Finances...

I went to see our financial advisor, Steve, at Morgan Stanley this afternoon. I had seen him a few weeks ago when I signed the paperwork to move accounts into my name. I was indicated as "TOD" (transfer on death) on all the accounts, so it was an easy task mechanically. Today I saw him to submit the paperwork to re-start the periodic transfers that Dwayne had been previously receiving.

I thought that I should probably share things I've learned about income and death of one's spouse, in case it might be helpful to others.

Income streams that were directed specifically to the individual who died are cut off as soon as the paying entity is aware of the death. Social Security is notified by the funeral home; others may also learn through the change of status of the social security number, or, you're supposed to notify them. I was thankful, right after Dwayne's death, to have talked to a friend who was widowed in the past couple of years, and had asked her, "What things happened that you wish someone had warned you to anticipate?" She told me that her husband's social security payment was deposited into the account that they used to pay bills, and then it was subsequently removed from the account, causing a number of scheduled bill payments to have insufficient funds. There is a fee for presenting a request for payment for which you don't have sufficient funds, and that fee is charged each time the request is presented -- it seems that most items are presented 2 or 3 times before the recipient who is desiring payment gives up -- so your account doesn't have money in it, and you're racking up overdraft fees 2-3* for each item being presented to be paid. It can quickly get you into a place where you owe the bank hundreds of dollars, and... there's no income coming in.

So, I had forewarning about that... Several years ago, Dwayne and I attended a Crown Financial Ministries class. One of their recommendation was that you keep 3-6 months of living expenses in a readily available account. I would have tended to keep just 3 months of living expenses set aside (why keep the other funds out of investments?), but Dwayne was managing the accounts in the last few years, so he kept 6 months of living expenses in a savings account. Yet another way that Dwayne is taking care of me, even after he is gone!

After Dwayne's death in February, in the beginning of March, I saw that Dwayne's Social Security payment, and his pension, were deposited into the account. Within a day or so, I got a message from the bank that the deposits were "on hold", and, then I got a message that the hold was released... but the funds had been taken out.

Steve, our financial advisor, had recommended that we delay telling the accounts that were solely in Dwayne's name about his death for a few weeks, until such time as we were ready to work through the process of transferring the accounts into my name. So, the deposit for one of the annuities that he was getting was put into the account in March, but the other one, an IRA, was not. The second annuity stopped in April.

Based on Dwayne's age, and my age, at the time of his death, he was receiving Social Security, pension from the federal government, and two annuities from investments we had made. I was receiving my pension from IBM. About 75% of our household income was from sources associated with Dwayne, and 25% was income associated with me. So, I suddenly was getting only about 25% of the income we had previously received. Thankfully, I could use the savings to supplement the shortfall.

Now, also, at this time, there were a lot of unplanned expenses: funeral home costs for the cremation, cost to acquire the niche where Dwayne's ashes were to be placed, and... (not necessary to be done at the same time, but I (a) wasn't thinking clearly and (b) didn't want anyone to have to deal with these expenses for me), I did a pre-planned contract for my final arrangements. Each of these were high costs, not something that I (or anyone) could pay out of pocket without dipping into other savings or going into debt. And, I am cheap, erh, frugal... so I was not going with luxury options on any of this.

So, the income streams stop very efficiently and with just a phone call... getting survivor benefits is not quite as straightforward. First, you have to have a death certificate. This was complicated for me that, in the state of Texas, a new system was put in place at the beginning of 2019, which was, uhm, buggy... as I heard it, for the first two weeks of the year, not a single death certificate could be produced or requested. As I understood it, this meant, for example, that no cremations could be done for the first two weeks of the year as the request for the death certificate would need to be started before the cremation could be done. Imagine the frustration and angst for the families... In addition, doctors did not have appropriate credentials to be able to certify death certificates, and those credentials had to be requested and approved. This meant that, by mid February when Dwayne passed away, they were still dealing with a backlog of requests. I was told to anticipate a 4-6 week wait for the death certificate. For me, it ended up being just short of 6 weeks.

Then I could apply for the survivor benefits - actually, the process with Social Security went relatively easily. I called and got the information I would need to bring, and in that call learned that I was not eligible for survivor benefits until I turned 60, which happens this month (July). I could, however, *apply* for the benefits up to 3 months before I was eligible, meaning in April. I could also apply for the death benefit ($255 -- let me just say that $255 is a drop in the bucket compared to the costs that are incurred). So, in April, I went to the Social Security office in Denton, and other than a long wait to actually talk to someone, the process was pretty easy. I have received the $255, and am supposed to start getting survivor benefits in August.

