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The 5D’s: Death

Although all 5Ds are difficult (death, divorce, disaster, disability, debt), we can pretty safely say death trumps them all. Coping with the death of a loved one is perhaps the hardest thing we have to encounter in our lives. But when your spouse or a family member dies, you’ll also need to handle numerous financial and legal matters. One of our favorite divas, Erin O’Toole, has not only coped with the loss of her husband, but has done so with incredible grace and dignity. Here is her story.
As if loosing her mother to cancer as a young woman wasn’t enough, Erin faced the “big Erinkids3C” a second time when her husband John fell ill. Erin and John were still newlyweds, only married for a year and a half, when he was diagnosed with brain cancer. John battled six and a half long years after his diagnosis. You wouldn’t blame Erin if she allowed her life to go haywire. But instead, she took the bull by the horns and saddled up, all while raising her three young children.
Emotionally, it was a total mess. A nightmare,” Erin remembers. Despite the whirlwind of emotion she was feeling, Erin knew she had to face several financial matters for the sake of her husband and children. “I wanted to make sure the finances weren’t a burden on John while he was sick,” she shared. “At the end, he wasn’t even aware enough to know it was all taken care of.”
How She Got Through It:
Luckily, Erin had a financial background and was already very involved in her family’s finances. “When we got married, I told John to hand over his wallet,” Erin joked, “He was always a big spender.” Even if you’ve always handled your family’s finances like Erin, you may be overwhelmed by the number of matters you have to settle leading up to and following your loved one’s death. Here’s what she did:

  • Worked closely with the family CPA and their attorney.
  • Learned new financial concepts, such as refinancing a mortgage & budgeting a household with someone being sick and dying.
  • Stopped working. (An obvious luxury and not an option for everyone).
  • Became aware of John’s financial situation. “Thankfully John had upped his 401(k) to the max level and bought supplemental life insurance prior to getting sick. We would not have been where we are today, living comfortably had he not done that,” Erin says.
  • Located paperwork and made sure forms were up to date before John passed. “John was always really good about updating his records throughout the years. He always made sure his will was aligned with our family goals,” she says.

And most importantly:

  • Erin never stopped asking questions. John was on long-term disability leave and Erin remembers worrying about whether she would get his full life insurance if he died while on disability. Although calling the insurance company was very difficult for Erin, she knew that it couldn’t wait. {The answer is yes, she would get his full life insurance even if he was on disability at the time of his death.}

Her Advice:

  • Don’t make any important financial decisions soon after someone dies. You won’t be thinking clearly and you will make bad decisions. “I panicked. I took John’s 401(k) and cashed it in instead of rolling it over. I did all this without talking to my accountant or lawyer and ended up paying $35,000 in taxes.” Erin admits that this mistake could have easily been avoided with a quick call to her CPA.
  • Get a copy of the beneficiary designation form of the life insurance policy and retirement plan to confirm that you are the primary beneficiary and your kids (or a trust for their benefit) are the contingent beneficiary. If you do this before your loved one dies, it can be changed if need be.
  • Estate planning is really, really important. ” I never realized it until it slapped me in the face,” Erin admits. Be involved in the estate planning process, if not fully, at least 50%. Erin says that she reviewed her will five years ago and is currently reviewing it for an update.
  • Manage the finances together in a relationship.

Ps…while John was battling cancer he never felt sorry for himself. He and Erin not only took care of their own family but also raised thousands and thousands of dollars for The Lance Armstrong Foundation. An inspiration to all!

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