Death of a Spouse, Tax Reform, and a Change in Plans

Do you know anyone that lost a spouse lately?  I am sure the answer is yes.  I haven't done this before, I will speak from a personal perspective.  As many of you know, my wife Ann (Joe and Nick's mother) passed away unexpectedly this past July.  I am not writing to re-hash the cause, complications, etc.  I’m writing to let you know that if you haven't experienced this (and I hope you haven't) it’s a truly a life-altering experience on all fronts.  Of course, in my case of being married 45 years, it was necessary to re-engineer/redefine and/or reinvent myself. On the personal side, it was no longer "Ray and Ann” or “Ann and Ray” -  it was Ray... just Ray.  Of course, my first responsibility was to make sure that my kids Nick, Joe (who are with the Ohlson Group) and Kiley were dealing with this tragedy, seeking help and were getting stronger every day.  Now, I will never quit doing that, but it was now time to focus on me. What do I want to be "when I grow up?"
 
What about my financial and retirement plans: any changes?  You bet there were... and still are.  Does the new tax law affect me...or my family?  You had better believe it.  Let's take a look:
 
I opened up with "do you know anyone that has lost a spouse lately?"  Keep that in mind because I know that you do and they are re-working their plans and you should be there to help.  Let's look at some of the challenges, opportunities and solutions:
 

• The surviving spouse will now file as a single.  Have you looked at how fast you move into the higher tax brackets as a single? no double standard deduction, etc.
• What about the life insurance policies that are in force to be paid to the deceased?  What do you do about them?  Do you consider a life settlement?  What about giving to the kids so when the survivor passes the kids/beneficiaries will get a tax-free benefit.  It may be hard to find a better return.
• The survivor has been holding off until age 70 to collect social security… should he/she start now?  What about a Social Security Survivor benefit?

 
Now, let's also take a look at the "tax time bomb.” The survivor has a good net worth and good financial products. The kids will now get all the dough when the survivor passes. When that happens, the kids can say good bye to President Trumps low tax rates. This windfall will throw them into the higher brackets. So, what to do?  Let's look:
 
I want to take you back to the old "miracle of paper and ink" As was said, a piece of paper and a drop of ink can transform lives when the ink is used on a life insurance application. It’s simple: start moving some of the assets into life insurance so when death occurs, the money that is passed down is income tax free. That will pay for a lot more grandkids educations, assistance to heirs that have been behind a financial eight ball.  But, even though that will eliminate some tax rime bombs, let's don't forget about the survivors needs. Read on.
 
Okay, the survivors life has changed forever.  He/she will now be riding solo into retirement.  He/she might not have desire to work as long. He/she might want accelerate income... retirement income. Should we beginmeeting with the survivor again? You bet... because if you don't, someone else will.
 
Here’s the bottom line…  get with the survivor asap.  No, don't go in for a sales presentation.  How about a nice lunch letting the person know that you are there to help and there will be changes to his plan that need to ne made. And, while you are at it, try to get a meeting with the attorney as documents will need to be re-written or altered.
 
You know, after the dust settles, you've eaten all the casseroles that friends and neighbors fixed, the phone doesn't ring as much... your client has to "face the financial music.” Too many in this situation put it off for too long. So, make the call today.  Ask questions, re-write the plan and everyone will gain.
 
Until next time... good selling!