BFF 0.5 Million In Debt at 79 Has Passed Away

[marko]

My sincere condolences, Koolau. The overall family situation seems like a tough place to insert yourself with financial matters. If it were me, I'd let the dust settle for a month or so, revisit with a ".....you know, I'm really good with straightening out money issues, if there's anything I can help you with...." and sadly, leave it there.

My own experience is that as messy as their life is, it's really hard for them to see it, let alone want to change. But I think you know that.

 

[Bryan Barnfellow]

I offer my condolences for the loss of your BFF as well. These things are very hard indeed. I was about to post essentially what SecondCor521 did above, and add: Who is the executor of his estate? DW might need some expert help to navigate these waters.

On my end I have a very good friend who casually informed me recently that for his primary source of retirement income, he converted a lump sump into an annuity, in which he took a single life (his) option in order to "get more income now." His wife was mainly a SAHM for much of her life and so has virtually no independent resources. She apparently signed off on this; but I wonder if she understood it. His reasoning was that he thinks he will outlive her. My jaw nearly dropped into my beer regarding the enormous risk he has created for her :-(

-BB

 

[Alan]

Koolau, condolences on the loss of your friend. My advice would be to just be there for his widow to provide any help she asks for, whether that be financial advice or otherwise.

My wife’s BIL was a BFF to me, and we had been good friends to each other for close on 50 years when he died suddenly at age 67. They have 2 sons, one living just a couple of miles away, married with 2 children, so I didn’t expect or offer help with her finances, but was only too happy to assist when she came to me for advice. They had a financial advisor for their investments but it was much of the day to day stuff that she needed guidance on. How to shop around for the best energy suppliers, places to put her savings, how to use banking apps etc. They did own a second house which she sold the year he died and along with some other stuff going on her financial advisor told her that she would need to file a self assessment tax return. In the UK the vast majority of folks don’t need to file a return as HMRC receive all the necessary paperwork (aka 1099s and W2s in the USA) and the return for you. I was honored to help and after she had gathered all the necessary information we sat down together and filed her return online. We did the same the following year and she was rewarded with HMRC telling her that she no longer needed to file in future.

She is quite independent and manages extremely well, and the only major thing I’ve helped her with recently was trading in her car for a much newer one. Again, it was not lack of competence but simply something she had never been involved in before.

 

[Sunset]

Sorry for your (and her) loss.

On the 1/2 million in debt:

It might be "his", "hers", or "theirs".

Some might be forgiven at his death (student loans, for example).

"His" debts should be paid in a certain priority order, to the extent that he had assets to pay them. This can vary by state.

If "his" and unsecured and not enough assets, it might be written off. Credit cards, for example.

Knowing the high debt level, hopefully the wife knows not to pay for the friends debts, if her name is not on it, and "he" has no assets of his own in his estate.

 

[pacergal]

My condolences to you, Koolau. I, too, enjoyed the stories you shared--sad for your friends financial situation, but the stories have good memories for you.

Take your time to grieve, and allow his widow time also. If she asks, then begin to unravel the financial issues. But only if you wish too. It sounds like it has the potential to be very disheartening. She and their children will need to find their own way forward, financially speaking.

Take care.

 

[Venturer]

My condolences to you as well sir. After my Dad passed my stepmom has done ok as far as finances alone. THe youngest son that she has, has been in and out of jail and institutions for years and that has taken a toll. I am sure when she passes there will not be much left except the house and building that Dad had his welding shop in so hopefully she will continue to make it on her on. She is 94 now but still drives very well and insists on push mowing her front lawn. Hopefully you will be able to just be a stand by friend for moral support if needed.

 

[brett]

There is nothing you can do from a financial perspective. It is over and his widow will have to live with her husband's inability to manage his finances to and through retirement.

Plus his abject failure as a husband to properly arrange their joint financial affairs in such a way as to protect and provide for his wife in just such an event to the best of his ability.

Many other on this form, regardless of income level, have made efforts to protect a spouse as best they can in preparation for exactly these circumstances.

I cannot imagine needlessly and knowingly leaving my spouse with $500K of debt vs. low future cash flow. It speaks volumes to character IMHO.

