By Randall A. Denha, J.D., LL.M.
I have practiced as a Trusts and Estates lawyer for almost 21 years having prepared and been involved in thousands of these documents and the families that utilize them. Invariably, and all too often, spouses, in most case wives, know very little about family finances and are often just called upon to sign documents without knowing what they are. In my practice, I continue to see this mismatch of financial information in many situations. My experience is that this is rarely done for a bad purpose, but more often because one spouse has more financial skills and doesn’t want to burden the other. But when the less-experienced spouse becomes a widow or widower, and is to some extent on her or his own, problems can arise.
These problems are obvious: spending money unnecessarily, choosing the wrong investments or investment advisors, making unfavorable choices regarding health insurance and Social Security, even deciding where to live. The result is a much less secure and happy life for the survivor; and problems for the rest of the family as well. Children might help, but sometimes they give conflicting advice. The solution is easy to describe, but often fails in the execution: training, review and guidance for the less-experienced spouse. And, as well, a set of trusted advisors who can help the survivor with these important decisions.
Start with a notebook. List sources of monthly income; regular monthly expenses; where assets are located and how they are titled (and this includes items like retirement plan accounts and IRAs); the names of advisors and the kind of advice they give; where important documents are located. Once you start this project, more information will come to mind. And the result should be a better “rest of life” for the survivor and avoiding unnecessary and inappropriate expenditures that deplete what passes on to the next generation. It is common that one of the largest assets in a family business owner’s estate is his or her interest in the family business. This situation can be problematic because the owner’s interest in the company is included in the value of the owner’s gross taxable estate. The estate is required to pay debts, expenses, and taxes based on the taxable estate figure—requiring liquid assets when necessary. If needed, the liquidation of an interest in a business may involve acquiring an appraisal of the decedent’s interest and selling all or a portion of it at fair market value, both of which may need to happen within fifteen months after death.
*Randall A. Denha, j.d,,ll.m., principal and founder of the law firm of Denha & Associates, PLLC with offices in Birmingham, MI and West Bloomfield, MI. Mr. Denha continues to be recognized as a “Super Lawyer” by Michigan Super Lawyers in the areas of Trusts and Estates Law; a “Top Lawyer” by D Business Magazine in the areas of Estate Planning and Tax Law; a Five Star Wealth Planning Professional; Michigan Top Lawyer; Lawyer of Distinction; Best Lawyers; and a New York Times Top Attorney in Michigan. Mr. Denha can be reached at 248-265-4100 or by email at email@example.com