Coping with the Death of a Family Member
More and more, I’m hearing about boomers coping with the death of a family member. As one generation ages, the older generation is following the stream of all living things. Birds do it. Bees do it. Even our mothers and fathers do it. They pass on. For most of us it is a time of grief and that shock when we realize we can’t just pick up the phone to say, “Hi dad; Hi mom.”
If you are like most families, coping with the death of a family member, also means that your parents are leaving you with a house and the velvet ribbon mom used to tie back her hair. The ring that flashed when mom threw her hands in the air at surprises and all the possessions accumulated over the year.
Boomers stand to inherit upwards of $27 trillion over the next four decades, according to The Center of Wealth and Philanthropy at Boston College, and a portion of that includes the house their parents lived in. When that house becomes yours, figuring out what to do with it can present financial and emotional issues. If your siblings are involved, things can get even trickier.
In the process, one of the first words to enter your mind is the word and meaning of probate. Under Iowa inheritance laws probate is the official way that an estate gets settled under the supervision of the court. A person, usually a surviving spouse or an adult child, is appointed by the court if there is no Will or nominated by the deceased person’s Will.
Once appointed, this person, called an executor or Personal Representative has the legal authority to gather and value the assets owned by the estate, to pay bills and taxes, and, ultimately, to distribute the assets to the heirs or beneficiaries. In my case, my younger sister will be the executor. She lives in the U.S. and is the caretaker of our mother.
The purpose of probate is to prevent fraud after someone’s death. It’s a way to freeze the estate until a judge determines that the Will is valid, notifying relevant people, identifying all the property in the estate and appraised, that paying all the creditors and paying all the taxes. After accomplishing all of that, the court issues an order distributing the property and closes the estate. In most cases, distributing assets takes nine months or less.
Coping with the death of a family member means deciding what to do with the house and the possessions. Take a deep breath. There’s no hurry. You and siblings will have a lot of different emotions and memories about the home. Think about what the home means to each of you. Some may want to sell and split the proceeds immediately. Others may dance at the thought of living in the house again.
One of the first things to do is clean the house. Decide what possessions in the house you want to keep, sell, or donate. Once the house is clean, you can see the condition of the house. Does the house have maintenance issues? Has it been updated recently?
If you’re inheriting a house that needs upgrading, get an inspection before making any decisions. The amount of money you may have to sink into the place just to make it insurable could determine whether you choose to sell it, rent it, or occupy it. My sister believes that our mother’s house wouldn’t get top dollar in its present condition. That will mean we will discuss the amount of spending we need to fix it up.
We have already sought the advice of professionals. Mom decided to put everything in a trust to protect the assets. Other professionals could include a real estate agent or real estate investor experienced in your neighborhood. These professionals can walk through the house, see if work needs to be done to sell it. They can give you an idea of the house’s worth.
Coping with the death of a family member means preserving your capital. Old money has a saying, “Never touch the principal.” Old money advises living off the income. Capital can be hard to accumulate. Even if you save 10% of your income each year, it takes considerable skill to save and invest to accumulate a large savings account. So treat it kindly. Don’t let your inheritance spiral out of your control. Would your parents, who passed on leaving you their wealth, feel good about the way you spend your inheritance? Consider hiring a professional investor
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