Death Makes Life Complicated

(From USA Today)

In almost every year for the past ten years, there has been a death of a relative or a friend or a friend's close relative, and I've helped sort out the finances. It's not easy, even for those who have some accounting, financial, and/or tax training like myself.

For the spouse of the deceased, the tax decisions can be complicated and must be made at the worst possible time. The broad checklist of issues is:

Filing an estate-tax return [to claim the $11.7 million exemption]
Tax-bracket shifts [from joint status to single or head of household]
The step-up [of tax basis in inherited assets]
The home-sellers’ exemption [drops from $500K to $250K two years after spouse's death]
Retirement accounts [change beneficiaries, accelerate or defer withdrawals because of tax-bracket shifts]
Withholding and estimated taxes [may need to be increased by survivor, if deceased paid most of them]

The obvious recommendation is to get professional help, which is preferably lined up long before death. But there's still the problem of finding people who are both knowledgable and honest.

In Hawaii we have a big ohana, which includes a lawyer, CPA, and others who are familiar with elder-care issues. When my father passed away, all of us looked after Mom's best interest though even in our case there were some disagreements.

In the absence of having family who can help, there are other groups, such as churches, Kiwanis, Elks, Freemasons, alumni organizations, etc. where one might find trustworthy advisers.

Still there are no absolute guarantees, even with families, so it's best to be kind to everyone throughout your life so that some of the thoughtful and honest ones will help you and your spouse after one of you is gone.