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Make Sure Your Tax Preparation Routine is Known to Others

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Over the last four months I have received various phone calls from my clients or a family member of my clients. These calls, necessary as they are, have not been easy for them to make. They are calling to inform me that their spouse or father or mother or sibling has passed away.

Gentle Scenario

Two of them were a bit easier as the spouse or daugther that called knew enough about the situation of their loved one that they were confident and would be ready for the upcoming tax season. This is because (1) they had been involved in the tax preparation in previous years or (2) their loved one left them instructions. This isn't always possible based on circumstances and lifestyles but it is important to make efforts to work together on the taxes and family budget in general.

Tough Scenario

The others were more difficult in that the spouse calling had always either let or had the deceased do all the leg work for their taxes. As such, they said something to the effect "Please know that I will do the best I can but I always let my husband or wife do all the work necessary for our tax returns and I am not sure of which documents are needed or where to find them." This lack of participation can cause anxiety and even depression come tax time, sometimes leading them to not doing taxes at all for a couple of years.

Transition Scenario

Sometimes you have some time to prepare for the passing of a loved one. Maybe they are diagnosed with a disease and have some time to live and take advantage of that time to help their family understand their routine. I had a call this last week from such a client. She tried to help her ailing husband in the preparation of their 2020 taxes to learn all she could. She would call me indepenently of her husband to talk about what he was supplying and about his filing system @ their house. We had started to work through things before the husband passed.

Manage for Success

By having just one of you in charge of the taxes and preparation of the paperwork puts you at a disadvantage. You should actively work with your spouse, partner and even parents (as they age) to make sure you are aware of (1) the basics about their sources of income (pensions, retirment accounts, banks etc.); (2) who your financial advisor; local banker and more are as well as (3) make sure they know who you use for your tax preparation as the preparer can help guide them through the process and identify the items in #1.

Don't be afraid to talk about taxes and more with your family members. Make sure they understand your situation and have a key contact list. Be Proactive - Sharing is Caring - Involve them in your tax preparation routine.

You can always talk with your tax professional for other advice surrounding this sensative subject.

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