I have a SIL/BIL in the same situation. Two late model vehicles the driveway, expensive kitchen renos, mortgage, home equity loan. No pension, no savings, little SS income. When one goes, which will be soon, that income will drop by about 40 percent. We no longer feel sorry for them. They both worked hard to get where they are today vis a vis debt/poor financial decisions. They have been good friends to the credit card issuers and loan advisors over the years.

 

[Gremlin]

Koolau, I’m so very sorry for your loss. I remember you talking about his financial situation and I have enjoyed your stories about him!

I recently lost a BFF from elementary school. She was the light of our group of friends and sharing memories about her with each other has helped ease the grieving process.

I have zero words of wisdom regarding the DW but agree with the poster above. You are kind, intelligent, and practical. Follow your instinct and I don’t think you can go wrong.

 

[MarieIG]

. . .

On my end I have a very good friend who casually informed me recently that for his primary source of retirement income, he converted a lump sump into an annuity, in which he took a single life (his) option in order to "get more income now." His wife was mainly a SAHM for much of her life and so has virtually no independent resources. She apparently signed off on this; but I wonder if she understood it. His reasoning was that he thinks he will outlive her. My jaw nearly dropped into my beer regarding the enormous risk he has created for her :-(

-BB

That was brutal.

I suspect a lot of the spouses that waive income benefits - either don't understand what they are waiving - or don't comprehend the consequences, i.e., the potential inability to maintain their standard of living.

 

[Bigdawg]

That was brutal.

I suspect a lot of the spouses that waive income benefits - either don't understand what they are waiving - or don't comprehend the consequences, i.e., the potential inability to maintain their standard of living.

My DW agreed to sign away survivor benefit on my military pension. I denied her's also. Why? We felt it was not a good deal. We went the life insurance route instead. When SS kicks in, both of us individually will be 6 figure pensioners. I am working to minimize the tax burden on DW when I pass. I take the financial aspects of our marriage relationship seriously. We owe that to each other.

 

[jollystomper]

Koolau, so sorry your BFF has passed. one of my good friends was diagnosed with cancer a day after DW and I returned from France and died less than 2 weeks later - the quickest I had ever seen someone taken with that disease. It is a slightly different situation than yours - he was single, took care of his money *but* did not have a will and barely had time to throw together something basic before he passed. Now all kinds of things are up in the air and being figured out.

In the case of his wife, I agree with those that say do not get involved, but be available for advice and guidance if asked.

 

[rodi]

Koolau - So sorry for your loss.

I agree with what others have said about waiting to be asked for financial advice. She is probably unaware that some of the SS income is gone (she'll get the higher of the two SS's.) She's probably unaware of some of the debt. Unfortunately, she's in for a rude awakening.

When my BFF's father died BFF's mother had no clue she'd lose SS income. It was a shock. She also had no clue that his credit card debt still needed to be paid.

 

[athena53]

My DW agreed to sign away survivor benefit on my military pension. I denied hers also. Why? We felt it was not a good deal.

That can be an educated decision; my late husband signed away survivor benefits on my pension when I applied for it in his last months because we knew he was terminally ill. It always requires a notarized signature (not true in the past; I had a step-grandmother who didn't know about her husband's pension election till he died and it was gone) and we can only hope that the spouse signing off understands the implications.

I agree the OP's friend's widow is in for a series of rude shocks and the best he can do is offer sympathy and help wading through paperwork and directing her to resources.

 

[38Chevy454]

Sorry for your loss of your good friend. I agree all you can do now is be available for his wife after things settle down. If she asks, you can help.

I can give a bit of help for the racecar. Go to www.racingjunk.com and look in the classifieds for similar cars. There are all types, and you should be able to find similar to get a rough idea of value. Chances are his wife will need some help selling the racecar. Racing junk is a good sales place for racecars.

 

[Koolau]

There is nothing you can do from a financial perspective. It is over and his widow will have to live with her husband's inability to manage his finances to and through retirement.

Plus his abject failure as a husband to properly arrange their joint financial affairs in such a way as to protect and provide for his wife in just such an event to the best of his ability.

Many other on this form, regardless of income level, have made efforts to protect a spouse as best they can in preparation for exactly these circumstances.

I cannot imagine needlessly and knowingly leaving my spouse with $500K of debt vs. low future cash flow. It speaks volumes to character IMHO.

