By now you have seen them on TV, the widows of the men who were killed in the September 11
terrorist attacks. They tell of hardship -- coping with confused, upset children and
looming financial distress during a period when their grief makes it difficult to complete
the most ordinary tasks, let alone sort out the estate of a beloved, terribly missed
husband.
Many parties are doing whatever they can to help these women. Federal, state, and
municipal governments are expediting the issuing of death certificates, making it easier
to get insurance benefits and emergency funds. The families are getting free legal advice
from hundreds of lawyers who are volunteering their time. Creditors, in a rarely seen
sensitive mode, are willing to do all they can to make a painful process less so.
If you and your husband are young and healthy, you, like many of the families affected by
September 11, may have put off making plans for what happens if one of you dies suddenly.
But as the magnitude of the post-World Trade Center recovery effort indicates,
anticipating a tragedy may be one of the most important bits of financial planning a wife
can do. Thinking ahead to protect yourself and your children in the event of a disaster,
while perhaps difficult emotionally, need not take a great deal of time or be very
complicated. And you could someday be very grateful you did it.
WILL POWER. The first step: You and your partner should make wills. If
you're living together but aren't married, it's even more important that you have a will,
because in many states common-law spouses don't have the same inheritance rights as
married ones. It's a myth that people in their late 20s and early 30s are too young to
worry about a will. Indeed, that age group may have suffered the greatest losses on
September 11, and many of the those died intestate -- or without a will. That lack makes
the process of financial closure and recovery lengthier and more complicated.
It's also a myth that people whose estates don't amount to the minimum taxable amount --
$675,000 until January, 2002, and $1 million after that -- don't need a will to help
distribute the assets. Even if your assets are modest, you should have one. "Even...a
simple will makes it easier to administer an estate because it names an executor,"
explains Barbara Sloan, a partner in trusts and estates law at New York law firm
McLaughlin & Stern, and chair of the Estate & Gift Tax Committee of the New York City Bar
Assn.
If you haven't named an executor -- the person responsible for overseeing the distribution
of your estate -- the court will. Who it chooses will vary by state, but courts usually go
down a list of relatives, starting with you if your husband has died, your kids over 18,
then your grandkids over 18, and so on. These people have to be located, and then apply for
the right to administer the estate.
WHO GETS WHAT. A state-chosen administrator, even one who is a family
member, is required to divide up an estate for which there is no will according to the
state's laws. In the District of Columbia, for example, if your husband dies childless,
$10,000 of his estate goes immediately to you. After that, three-quarters of the property
that's left goes to you, and the rest to the deceased's parents.
If you and your husband had kids, the children will get a third of the estate and you'll
get the remaining two-thirds. But if your husband had kids from a first marriage, they get
half of the estate, and you get the rest, regardless of whether you also had children with
your husband. Even if that wasn't what your husband intended, that's what you'll get if
there's no legal will.
Make sure you designate a guardian for minor children
With your husband
gone, moreover, a will is probably the only way that you can have a say in who looks after
your children should something happen to you. "If you have minor children, your will
should have a designated guardian and a trust with a designated trustee in the event that
both parents die, as has happened in some cases in the World Trade Center," says Judith
Volkmann, an attorney and certified financial planner. She's on the board of the Financial
Planning Association of New York, one of the many groups giving free advice to the
surviving families of the September 11 attacks.
If you haven't designated a guardian in your will, the court will appoint one for your
minor children and for their inheritance. If the court doesn't choose a relative as
guardian, the person it appoints can charge for his or her services, thereby diminishing
your kids' inheritance. Ask the lawyer who drafts the will to keep a copy in the firm's
vault so that it's easy to find in the event of your or your spouse's death. If there are
no children from another marriage, it would probably cost about $1,500 to $2,000 for such
a will.
KEEPING RECORDS. Step two in your disaster planning costs nothing but
time. You and your husband should gather all of your key records: a copy of your will and
information on where the original is held, account numbers, safe-deposit-box information,
insurance beneficiary designation forms, and the like. Keep them in one place --
definitely not where you work.
"One of the problems with the World Trade Center was that [after the Twin Towers fell] no
documentation could be found," notes Margaret A. Helen Macfarlane, a senior associate at
New York law firm Shearman & Sterling. Macfarlane has volunteered as a facilitator to help
families affected by September 11. "In many cases, the company [that employed the victim]
had the record of the insurance beneficiaries, but the insurance company providing the
group insurance did not," she says. That isn't unusual.
One widow had to pay for margin calls made after her husband died
You should also update your records and file them once a year -- and thus help avoid
unpleasant surprises. For example, one woman, who asked to remain anonymous, was widowed
more than a year ago. Her husband died intestate. She began getting margin calls from an
electronic-trading account he had opened that she knew nothing about. Once she contacted
the brokerage firm, it was willing put a stop on the automatic borrowing that occurred
when the price of the husband's portfolio fluctuated with the market. But the widow had to
pay for the margin calls that the broker had issued before she objected.
STAY INFORMED. Life insurance information should also be kept current.
When one partner has been married before, it's critical that you make sure the designated
beneficiary names on insurance policies are correct. Thanks to oversight, forgetfulness,
or procrastination, it's not uncommon for the former spouse to still be the beneficiary,
regardless of what the deceased intended.
Making a practice of combing through your records once a year will also make sure that you
and your spouse are both knowledgeable. "Marital partners don't always keep each other
informed," observes Sloan. "It's a kindness to the survivor to make a list of these
things." It's also important to put the list in a place that both members of a couple can
get to easily. "You can't get into a non-joint safe-deposit box without a surrogate court
order," she observes.
The final piece of emergency planning: You and your spouse need to give each other power
of attorney over the other's assets in the event that one of you is severely injured but
doesn't die. You should also establish what your spouse would like you to do in the event
that he needs to be kept on life support.
All this may sound gruesome. But as the terrible stories from the World Trade Center
tragedy demonstrate, the sudden death of your spouse is something you might have to face
someday. The bottom line in disaster planning is to help the surviving partner make the
transition to a life without you -- or to a life where you may be severely incapacitated.
Without a good emergency plan, the effects of a disaster may be even harsher and more
enduring.
Copyright 2001, Bloomberg L.P.
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