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by Shelley A. Lee

Freeze. If there’s one word that describes what estate planning attorney Jeff Scroggin considers the most critical piece of advice immediately after a client’s death, it’s that. “Do nothing as far as actions or decisions on the estate,” says Scroggin. “You need time to really get a handle on what you know.” And, perhaps more importantly, what you don’t know.

Several years ago, John “Jeff” Scroggin, J.D., AEP, with Scroggin & Company in Roswell, Georgia, had a client whose family discovered $8 million in original stock certificates in four different safety deposit boxes. He hears this sentiment even today from some older-generation clients. “Many of them really never trusted Wall Street, and now they really don’t,” says Scroggin. “You can understand why they like the tangible nature of those certificates. The problem is, there may be no brokerage statement that reflects the holdings because the client is receiving the dividends directly.”

Another too-soon mistake Scroggin sometimes sees is that survivors start immediately moving assets. A recent case involved a spouse receiving the advice from a financial adviser to roll an inherited IRA into her own. The problem? The widow was younger than 59½ and needed regular withdrawals from the IRA to support herself, which meant she had to pay a 10 percent penalty for early withdrawals. And then there are the situations, more routine than we may like to think, with buried but simmering conflict because of jilted spouses, second or third marriages, step-relations, “loans” to children that remain unpaid—and documents not updated to reflect such. “Life is messy,” says Scroggin. “Death and its financial and legal aftermath can be, too. But it doesn’t have to be.”

It’s probably fair to say that in the go-go days of the bull-market 1990s, few planners focused intently on post-mortem planning because few of their clients were aged and dying. Circa 2011, it’s a different world and a different set of demographics. Veteran financial planner Alexandra Armstrong, CFP®, chair of Armstrong, Fleming & Moore Inc. and author of On Your Own: A Widow’s Passage to Emotion and Financial Well-Being, notes, “I hate to even say it, but I recently had four clients die in one month. We planners are an aging group, and if you have clients who are 10 to 15 years older than you are … well, let’s just say we need to get really good at this.”

Beyond the Checklist

What exactly is post-mortem planning? While it’s certainly a multi-item process to ensure squeaky-clean estate administration (see the sidebar “Recognizing Responsibilities”), it goes beyond that. In fact, good post-mortem planning can fix inadequate pre-death planning and improve good pre-death planning. The goal? To ensure that, at death, the desired consequences are achieved even if the actual documents are deficient.

“Many people do think that documents make an estate ironclad,” says Scroggin. “The truth is, there is a lot of flexibility after death. We like to think that everything is black and white and neatly tied up, but there are many instances when discretion can be used. It comes into play a lot when there’s a family business. One child may want the business, the other may want cash assets. Working situations like that out is always a challenge of skill, judgment, and discretion.”

Broadly speaking, post-mortem planning can be broken into estate-tax issues and income-tax issues. Both are complex, highly nuanced areas that need good collaboration between financial advisers and attorneys. While financial advisers should have a comprehensive, holistic view of the client’s financial picture, estate and probate attorneys know all the war stories about things that can go awry in settling an estate.

“You can’t just push the reset button on post-mortem decisions,” says estate and probate attorney Deborah Hoskins, J.D., CFP®, of Pikes Peak Financial Planning in Colorado Springs, Colorado. Although she also practices as a fee-only planner, Hoskins is adamant about one thing: estate and probate lawyers know the law and the tax codes; financial planners don’t always have that in-depth knowledge, and should be in the number two chair. “As planners, we’re constantly told that we ‘quarterback’ everything,” says Hoskins. “The truth is, no estate planning attorney worth his or her salt is going to take direction on post-mortem issues from a financial planner. We’d be laughed out of court if we came up on a grievance or malpractice issue and said that a planner told us to do something. The big issues in post-mortem planning are really tax issues. Attorneys don’t know asset allocation, including for the surviving family. We leave that to planners—at the right time.”

Estate planning attorney Brian Della Rocca, Esq., with Stein, Sperling, Bennett, De Jong, Driscoll & Greenfeig P.C. of Rockville, Maryland, agrees that a planner must rely on the counsel of an experienced estate planning attorney. “Since I’m a lawyer, I’m sure you’d expect me to say that, but it often surprises me to hear financial advisers talk about their estate planning knowledge,” says Della Rocca. “I don’t understand financial planning! It takes both of us to work on settling a client’s estate. Frankly, I’ve seen some situations in which financial advisers have such a limited understanding of the client’s estate planning documents that their actions can really implode the plan.” One of those common advisements is actually pre-death—and it can cause problems post-mortem. “Few things can destroy a well-thought-out estate plan faster than ‘transfer on death’ [TOD] designations or advice to title an account jointly with one child to make it easier for the child to assist his or her parent,” says Della Rocca. “If your client dies and that’s still in effect, other children will get nothing from that account. In a will-driven plan, placing TOD designations on a client’s accounts or adding one or more joint owners to accounts has the effect of nullifying the plan.”

