief is not about spending money. Fortunately, my folks discussed this with me and my sibling in advance, so it was a no-brainer: my dad went to the funeral home that happened to be on call that night, and we had a cremation without a service and opted for the lowest-end cremation container and urn that were available. (The urn turned out to be a very nice hardwood box.) Even the low-end option cost close to two thousand dollars, all payable in advance.

What you can do to make things easier for your survivors:
Discuss the options available in advance, and get a price list from the local funeral homes if you need to. Whatever you choose, make sure you set aside enough money to cover it in an account that your survivors can access immediately.

2. Scammers love obituaries
Identity thieves and other suchlike lowlifes watch the obituary column in the local newspaper for opportunties to steal the identities of the recently deceased. Thanks to the helpful information available in obituaries, it's far too easy to determine where the deceased lived, and that's all some scammers need to get their game going. The thing I find the most mind-blowing is that some financial institutions even accept obituaries as sufficient evidence to change account ownership details. Given that grieving relatives are unlikely to have monitoring identity activity for the recently deceased as their first priority, there's a great window of opportunity for nefarious activity to take place undetected.

What you can do to make things easier for your survivors:
Leave instructions detailing that an obituary not be published. In our case, my parents agreed on this in advance on the grounds that we believe in keeping our grief private and that we're aware of the nasty things that people can do with obituaries.

3. Get thee to the Social Security Administration
The Social Security Administration needs to know about a death at the earliest possible opportunity, and they require an in-person visit. If the deceased was receiving Social Security payments, don't cash them! For beneficiaries of a traditional pension, pension plan administrators also need to be notified of the death right away, and those payments can't be cashed either. Survivors will need to fill out paperwork for both. Depending on what time of the month the death takes place, an interruption in benefits is not only possible, it's likely.

What you can do to make things easier for your survivors:
If you have a traditional pension and a spouse or qualified domestic partner, make sure you opt for an annuity benefit option so that your spouse or partner will continue to receive payments after your death. For Social Security, make sure that you and your spouse or partner both know what Social Security benefits are available for your survivor if you die first. (My mom is a fantastic financial manager, but even she boffed this last one. Fortunately, her estimate was short of the actual instead of the other way around.)

If you can see a gap between income streams and your spouse's living expenses, then you know what to do: Save, save, save so you can close that gap. Even if you don't anticipate a gap --and if that's the case, then I want to be on your pension plan--, make sure you have enough money set aside in an account your spouse can access to cover living expenses during an interruption in benefits.

If you don't have a spouse or qualified domestic partner, then income is off the table. (In fact, I'm pretty sure that not terminating the income stream in this case is a felony.) Instead, think about how much you want to leave your survivors and save and plan accordingly. While you're at it, make sure they know who to call and what forms they need to fill out to notify income providers that the income needs to stop.

4. Estate planning is a must
The death of a loved one is bad enough. If the loved one is intestate, that will cause all kinds of problems when it comes to dividing the estate. Don't assume that it automatically goes to the nearest and dearest; while local laws on this topic may vary to some extent, the decision of who gets what overwhelmingly lies in the hands of the courts.

What you can do to make things easier for your survivors:
Write a will. If you don't want your survivors to have to deal with probate, put your assets into a revocable living trust. Either way, name an executor that you can trust. My parents went the revocable living trust route, and I think that was the right choice for them. We still have to do a lot of paper-pushing to get the trust updated to reflect my father's death, but we don't have to deal with the courts to do it.

Personally, I'm remiss on this one: I have a holographic will written on a standard form from a stationary store and witnessed by a few friends, but it doesn't have a legal stamp of approval on it. As soon as my employer starts our annual benefits enrollment for 2009, though, you can bet your bippy that I'm signing up for our group legal plan and putting this one to bed.

There's a great deal more to know about a loved one's death, so check back here in a few days for a new post. In the meantime, go hug your familes and tell them you love them.

That's all.