I have a SIL/BIL in the same situation. Two late model vehicles the driveway, expensive kitchen renos, mortgage, home equity loan. No pension, no savings, little SS income. When one goes, which will be soon, that income will drop by about 40 percent. We no longer feel sorry for them. They both worked hard to get where they are today vis a vis debt/poor financial decisions. They have been good friends to the credit card issuers and loan advisors over the years.

I don't know for a fact that BFF left his wife in this condition - he may well have. But it's also possible he has significant life insurance or has separate debt from DW. I hope so. He may also have investigated bankruptcy law to see if she can "escape" his debts at death. I hope so.

 

[Koolau]

That was brutal.

I suspect a lot of the spouses that waive income benefits - either don't understand what they are waiving - or don't comprehend the consequences, i.e., the potential inability to maintain their standard of living.

Actually, DW and I went through this regarding my "modest" pension. By DW signing off, I could reduce her survivor benefit from 1/2 to 1/4. In doing so, we got a significant monthly bump in income. At the time, that was a good move. To make up for this loss upon my death we 1) Agreed that I would wait until 70 to start SS so that her survivor benefit would be max. 2) I would keep in force 2 insurance policies which will net her better than $250K upon my death. Tax wise, this come out better - especially since she will be a single tax payer and life insurance payouts are not taxed.

Megacorp made the decision totally DW's. I gave her complete decision making on our "plan." Thankfully, at this point, due to the growth of the "stash" I don't think the pension is much of an issue.

 

[Bigdawg]

Declining the survivor benefit on a pension depends on the pension. The military SBP is one that I do not like. Here is the formula: Say your base pay was 5K at 20 years. Your retirement check will be 50% or 2500/mo. The SBP will pay the survivor 55% of that so $1375. Right off the bat the surviving spouse is getting a lot less. The cost? 6.5% of retired pay each month. That same $2500 per month retiree would be paying $162.50/month. For that cost a young military retiree could get a huge life insurance policy. I didn't get my 1 million policy until after age 50 and I am paying $170/month. Not apples to apples as mine is term and SBP is a continuous payout. Also COLA. I think couples need to look at the various aspects of the pensions they would rate and figure these things out long before they are retired.

 

[Badger]

I don't know for a fact that BFF left his wife in this condition - he may well have. But it's also possible he has significant life insurance or has separate debt from DW. I hope so. He may also have investigated bankruptcy law to see if she can "escape" his debts at death. I hope so.

I am sorry for your loss. I understand and have been through the grief of losing a best friend of more than 50 years. Although it can play havoc with your head and you want to help the spouse financially or otherwise this is really a family issue for her children to deal with. Since you live nearby you could offer suggestions for agencies that can help or ways to have enjoyment on a budget although it most likely be met with indifference or even anger. Your call if it is worth pursuing.
For his wife's sake I hope there is a significant life insurance policy and she can escape from all the debts. Given her past history of spending and lifestyle it will indeed need to be really significant.

Cheers!

 

[MarieIG]

My DW agreed to sign away survivor benefit on my military pension. I denied her's also. Why? We felt it was not a good deal. We went the life insurance route instead. When SS kicks in, both of us individually will be 6 figure pensioners. I am working to minimize the tax burden on DW when I pass. I take the financial aspects of our marriage relationship seriously. We owe that to each other.

I am correct that both you and your DW totally understood your retirement benefits - and that those benefits include, independent six-figure COLA'd pensions plus health care for life - no matter who passes first? So what I am seeing here - is that you both have adequate protection - to weather almost every storm. (Yes, I recall that you also have a very healthy nest egg.) And yes, I am aware of the tax benefits of life insurance although some people particularly with term (not you) eventually let theirs lapse in older age if premiums go up significantly, or they forgot to pay premiums.

Kudos - to you and your DW for each considering the other. And please accept my thanks for your service.

 

[Teacher Terry]

I have lost 9 good friends between the ages of 59-71. It’s really hard. A friend of mine was also a race car driver and when he died his wife called a race friend that put the word out and both his race car and simulator sold quickly.