Hoskins has had cases where the financial planner has advised a surviving spouse to go ahead and take custody of assets when a disclaimer against assets might make more sense. “Even if the spouse has custody of assets for a day, he or she can’t disclaim,” she says. “This is just one of the things that makes us uptight.” (And for the financial planner, so can wading through the disclaimer Treasury regulations and their language.)

Planning for Uncertainty

Disclaimers (an irrevocable refusal by a person to accept specified assets, done within nine months after death) are one of the most important elements in a post-mortem review and action plan, and just one of the ways, says Della Rocca, to alter or improve pre-death planning. In effect, a disclaimer allows the planner to have a “do-over” and allows an inheritor to transfer assets to the next generation without paying gift or estate taxes.

But Armstrong, for one, is not particularly keen on disclaimers unless the client is wealthy: “You need to be quite certain that the surviving spouse won’t need the money. Once it’s gone, it’s gone.” Della Rocca has also used other post-mortem tactics such as getting a court order to revise a trust or a will because it doesn’t reflect the obvious wishes of the deceased, perhaps because of undue influence by a family member or because trust language is vague, ambiguous, or unintentionally deficient—the “scrivener’s error” in legal terms.

Sometimes the “error” discovered in the post-mortem phase, inadvertent as it may be, is a sizeable shock to planners and clients alike. One client of Jon Ulin, CFP®, of Ulin Financial Group in Boca Raton, Florida, failed to tell his wife and his estate planning attorney about restricted stock options from his employer. Because Ulin felt the attorney wasn’t being aggressive enough in following up with multiple firms where accounts were held, he finally started making his own calls and discovered his client’s wife was set to receive a check for a half-million dollars. “It’s not uncommon today for wealthy clients to have multiple bank accounts, retirement accounts, and insurance policies,” says Ulin. “Even if you think you have it all accounted for, never assume there aren’t flaws in the plan or that it will go smoothly. Remember, in particular, that if you’ve dealt only with one member of a couple, you may not know what to expect in a relationship with the surviving spouse, especially under stressful conditions.”

Ulin uses a spreadsheet technique with three scenarios. The pre-death spreadsheet accounts for all the known assets, ownership of assets, and beneficiaries (keep in mind that there are some not-so-obvious assets, such as royalties, outstanding claims from a lawsuit, or future commissions). The post-death scenario spreadsheet includes an in-depth review of the actual estate settlement arrangements and inherent outcomes for both the deceased’s estate and the surviving spouse’s “new” estate if the estate is settled as given. The third spreadsheet is an estate settlement cost analysis with alternate strategies. This step discloses potential pitfalls in the surviving spouse’s estate and provides facts on which to base post-mortem techniques that may better position survivors after the client’s death.

Navigating Gray Areas

Collaborating with an experienced attorney will help financial planners recognize and take advantage of opportunities to increase a survivor’s wealth, even if it feels like it might be in the gray zone. In most states, a surviving spouse can elect against the will—even if the will specifies a certain percentage of assets to go to the spouse, he or she can elect to take what the law allows, usually as much as 50 percent. It might create discord among other family members, for example, the deceased’s children from a previous marriage, but if the surviving spouse is the client, the planner has an ethical obligation to act in the client’s best interest.

And then there are situations for planners like one Della Rocca recently handled. When the wife of a disabled man died, the attorney-in-fact for the husband had a fiduciary obligation to elect against the will on his behalf, seeking more than the specified $25,000. “It may feel awkward or uncomfortable for the designated representative, but it had to be done,” says Della Rocca. “The legal research was pretty clear on the obligation to seek maximum financial support for a disabled person.”

Many financial planners have a strong interest in caring for the client’s whole family. Lawyers, however, are bound by the person who hired them and must represent their interests solely. Hoskins relates the case of six adult children whose father died; the will stipulated that each was to get one-sixth of the estate. But the contract for a very sizeable annuity inadvertently left one child’s name off. The annuity was distributed in five equal shares. Wanting to be fair and knowing that it was a simple oversight, one sibling, the executor, asked if the rest could simply gift to the omitted sibling, or if he himself could do that. “A planner who has had a close relationship with the family would certainly want to see all of the children get what dad intended,” says Hoskins. “But if the planner isn’t very familiar with all the intricacies and tax issues involved, he or she could advise this sibling to do the ‘right’ thing, even though it could have unintended consequences. I had to make him aware of the potential pitfalls of gifting his own money. Things can get hairy if you are in the middle of a divorce or have an issue with a creditor or some other situation where an interested party might not want you to gift.”

Heart First, Mind Second

Mark Colgan, CFP®, of Plan Your Legacy in Rochester, New York, and author of The Survivor Assistance Handbook: A Guide for Financial Transition, suffered the loss of his wife when she was only 28. In the years since, he’s made it his passion to help his grieving clients not only make the right post-death decisions but also remind fellow planners to lead clients through the process with heart first. Sometimes it’s the little things that count: no business card on the flowers, a charitable donation in the deceased’s name, a list of grief support groups in the community, a handwritten note with a personal reflection or story about the client. “Because many clients tend to panic about cash flow and outstanding debts, it’s really important to focus on being a rock for them,” says Colgan. “Even the sight of the deceased’s name on statements that come in the mail can result in the survivor making rash decisions just to be ‘done with it’ and get through a list. But that can be where the harm is done.”

