You can’t take your investments with you

You can’t take your investments with you. This is why you make investments into a will. But even when you make a will the unexpected death of a loved one can still cause all sorts of complications.

Probate – is the process of proving a will. An executor is appointed and they will administer the estate which involves paying all debts and then dividing the left over money, investments, and any or all remaining assets.

Unexpected Death – even though the deceased has planned how they might want their estate to be divided. There is a huge amount of work required to administer all the elements. Some of which may be hard to pin down especially if the person died unexpectedly. It’s a bit like if your hard disc failed, everyone knows they should have backed it up beforehand. It’s the same with your financial investments.

Once someone dies an official letter must go to all financial institutions to inform them of their death. If the accounts are held in a sole name then the accounts are frozen until after probate. If the accounts are held in two names, then the principle of survivorship applies and the monies automatically belong to the survivor.

With a frozen sole account, the relatives may still need to look for funeral expenses. Some banks grant a loan of up to €5,000 and others will pay directly into a funeral director’s account. If the relatives are experiencing financial hardship through the death, perhaps it was a sole account in the main breadwinner’s name. Then an application can be made to a special bereavement support unit at the financial institution.

Of course, that implies you know all the accounts held by the deceased. Many people hold multiple accounts. For example, they might hold a checking account and a saving account in a high street bank. Then they might have a credit union account and a post office account. Maybe they have investments, pensions, prize bonds, and other property. Unless these are listed, it may be hard to locate all the funds.

In the case of joint accounts, the liabilities or assets automatically pass to the other name in the account.

In the case of sole accounts, the monies or debts belong to the Estate of the Deceased. But not to the Families of the Deceased until probate is proven. Banks can also take monies owed directly before probate is concluded.

If the deceased holds a credit union account, then they may also have a life insurance product. This will pay out a sum of money on their death dependent on age and savings. For someone under 50 with savings of €2000 then a euro per euro saved will be paid out, or €2000. This diminishes as they get older, down to 25 cent per euro saved up to age 70 and then disappears altogether. It might be advised that anyone with money in a savings account in a bank transfer it to the Credit Union for this payout alone.

However, any loans taken out in the deceased name now transfer to their estate. In the case of there being insufficient funds to cover these loans (which might cover car loans, investments etc) then there is a hierarchy of debtors which goes as follows:

• Funeral expenses and the cost of administering the estate
• Secured debt such as mortgages (where mortgage protection is not in place)
• Unsecured debt (personal loans).

At the end of the day debts owed by the Deceased Estate belong to the Estate not to the Family of the Deceased, despite what lenders might try and imply.

At death, any loans taken out in the deceased name now transfer to their estate. In the case of Credit Union Loans, these are cleared at death up until the age of 70 years, although some will extend this to the age of 85.

With car loans, based on the principle of lease hire, the half rule applies. With the half rule, if the loan is half way paid off, then the deceased family can either hand back the car without any penalty or pay off the remainder of the loan. If the payments are less than the half way, then the estate must pay up to that point before handing back the car or repaying the remainder of the loan and keeping it.

Any mortgages on a family home will typically have mortgage protection which will make the home debt free. Any other properties will be put into the Estate. If they are a liability or asset to the Estate based on the equity in the property. Property in negative equity may be sold to pay off outstanding mortgages. With the lending institution taking the hit unless the mortgage has collateral assurance from the deceased.

Then there may be utility bills in the deceased name which need to be reassigned. In these days of paperless billing, this may be harder than one imagines. Fortunately, when it comes to mobile phones, most phone companies will cancel a contract even if there are months outstanding.

Finally, there is one thing you can do in addition to having made a will and appointed an executor. And that is to provide a member of the family a list of all assets and liabilities, including usernames and passwords to financial accounts. While you are at it, you might provide details of any email accounts and passwords and access to your social media if you have any. There is nothing more upsetting than seeing someone on Facebook long after they have passed away.

Like the backup of your hard disc – you might want to consider doing up an asset list now. Tomorrow may be too late.

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