Are You Prepared to Die?

 

Disclaimer: I am not an attorney or expert on estate planning/probate law. Seek professional help. 

 

I almost didn't do this article because of the depressing subject matter and the overwhelming amount of information to consider, but I think it is an important topic. I hope you find the suggestions helpful.  Next week's topic will be more fun.  

 

Considerations 

We often hear about how you should plan ahead for a funeral (e.g. burial vs. cremation) and most everyone knows you should have a will for property disbursement, but what about the everyday things like credit card balances, recurring credit card charges, phone codes to verify IDs, checking accounts, access to statements, etc.? Does your family or designee have that information? Do you have it for them?  Do they have any idea of the red tape involved when someone dies?   

 

Estate Planning 

How can you prepare for death?  To start with, assemble an estate plan BEFORE you die. 2 out of 3 Americans do not have any kind of estate planning document, with most citing procrastination as the main reason (2023 Wills and Estate Planning Study).   

 

Estate Planning: 11 Documents You Need for Coronavirus and Always by Kathleen Coxwell discusses the following documents to consider for a complete Estate Plan: 

1. Will 
2. Guardianship Designations 
3. Living Trust 
4. Financial Power of Attorney 
5. Healthcare Proxy/Medical Power of Attorney 
6. Living Will or Advance Directives 
7. Beneficiary Designations 
8. Life Insurance 
9. Letter of Intent/Letter of Instruction 
10. Digital Asset Instructions 
11. List of All Accounts and Documents 

Probate 

When someone dies and there is an estate (property in their name) you will most likely need to go through probate and you will probably need a lawyer to help with that.  (Note: Avoid probate if you can.  It is time consuming, expensive and complicated. Instead rent, lease and set up joint accounts, trusts, etc.)  

 

Who's in charge? 

If there is no will or trust, then you first have to figure out who is in charge.  A surviving spouse or family member who lives closest to the deceased is the natural choice. Get started right away in processing the deceased's financial affairs (within 30-60 days).  Things only get more complicated the longer you wait. (How to Manage a Loved One's Finances after they die). 

 

Death Certificate 

When someone you are responsible for dies you will need to obtain a death certificate and certified copies to present to a variety of resources like the SSA, IRS, DMV, banks, bill collectors, etc. (How to obtain a Death Certificate when someone dies). If you are not a spouse you may also have to provide proof of who you are and your authority to handle the deceased's affairs. Immediately after a death you can usually obtain a copy of the death certificate from the funeral director, but if not, the local health or county department should have it.   

  

Social Security Administration 

The first agency to notify is the Social Security Administration (SSA) if the person was receiving Social Security payments. Paying that money back is a nightmare.  Sometimes the funeral home will do this notification for you. The SSA may automatically notify the deceased's credit card companies, but double check. 

 

Credit Cards 

• Lay hands on the deceased's credit cards to avoid identity theft.  
• Notify the 3 credit bureaus (Equifax, Experian, TransUnion) to request a credit freeze and avoid identify theft. You only need to notify one of them and they will then notify the other two (How to Report a Death to Credit Bureaus).  
• If anyone else is listed as a user on the account notify them to stop using the account immediately.   
• If the deceased person is the sole owner on a credit card notify the issuer(s) immediately to cancel the credit card(s) and avoid interest and finance charges.  Use their website or ask to speak to the department of deceased accounts.  Ask to close the account and where you should send documentation.  
• Ask the issuer if there are any recurring charges on the account and if so cancel those.   
• Ask that recent interest or finance charges be waived because of the death.   
• Follow up the request to cancel in writing including the pertinent information (deceased person's name, date of birth, date of death, social security number, credit card number, your contact information and relationship to deceased).  
• Shred all credit cards when you no longer need them.   

Family members aren't responsible for the deceased's credit card debt unless it is a joint account.  The credit card companies can apply to the estate (if there is one) for payment. (How to cancel credit cards after a death) 

 

Secure Property 

If you don't live with the deceased be sure to secure their house right away. Take care of any pets or plants. Take a camera, take inventory, change the locks if necessary. 

 

Pay Bills and Taxes 

To pay bills follow the money.  If you don't have a list of the deceased's accounts, look up 1099's to see where the money comes from.  Figure out what accounts need payment (utilities, phone, cable, and more).  You may need a death certificate to access and close out online accounts. 

 

Don’t forget to file the final federal tax return by April 15th the year after they die and any prior returns not yet filed. 

 

Beneficiaries 

Some accounts, like retirement funds, get distributed directly to beneficiaries.  Joint bank accounts and tenancy will pass directly to the joint owner or owners. 

 

Get Help 

If you are not up to the task or just need some help, consider hiring a probate lawyer or a fiduciary to administer the estate.  The later may take a percentage of the gross value of the estate, but it may be worth it. 

 

Conclusion 

Nobody likes to think about death (our own or a loved one’s) but dealing with some of these details/decisions prior to death might just make the grieving process a little more bearable for the survivor(s). 

 

My mom and I update and exchange our personal information annually.  This includes a list of current doctors, medications, credit cards, bills/subscriptions, and financial accounts.   

 

Do you have any suggestions or corrections?