Death in America (Part I)

Maybe it is too close to the actual event, but this is the subject that I am thinking about, so I will share what I am learning. A few weeks ago my mother-in-law passed away. Besides dealing with all the emotions of losing a family member death brings a large number of financial problems and difficult responsibilities to the survivors.

Death in America is expensive. My wife had durable power of attorney for her mother. She paid all her mother’s bills with funds from three joint tenancy accounts. When her mother died, durable power of attorney expired. My wife no longer has access to the brokerage accounts that provided funds for the checking accounts that actually paid her mother’s bills. After her mother’s will clears probate, my wife must be sworn in as executrix of her mother’s will before she will have access to the estate. In the interim, the bills keep coming. At this point we can only pray that there is enough remaining in the joint tenancy accounts to cover her mother’s bills until a separate account for the estate of my mother-in-law can be created to execute the terms of the will. By the way, my mother-in-law’s death will create three tax events. She will have to pay taxes until the day of her death. After her death, her estate will pay taxes until it is dissolved. Finally, we will pay taxes as appropriate on any inheritance.

The family attorney informed us that the joint tenancy accounts were not part of the estate. Legally, they belong to my wife. She is not required by law to pay her mother’s bills with that portion of her mother’s money. Such wickedness would have never occurred to me. However, it is easy to see how something like this could start a family fight.

If you are competent at the time of your death you will probably not have a durable power of attorney agreement giving one of your children access to your funds prior to your death or joint tenancy accounts that will allow one of your children access to the funds required to pay your final expenses. This can be easily handled by setting aside a large sum in a CD that names the executor of your will as sole beneficiary. This money will not be considered a part of the estate requiring probate. You will need to instruct the executor that these funds are designated for payment of your bills. If your executor is dishonest, he can take the money and run. There is no way you can avoid trusting someone with your money once you are gone. Hopefully, you have made a wise decision. Burial life insurance policies can also be used for this purpose but they tend not to be very good investments.

There are a lot of bills. A traditional American funeral with a visitation cost $18,000! I wasn’t surprised since I handled the funeral arrangements for my father-in-law eight years ago. That one cost $16,000. I did not expect prices to go down in the following years. I have instructed my wife not to spend that kind of money on my funeral. It is pretty obvious why cremation is gaining popularity with my generation. A $3,000 funeral, although still too expensive, makes a lot more sense than an $18,000 funeral. My parent’s generation, particularly the women can’t deal with the thought of cremation.

During the final weeks of my mother-in-law’s life my wife was staying in her mother’s apartment located in another city. During that time they made three emergency trips to the hospital. Needless to say, my wife let some things, such as remembering to pay all the bills, slip. The final bill from the home health care agency exceeded $20,000. Patients do not receive one bill from a hospital. They receive bills from the ambulance company, the emergency room, individual doctors, and the hospital. These bills are inevitably wrong. They were not submitted to insurance and Medicare or they were submitted improperly. Fortunately, my wife worked in the hospital system and understands when and what to pay.

Job 1:21

Naked came I out of my mother's womb, and naked shall I return thither: the LORD gave, and the LORD hath taken away; blessed be the name of the LORD.