|Treasures from the shed|
Sell The House & Rent A Hut
Seriously. It's an enormous task to manage a house after someone dies.
• Is it paid for?
• Is the homeowner's insurance up-to-date?
• Don't look now, but you're in charge of maintaining someone else's entire home.
• What repairs are needed? Carpet, fresh paint, plumbing, roof repairs...it's a long list.
• If the thought of cleaning out your own garage is daunting, how'd you like to add another one?
• Got bikes, cars, and lots of junk? You just inherited more.
• Oh goodie, more yard work!
• I hope you love crappy furniture and cheap art, because you're getting a house full of it.
• What if all of the heirs live out-of-state?
• Can you put your life on hold so that you can deal with your parent's house?
The heirs can always sell the house, but that's actually even more work because the house has to be cleaned out and updated. Do them a favor and sell the mother ship. Down-size and distribute all of the sentimental stuff, then put the money into a trust account and live simply.
Say NO to Life Insurance
Life annuity policies are a ripoff. My dad invested $100K in an annuity policy that ended when he died. He signed the contract in 2010 when he was 74 years old and lived for 4 more years. He got $710 a month from the annuity, which isn't much of a return on his investment, a little over $34K from his initial investment. The insurance company got to keep the rest (almost $66,000). These policies are carefully designed so that the insurance companies win. By pooling a lot of these policies together, they will come out ahead in the long run.
Term life insurance provides a stated benefit upon the death of the annuitant (insured person), but there is a catch. The annuitant had better keep the beneficiary up-to-date, or the insurance company will refuse to pay the benefit to the heirs, even if it's clear that the heirs are the intended recipients.
I was brought into the trust three years ago after my dad set up his trust. As comprehensive as the language of the trust is in terms of his estate (consisting of all property and assets), his insurance company is not respecting the trust as the beneficiary because the trust is not named specifically on the policy. He was the policy owner, and most people would consider an insurance policy in his name to be an asset of the trust. But, the beneficiary has to be precisely named. They will pay to the "estate," which is the general term used for property left by the deceased.
He may have tried to change the beneficiary over to the trust, but his behemoth insurance company is so steeped in its own bureaucracy that the paperwork was never completed. Again, the insurance company has the advantage because as policy owners age, they become less able to keep up with the arduous paperwork necessary to make changes to their policies, especially if they live alone like my dad did.
So, we—meaning our trust attorney—will ask a probate judge for a "set aside" procedure that will direct the insurance company to pay to the trust.
My dad would be pretty pissed if he knew that his insurance company was trying to stiff us. But, he was smart enough to set up a trust attorney who could act on our behalf. It was his money to begin with, and he put his trust in an insurance company. As trustee, I would have been happier if he'd just kept his money in an investment account at a bank.
Recently, I heard a curmudgeon in line at the airport complaining about having to clean out his basement when he got home. Then, he snorted and said, "Oh hell, I'll save myself some trouble and just let the kids deal with it after I die!" Har-har-har...
I can hear the adult kids lamenting that their father was a jerk to the end. :)
As a trustee, I am living it every day. The lasting legacy of my father is that he not only created a comfortable retirement for himself, but he planned things out with great care and consideration toward his children after he was gone. This is a gift that I will pass on to my own kids.