I also had contacted the Federal Employee Retirement System (FERS) both to report Dwayne's death and to ask about how to apply for survivor benefits. They sent me the paperwork, and, once I got the death certificates, I applied. I hadn't heard from them so, a couple of weeks ago, I called to see if I could get the current status -- the person I spoke with said, "Yes, I see that we received your paperwork in April; it is currently anticipated to be processed in August. If you don't hear something from us by October, please call again." Huh?

The final two income streams were periodic distributions from two annuities. Once the investment companies knew about Dwayne's death, we could make no changes to the accounts until they were processed into my name through the TOD setting. (Note: somewhere in this timeframe, the setting for "e-delivery of paperwork" got reset, and I started getting prospectuses and proxy voting forms hardcopy in the mail to our Livingston address, which then I had to pay postage on when they got forwarded to me -- I tried to get that stopped, but no one was allowed to make changes on Dwayne's accounts during this time... I'm hoping I've got that fixed back to e-delivery now!) A few weeks ago, Steve helped me get paperwork completed to set up the new accounts and transfer the funds based on the TOD, and today, he helped me get the paperwork completed to re-start the periodic distributions from the two annuities. One should start in July, and the other in September.

So, by September (maybe October, depending on the FERS progress), I may be receiving the survivor benefits for the income sources that we had been living on for the past 5 years (since we retired in 2014) -- seven or eight months after Dwayne's death.

Let me be very clear - I am NOT in financial difficulty. We have investments, and I could, during most of this time, have accessed funds that were not solely in Dwayne's name. I have been transferring from savings over to checking an amount to cover expenses that I know will be incurred in the next month. I have had sufficient funds in savings to do this, and could continue, if necessary, for about another month and a half before needing to access other funds. I didn't want to pull funds out of investments if I didn't have to... and because of Dwayne's wisdom in keeping 6 months of living expenses in savings, I haven't had to. I haven't written this post for anyone to think that they need to help me out financially, but, since I was so floored by what I saw happening, I thought it might be instructive to someone else in their planning.

I talked with Steve today about how much he recommended that couples keep in easily accessed accounts to deal with death or job loss - he said he recommends 3-6 months. 3 months if the couple are high wage earners and working in two different industries (so there would not likely be a downturn affected both of their jobs at the same time), 6 months if they are employed in the same or like industries, or if they are retired. For a single retired person (me), he recommends 3 months.

One additional thing: through our married life, each of us had, at various times, been responsible for paying bills for the household. (A funny story -- at the beginning of our marriage, each of us was trying to be responsible for paying the bills, each wondering why the other one was not letting us do it. Finally, one day, it came to a head, and one of us, let's say, Dwayne said, "Why aren't you letting me pay the bills? Don't you trust me?" to which I responded, "Why don't you trust me to pay the bills? In my family, my mom always took care of paying the bills!", and Dwayne came back with, "In *my* family, my dad paid the bills!!" -- and both of us realized that we were indeed, arguing about finances, as we had been warned that newlyweds often had issues with finances... though I think our "issues" were possibly different from other newlyweds with regard to *what* about finances we were arguing about, though not different in the sense that we were arguing rather than having communicated clearly beforehand!) Anyway, at the time Dwayne went into the hospital in November last year, he was handling most of the bill paying and I was handling most of the contributions to charities. After he was in the hospital a week or so, he asked me if I could bring his laptop in to the hospital so he could check to see if the bills were all scheduled that needed to be paid. I suggested that, while he was in the hospital, I take over the responsibility for bill paying on my laptop and so I transferred the files he used to cross-check and follow-up onto my laptop, and he tutored me on how he looked up what needed to be paid and used tools to ensure nothing fell through the cracks. I am so thankful that I had 3 months of tutelage from Dwayne before having responsibility for this on my own. I would recommend that couples consider how both of you can be knowledgeable about your finances and the simple mechanics of paying bills for your household so either can handle the task if needed.

So, there's my financial lesson for you for today... I apologize for the long entry on a mostly boring topic, but maybe it will help one person or couple and for that I will be grateful!