Spouse just received the another diagnosis of “the same thing only different” metastatic cancer. They almost assuredly will have at least a year, they may have 5-10, it can’t be predicted. Barring a physical injury, we know generally how they’ll die.
We’ve been making adjustments, but we realized we don’t really know how:
1) True joint accounts
2) My account, they’re an authorized user
3) Their account, I’m an authorized user
4) Their account, I have no access/use
are handled.
The big concern is that (3) and (4) will force the sale of the house, because that is a 100% joint account (both names on the deed, both names on the mortgage, both incomes used to determine rate/limit).
The next highest unknown/concern is that (3) & (4) accounts could force the liquidation of the spouse’s 401k account, and the additional tax liability for an early withdrawal.
They’e on SSDI, and have Medicare as secondary to my work-based insurance, so if I understand correctly, there’s no 5-year look-back/claw-back to worry about. There’s no expectation they’ll ever have to use Medicaid. Does the fact that they’ve been on SSDI for almost 5 years, but my previous insurance (≈15 months ago) was secondary to Medicare, change anything?
Spouse has Terminal Cancer and Accounts in Their Own Name
byu/MeButNotMeToo inpersonalfinance
Posted by MeButNotMeToo
8 Comments
The death of a co-borrower will not trigger the sale of the house. If you fall behind after, then that would be a separate foreclosure event.
You need an estate attorney. Preferably one that has experience in end of life planning.
Mortgages are not callable on death. You can keep paying it. Assuming you are the designated beneficiary, the 401k passes into your name, intact.
you should consult with an estate attorney at this stage
> The big concern is that (3) and (4) will force the sale of the house, because that is a 100% joint account (both names on the deed, both names on the mortgage, both incomes used to determine rate/limit).
Not a thing (see Garn st Germain)
> The next highest unknown/concern is that (3) & (4) accounts could force the liquidation of the spouse’s 401k account, and the additional tax liability for an early withdrawal.
Not a thing. See the rules for inherited IRAs/401ks. Have spouse make you a Beneficiary if you aren’t already
Make sure you are listed as Payable on Death beneficiary, co-owner, or an account beneficiary, the assets will pass cleanly.
No expert, not a financial advisor not a lawyer. For accounts 3 and 4 they can add you as a Pay On Death / Transfer On Death or just go true joint account on them with right of survivorship.
The mortgage won’t be called in on death. Depending on the mortgage there could be a life insurance benefit that pays the mortgage off. As long as you keep paying the mortgage the lender will be happy.
we just enabled a trust between me, and my wife, and daughter, so we don’t have to deal with tax issues of inheritance. Got a house in Texas, I have an e-trade account, we both have retirement accounts, good bit of equity. The lawyer collected all the necessary info, and I doubled down making sure all the accounts had next of kin info. Our agent for our duaghter, who is 20 right now is a personal friend who is already set financially, because we could not trust our families.
I also made sure that stored a password to my password locker, access to the seeds for my MFA tokens, so they can login if they need to (and I update those regularly, as well as the current PIN for my phone (9 digits).
it’ll be a pain in the ass to have to contact those companies even if my family had all the documentation and if they needed access to money, it’ll be important.
Bottom line, get a lawyer, have them spend a couple hours of time to save you months of time after, when you’re dealing with the aftermath.
Make sure all account beneficiaries are up to date, the way that your spouse wants them.