 

[MarieIG]

Actually, DW and I went through this regarding my "modest" pension. By DW signing off, I could reduce her survivor benefit from 1/2 to 1/4. In doing so, we got a significant monthly bump in income. At the time, that was a good move. To make up for this loss upon my death we 1) Agreed that I would wait until 70 to start SS so that her survivor benefit would be max. 2) I would keep in force 2 insurance policies which will net her better than $250K upon my death. Tax wise, this come out better - especially since she will be a single tax payer and life insurance payouts are not taxed.

Megacorp made the decision totally DW's. I gave her complete decision making on our "plan." Thankfully, at this point, due to the growth of the "stash" I don't think the pension is much of an issue.

You also have responsible children who will step up to the plate and help your DW manage finances should you pass first and she need assistance yes?

DH's employment had a default 50% pension - but "we" decided on the 100% joint and survivor. If I pass first - DH gets a higher payout - i.e. the reduction to cover me - which was not insignificant, goes away. If he passes first, his health insurance is tied to his pension, and the pension and health insurance would continue for me (and child under 26) unaffected.

DH is also postponing his SS to age 70 for the longevity benefit (he is doing this for me - however he is the one who will actually need this as he is pretty healthy had has longevity in his family.) If I pass before he reaches 70 he (and my DSs) have instructions that he is to claim on my benefit and let his grow.

I have a small annuity, which I have not yet triggered. It has a death benefit, and DH has instructions not to take a lump sum, but to take the monthly payout. If I do trigger it before I pass, I will take it as 100% joint and survivor, so this adds to DH's reliable monthly income. (I was uninsurable when I looked into life insurance.) I don't want DH to be in a position where he has to manage investments. I was going to trigger this when I turned 65 - but am reconsidering pushing this back to 75 (if i am still around) to allow more room for conversions.

With regard to taxes - I am doing what I can by making Roth conversions, starting to use dividends from stock to buy ETFs, and looking into munis. That's far from perfect, but it's something.

 

[brett]

When I retired early I was in the process of consolidating our investments and changing investment advisors.

We did the usual prep with the new advisor, a CPA with a tax specialty.

One of the first things we did jointly was review insurances (essentially none post retirement) pension entitlements, and investments, debts/encumbrances (zero).

As we went through it he/we took two approaches. The pension entitlement was in my name.

The first was assuming joint. The second was assuming that I got hit by a bus the next day. The question was then 'what secure sources and streams of income would my spouse have to support her retirement' After tax. Plus any tax implications that might require immediate settlement. Fairly simple, not a complicated task.

That exercise impacted a subsequent pension entitlement decision and some aspects of our investments-tax and otherwise.

We revisited this after six or seven years. I expect to do the same over the next 18 months as an equal amount of time will have passed.

Prior to that my spouse paid zero attention to our finances/investments. At first she grudgingly attended. But now, as we age she realizes the benefits of understanding what her financial situation is today and what it might be if I fell off my perch tomorrow...despite having longevity in my family.

It is important even if a little dull. Several of her friends/acquaintances have been caught in a less than desirable financial situation subsequent to the death of their respective spouse.

 

[Sunset]

I don't know for a fact that BFF left his wife in this condition - he may well have. But it's also possible he has significant life insurance or has separate debt from DW. I hope so. He may also have investigated bankruptcy law to see if she can "escape" his debts at death. I hope so.

I'm sure you will miss, and remember now and then about your BFF.

Given your descriptions about how he yearned for $$ now instead of later, I doubt he has insurance but hope he does.
It will be quite an awful thing if the Wife pays "his" debts with her last few remaining dollars when they could be ignored as they are not her debts. I wonder if she knows this, because many folks don't.
I'm not suggesting you help her manage all the paperwork, etc, but just tell her the rules, because the credit card companies won't stop calling.

 

[clifp]

My condolences. The one thing, I have found disappointing about both early retirement and getting older is that it is really hard to make old friends. Although, possible to make friends who are old.

After some time for mourning, I do think it is entirely appropriate for you to offer help with the finances. She probably has no idea how long you been a part of this community and how akamai, you become about finances.

As far as the kids once you do become familiar with her finances, and frank but probably painful discussions with one or more of the kids will probably be necessary.
The money leak has to stop.

 

[ls99]

Sad to read of your friend's passing. Losing lifelong friends is as tough to deal with as loosing spouse.