In fact the primary role the financial planner can play in post-mortem planning revolves around the words “new” and “revised.” Colgan explains: “Let’s let the attorneys take care of the estate administration legalities while we gently move the client toward moving on with his or her life: updating vital documents, changing beneficiary designations, preparing a new budget and financial plan, revising the investment portfolio, and establishing their own personal legacy plan. And, of course, creating their own bucket list.”

While there certainly are universal and basic nuts and bolts for the planner to handle during the post-mortem phase, serving as a sharp-eyed advocate for grieving, emotionally confused clients may be the most important one—it can turn around a potentially financially disastrous situation. Jason Hiley, CFP®, with Karstens Investment Counsel in Omaha, Nebraska, whose client base is 35 percent widows or widowers, noticed a serious mistake by a recently widowed client’s long-time accountant. At her husband’s death, the client sold stock shares that her husband held in an outside account. The stock should have received stepped-up basis, but the accountant lacked cost-basis documentation and elected to use zero. It resulted in a $37,000 capital gain to the client. Hiley had done plenty of pre-death planning, including tax-liability estimates. Surprised that the widow owed an additional $8,000, he asked to see the return and discovered the error. The actual basis resulted in a $4,000 loss, an amended return, and a reduction in Medicare premiums, which had increased significantly because of the erroneous higher income on the tax return.

“The wife wasn’t too concerned with the $75 a month increase in the Medicare premiums, but she was concerned with helping to fund her grandchild’s education,” says Hiley. “Putting that $800 in more meaningful terms made it worth the time to get the amended return to the Social Security Administration.”

Another of Hiley’s clients, a young woman whose husband was killed in Iraq, had inadvertently let a $250,000 life insurance policy lapse when she changed banks after a move during her husband’s deployment. A lapsed letter came and the husband said he would deal with it when he came home on leave, expected shortly. Instead, he never came home. When his client initially called the company, the answer was, “Sorry, there’s nothing we can do.” Hiley felt there were extenuating circumstances and repeatedly urged her to call again, even offering to make the call with her. The company reconsidered and honored the policy. “For a 28-year-old with a young child, that money over time will make a profound impact on her life,” says Hiley. And for a process that most clients would like to be a sprint but can turn into a marathon—settling even a modest and uncomplicated estate can take up to a year—planners’ value also lies in constantly reassessing where the survivor is on the grief timeline.

“It’s very different 12 months after death than 3 months,” says Hiley. “In the early days, we may even address the envelopes and put the stamps on for them. In the later period, we’re laying out options and guiding them to come to their own decisions, which is very healthy.”

Speaking as a former psychology major, Della Rocca finds the family dynamics as fascinating as the puzzle pieces of pre- and post-mortem planning. Loss, grief, anger, and distance often compound long-held feelings of the same. Having settled estates as small as $100,000 to multi-million dollar ones, Della Rocca says there’s one constant: mom and dad were the family regulators and referees, the touchstones, the guardians of the intangible family wealth, the keepers of the keepsakes. “When squabbles erupt, and they do, it’s rarely about the money,” he says. “Even years later, a child may not question the structure of the inheritance but they may say to a sibling, ‘Who said you could take the coffee table in front of the red chair under the family photo on the wall?’”

Shelley A. Lee is a writer and business journalist in Atlanta, Georgia. She can be reached at

  • Secure 15–20 copies of the death certificate as soon
    as possible.
  • Help the surviving spouse decide on a trusted friend or relative to assist through the transition.
  • Provide a written checklist to the family for all the important documents: will, trust, powers of attorney, letter of instruction, life insurance policies, tax returns, retirement account beneficiaries. Remind the family to gather contents from safe deposit boxes.
  • Organize and prioritize the deceased’s bills; separate bills into deceased’s, spouse’s, and joint. Do not let the surviving spouse pay the deceased’s bills from his or her own funds—these are the estate’s responsibility. Notify creditors if there are any issues making timely payment. Check with creditors to see if there are death payments on loans or credit card accounts.
  • Open a bank account in the name of the estate.
  • Identify benefits to be claimed: insurance, Social Security, pension continuation, employer benefits (such as vacation, sick leave, expense reimbursement).
  • Identify pressing tax issues; for example, the required minimum distribution from the deceased’s IRA must still be taken before the end of the year. Review the last three years of tax returns.
  • Re-title assets.
  • Accompany surviving family members to a meeting with the attorney.
  • Work with the attorney to make sure appraisals are done and assets are properly valued.
  • Roll over and consolidate accounts.
  • Establish cash reserves. Begin documenting survivor’s cash flow to create a new budget and financial plan.
  • Review and revise investment policy statement and investment portfolio.
  • Address long-term health care needs of surviving spouse.
  • Update the surviving spouse’s estate plan; take care to thoroughly address new beneficiary designations, will, powers of attorney, and medical directives.
  • Lead with the heart, hold the family’s hands, make the emotional journey with them.

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