Ask Liz Weston

Get smart with your money

Banking

Q&A: Dementia and financial accounts

By

Dear Liz: You recently discussed the importance of adding spouses to financial accounts before one of them dies to make it easier for the surviving spouse. I wholeheartedly agree. I would add that this needs to be done sooner rather than later. If one of the spouses is diagnosed with dementia, the bank will likely not make changes to accounts. People have to be able to understand what they are signing.

Answer: That’s an excellent point. Another important task is to create powers of attorney for healthcare and finances. These allow someone else to make decisions for you if you are incapacitated. Someone in the early stages of dementia could sign such a document if they understand what it is, but otherwise the family might have to go to court to get a conservatorship, which can be an expensive process.

Q&A: How to find an accountant and a financial planner

By

Dear Liz: Can you offer advice on finding the right accountant for someone doing taxes for the first time after divorce? My husband always handled this. Also, same question for a financial planner for a newly divorced person? It’s all so overwhelming.

Answer: It is, and you’re smart to reach out for help.

You might consider hiring a personal financial specialist. This is a designation earned by CPAs who handle not just taxes but financial planning as well.

A CPA-PFS is a fiduciary, which means they’re committed to putting your best interests first. Also, many are working virtually now because of the pandemic, so you should be able to find several candidates to interview even if you live in a more remote area. You can start your search at the website of the American Institute of Certified Public Accountants.

Q&A: When your spouse dies, there are immediate financial steps to take. Here’s a checklist

By

Dear Liz: What financial steps need to be taken right after your spouse dies?

Answer: Your attorney or accountant may have detailed checklists to guide you through the many tasks involved. In general, though, you’ll be settling the estate, notifying appropriate parties, signing up for any benefits and shutting down potential identity theft.

To start:

Get 10 to 12 certified copies of the death certificate (ask the funeral home for these).
Find any estate planning documents, such as a will or a living trust, to start the process of settling the estate. That may require opening a probate case at the county courthouse.
If you don’t already have an estate planning or probate attorney, consider hiring one for help.
Contact your spouse’s employer about any life insurance or retirement benefits, such as a 401(k) or pension.
File a claim if your spouse had life insurance.
Call Social Security at (800) 772-1213 to ask about survivor benefits. If you and your spouse were already receiving Social Security benefits, one payment ends at your spouse’s death, and you’ll get the larger of the two checks from now on.
If your spouse served in the military, contact the Veterans Administration to inquire about additional benefits.
Cancel your spouse’s health insurance.
Contact banks, brokerages, lenders and credit card companies to inform them of the death and close accounts or transfer them to your name alone.
Notify the three credit bureaus: Experian, Equifax and TransUnion.
Delete or memorialize social media accounts.
There are a few things to avoid as well. A big one: Don’t give away money or assets prematurely. These may be needed to settle the estate or you may want more time to make good decisions. If you’re getting pressure from family members or anyone else, refer them to your attorney.

Be careful about making big changes, such as moving or selling a home, in the next year or so because grief can impair your decision-making abilities.

Don’t try to do all this yourself. Let the attorney assist with estate-settling tasks and hire a tax pro to file your spouse’s final tax return. Also, consider talking to a fee-only financial planner. You may have options for payouts from retirement accounts, life insurance and Social Security, for example, and your choices could dramatically affect your future standard of living.

Q&A: Now is a good time to get a financial tuneup. Here’s how

By

Dear Liz: I’m hoping you could provide recommendations, referrals or tips on how to help me manage my money. I’m seeking a financial planner who can help me pay my bills on time, learn to budget and pay off credit card debt.

Answer: When you’re struggling with the basics, a financial fitness coach or an accredited financial counselor may be a better fit than a financial planner.

Financial coaches and counselors specialize in budgeting, debt management, retirement planning and creating better money habits in general. Coaches and counselors in private practice typically charge $100 to $150 an hour, although many work on a sliding scale, said Rebecca Wiggins, executive director of the Assn. for Financial Counseling & Planning Education, which grants both credentials.

These accredited financial professionals also are employed by the military, credit unions and other organizations to provide services for free or low cost. You can start your search at https://www.afcpe.org/.

Q&A: How deposit insurance limits work

By

Dear Liz: My parents, who are in their 80s, just moved and are about to sell their former home. Their net gain from the sale will be approximately $400,000. I am advocating they put this money in a high-yield savings account as capital preservation is key. I know an individual account is insured by the FDIC for up to $250,000. But if we set it up so they are joint account holders, would the FDIC insurance limit on that one account rise to $500,000?

Answer: Yes. The FDIC insures up to $250,000 per depositor, per institution and per ownership category. Ownership categories include single accounts, joint accounts, certain retirement accounts such as IRAs, revocable trust accounts and irrevocable trust accounts, among others. Each depositor in a joint savings account is covered up to $250,000, so a couple would have $500,000 of coverage.