I have recently come across two stories that provide an excellent example of contrasting outcomes. In both cases there was a sudden death yet the consequences for the families left behind couldn’t have been more disparate. It all hinged on preparation.
Mom was an 80 year old woman who had never experienced much illness. She was certainly overweight but beyond that she did not appear to have any significant health issues. Her two adult children, a daughter and a son in their thirties and forties respectively, lived with her and depended on her for survival as they are both unemployed. Mom never worked outside the home. When the children’s father died she lived off his pension.
When Dad died, there was a will and thus the estate passed on to his wife without issue. Mom did not have a will. She understood its importance but when the kids pressed her about it she made excuses: too expensive, not the right time, not necessary at the moment, she’ll get around to it in good time.
One morning Mom didn’t get out of bed: She had died of a heart attack in her sleep. Now the kids are in a real bind. The only money available – a relatively modest amount – is in Mom’s various bank accounts and those are frozen until her estate goes through probate to determine the heirs. There is no mortgage on the house but there are taxes and utilities to be paid, not to mention the need for food. There is also car insurance to be paid for a vehicle that is necessary given the location of the house. One last thing: The pension ended the day Mom died.
The process of probate has just begun and in the best-case scenario, assuming the court process goes reasonably smoothly and doesn’t suffer delays, the son and daughter can expect that the matter will take six to eight weeks to be resolved. Again, that’s the best possible outcome.
The daughter is currently in hospital with a terminal illness. The son will have some difficulty finding employment given that he has been out of the work force for more than a decade. The family house, in which the son currently lives, is in terrible physical condition and will require a substantial investment in order to make it sale-ready. Prior to that consideration, there is the issue of the clutter and hoarded materials. The house can’t currently be emptied because there is no money for something as simple as a dumpster. The most likely outcome is that the son will eventually sell the house as-is for a price well below market. Sadly, house values in that area are already quite modest. He won’t end up with much.
The grim situation outlined above could largely have been avoided with a simple will.
Now let’s take a look at another situation.
Ann and Tim were a successful, healthy, middle-aged couple with two adult children. Years ago they had bought an IT company that they grew into a reasonably large enterprise with several employees. The growth was due to a couple key factors: Tim’s technical and marketing savvy, and Ann’s careful financial planning. While most of us could not imagine working day-in, day-out with our spouses, Ann and Tim thrived together.
For fifteen years they had talked about taking a holiday alone and somehow they had never quite managed it. Work was busy, they had a large house to maintain and then there were the kids’ activities – there was no shortage of things to do. Finally, in November of 2007, they took the plunge. The kids had just moved out and they decided that it was time to treat themselves. Off they went to Barbados.
Their condo was gorgeous and so was the weather. For the first couple of days they played in the surf and relaxed by the ocean. Tim got battered about by the waves but it didn’t seem to matter; he loved the water so much that he couldn’t get enough of it. By the third day, he was complaining of a bruised rib and decided that it would be prudent to take it easy for a while. They both relaxed by the ocean until it was time to get ready for a cocktail party hosted by the Manager later that afternoon.
Around 4 pm, Ann went back up to the condo to have a shower. She was just getting out when she heard someone banging on the door. It was the Manager.
– Come to the beach right now. Something’s happened to your husband. I think he’s dead.
The condo complex was located at the top of a hill adjacent to the beach. There were what appeared to be one thousand steps to get down. As Ann descended, she saw one lawn chair on the beach with a large group of people standing around it. All other chairs had been removed. Tim was seated on the chair. His eyes were open, looking out at the ocean. He was dead.
Ann was stunned. She reached out for his hand, closed his eyes and sat down next to him, unable to say or think anything at all. The condo staff eventually cleared all of the people away. The next thing Ann knew, men in black shirts showed up and took control. Ann later learned that the black-shirted men were all ex-military Canadians working as security staff for a wealthy Canadian, Mr. H, who lived in the area. Word of a death on the beach had gotten out and they came to help.
For the next several hours, the security men called the police and the coroner, they eventually talked Ann into going back up to the condo to call family members, ensuring that she had everything she needed, and they watched over Tim. Their local knowledge and contacts were indispensable as Ann navigated the concept of “island rules on island time”.
The whole experience was unreal – Ann couldn’t make any sense of it. Tim was the healthiest guy she knew. How could this happen? She knew perfectly well that if she thought about it too much she would be overwhelmed with emotion, so she buried all of her feelings and focused instead on the tasks in front of her: She needed to track down her son and daughter, and her in-laws; there were business calls to be made; she needed to figure out how to get Tim’s body back to Canada; and she also had to call her insurance representative. The details were overwhelming.
A significant stumbling block presented itself: The funeral home and the insurance company were arguing over who would pay. The funeral home required payment before they would proceed and they refused to accept anything other than cash. Cash was the only thing Ann didn’t have. Who travels with a lot of cash these day? She had cheques and credit cards – none of which were acceptable to the funeral home. Mr. H, who had been calling and visiting her daily, showed up to the condo with a blank cheque in hand. “Use whatever you need to get things done. We’ll work it out later.”
His generosity didn’t end there. He gave Ann a cell phone and assigned some of his security staff directly to her. They were to take her wherever she needed to go. When her daughter arrived, Mr. H’s wife picked her up at the airport. Somehow her luggage had not made it to the island. No problem: Mrs H showed up with a bag of clothes, shoes and jewelry. The support was unbelievable.
After multiple challenges, including the island’s first-ever earthquake, Ann finally made it home. Tim’s brother followed with Tim’s remains a few days later. At long last they were back in Canada.
Money was not an issue for Ann. She and Tim had been wise from the very beginning: he had a will, they had a generous insurance policy, and Tim also had Key Man Insurance at work. Ann was financially set. In addition, since she ran the company she knew exactly where everything was and what she had to do. There were no frantic searches for key documents or shocking discoveries. Everything was where it needed to be.
It was clear to Ann that she could not continue to run the company without Tim, nor could she simply abandon it. Several employees depended on the business for their livelihood; something had to be done. During the year that followed Tim’s death, Ann split the company into its component parts and sold each one to people who would continue the path of success.
The biggest challenge that Ann faced, beyond the shock and the emotional trauma of losing her husband so suddenly, was determining what she wanted to do with her life. She has explored a couple of different paths and is continuing to seek out her passions.
The reason that Ann has the freedom to redefine her future at her own pace is simply because she made smart choices along the way. When I explored the source of her financial wisdom, Ann pointed to her parents’ influence. As a young child, she was included in trips to the bank and conversations about budgets. She learned that she needed to look and plan ahead, to honour cash flow above all else financially. The lessons began at an early age and continued throughout her time at home.
Today, Ann has the following advice for women: Read books on finance and ensure that you are taken care of. Don’t stick your head in the sand and above all, don’t assume that something won’t happen to you. Protect yourself now. Right now.
If you’ve been saying that you really need to create and/or revise a will and buy sufficient insurance but you haven’t had time, or you’re putting it off because you think it’s too expensive, just ask yourself: What would be written about your situation if you became a case study tomorrow?