Wednesday, July 11, 2012

5 Ways to Save Yourself...Without Even Thinking

     The chickies are expanding.
     I'd gotten 9 Black Australorps, because one was supposed to die. Well, it never got the message...we still have 9 black (with blue iridescent) feathered bundles of joy clucking around the yard. They rush around, chasing each other to the closest juicy bug -- and they're rapidly outgrowing the coop.
     Every so often, I trudge off to look for a larger chicken coop, via Craigslist. Monday, I stopped by "Sandy's" house in Denver. She told me she was moving -- but not because she wanted to. Her husband suddenly died about a month ago -- a trauma in itself. But only his name was on the house mortgage. 
     The bank did not consider her a co-owner, in spite of being married to him for 25 years, and living there for nearly as long. (I'm guessing Husband also did not leave a will, so that meant his possessions were in flux while probate was finished.)
     The only way the bank would let her keep the house was to make her buy it. Herself. And she didn't qualify for a mortgage. (Husband was the primary wage earner.)
     She had two kids, one of them disabled. Kids grieving for their dad, and the pets they had to give up. (She was, too.) 
     She had 45 days to move.
      I thanked God all the way home that the Brick insisted we have both our names on large purchases. No one can force me to leave our house, or give up our car.
     Will your partner die, or suddenly be incapacitated? Only God knows. But if that horror occurs, you would be able to stand it better if you did five easy things now.

If you're married, or especially if you're making a large purchase together (like a house), put it in both your names. If something happens to one of you, the other can still make payments. If you're not married, and you break up, both partners will gain something from the house's equity.

Get a policy that automatically pays off the house, if your partner dies. It's called mortgage protection insurance. This is in addition to standard homeowner's insurance; some policies will make payments if the owner is disabled, or loses their job. Doesn't cost much, considering -- but it's worth it.

Have more than one bank account -- one in both your names, one with just yours. If your partner dies, the dual name account will be frozen -- and your access to cash dries up. (Or, if you separate or divorce, they can clean it out without your permission.) Keep at least enough in the just-your account to pay bills for a few weeks. Separate accounts are handy for other reasons, too.

Keep at least a month's worth of food in the freezer or on the shelves. If your money must suddenly go to an emergency, you can still eat for a while. Comes in handy, too, if you have the flu for a week...or suddenly lose your job. (I include a few packages of dry milk and eggs, since the winter we had multiple blizzards around Christmas, and the trucks couldn't get through. Eggs and milk were an expensive luxury, if you could find them at all. Daughter #1 scored a dozen eggs hidden in one of the dairy aisles, and came out as triumphant as if she'd found the Hope Diamond.)

Make a will. Now. Quick. It will specify who cares for your children, and who gets what. If you can afford it, set up a trust, so possessions can pass seamlessly to your partner and other heirs. Include a living will, so your loved ones don't have to argue with the doctor about turning off machines. 

You won't regret it.

Our chickies look a great deal like this...only a bit more wild-eyed.


Crystal said...

"Have more than one bank account -- one in both your names, one with just yours. If your partner dies, the dual name account will be frozen -- and your access to cash dries up."

Is this only true in some states? We're in California and have joint accounts. My understanding is that the accounts immediately belong to the surviving spouse with no freezing whatsoever because they are jointly owned. But we're a community property state so is that maybe the difference?

Cindy Brick said...

Hmmm...I am not sure, Crystal. I'd thought the 'freezing' applied to every state's accounts. I do know that this has happened in Colorado, and it was an issue in Michigan, both from firsthand account. Maybe it IS a state thing, versus a national thing.
Nonetheless, I still think it's a good idea. Only you can control the money in an account that has only your name on it. And sometimes you need quick access to that money.
Thanks for mentioning it. (I'd ask your local bank or credit union about this.)

Crystal said...

Did a little research, Cindy. From AARP's site: "In some states, joint bank accounts are automatically frozen upon the death of one spouse."

So I guess it does vary by state. And apparently it also depends on whether the account is held as joint tenancy or tenants in common.

Now that I think about it, however, I remember my friend telling me that her bank here in California actually refused to take her deceased husband off the joint account because they had misplaced the death certificate she provided. So there he was, right on the statement each month.

Also, my SIL was added as a joint owner on her mom's bank account when her mom was diagnosed with cancer. After her mom died last year, she had no problem accessing the money.

Just to be safe, I'm going to verify with my bank. I've also got a POD (pay on death) designation on each account so if we both die, the balances are paid directly to our daughter immediately. Can you do POD in your state?

Cindy Brick said...

Thanks so much for adding this info, Crystal -- it's going to help someone else.
I'll check on your question regarding Colorado, and post here...

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