Jamie Menges was recently interviewed by the Wall Street Journal to discuss how families sometimes struggle to close an estate of a recently deceased loved one. The experience of PDS is that this is as much about helping families who are personally mourning the loss of a loved one as it is completing a task for their financial planning. As Jamie says in the article, “Give yourself time to mourn, then you can address your finances with the objectivity you need to make good decisions.” Read the article in its entirety below.
Adviser Brings Closure to an Unsettled Estate
By Alex Coppola
Published December 19, 2014
Jamie Menges ’s client was one of four brothers who were settling their parents’ estate.
Their mother and father had both died within the span of two years, and their assets–a combination of annuities and individual retirement accounts–were to be divided evenly between their children.
Mr. Menges instructed his client to open an inherited IRA and a trust account to capture his share of the parent’s assets.
“It couldn’t have been a simpler exchange,” says Mr. Menges, principal at PDS Planning, which manages $650 million for about 460 clients in Columbus, Ohio. “We contacted the insurance companies and custodians, retitled the assets, and we were finished.”
But six months later, Mr. Menges made a surprising discovery when he called the insurance company to ensure that his client had received his full distribution: Three-quarters of the parents’ assets were still in place. Although those assets were ready to be distributed, only Mr. Menges’s client had claimed his share.
Mr. Menges asked his client what was wrong and learned that the man’s three siblings had elected their eldest brother to handle their distributions–but he had found the process challenging. The client then admitted that the delay was becoming a source of friction between the brothers.
He told Mr. Menges that his brothers had confronted him at a family gathering, asking whether he had used some legal loophole or shortcut to claim his inheritance more quickly than they had. “They wanted to know why their brother had his money and they didn’t have theirs,” says Mr. Menges.
The adviser was curious as well, and to prevent further strife among the family he reached out to the eldest brother to offer his assistance. During that conversation, the eldest brother said he had not claimed the assets because he was struggling to decide how to invest them. The bank where he planned to open the new accounts was trying to sell him a number of products, but his limited investment knowledge was making him feel overwhelmed.
Mr. Menges told the eldest brother that he respected his desire to move slowly with his investment decisions, but added that it was time to take the first step.
He explained that the rules surrounding IRAs would mean that the longer the brothers waited to claim their assets, the less flexibility they would have in taking distributions from those inherited accounts.
“There was no pressure to choose any products at that time,” Mr. Menges says. “They just needed to claim their assets.”
Mr. Menges offered to facilitate the process: He would set up an inherited IRA and non-qualified account for each brother at the custodian of their choice and help them claim those assets. There would be no charge for his services–he wanted to do it as a favor to both the client and his siblings.
Once the assets were captured, the brothers could take as long as they needed to develop an investment strategy. It was the same advice he’d given his client during the planning process.
“Give yourself time to mourn,” Mr. Menges told the man. “Then, you can address your finances with the objectivity you need to make good decisions.”
The advice resonated with the eldest brother, who encouraged his brothers to all sign on to the plan. Just weeks later, the remainder of the parents’ estate was distributed to their new accounts. Each man sent Mr. Menges a letter of thanks for the work he had done.
The client was also grateful and relieved to see his relationship with his brothers return to normal. They spent their next family gathering reminiscing about their parents, he told the adviser, not talking about their parents’ money.
“As long as an estate is outstanding, it’s very hard to move ahead as a family,” Mr. Menges says. “Above all, the process helped give them closure.”