A Guide To Your Financial & Legal Responsibilities After Loss

Loss of a loved one is a difficult time to navigate. Learn how to obtain a death certificate, when to begin reporting the death and more.

Key takeaways:

  • Grief is a natural part of losing a loved one. Having an after-death checklist can take a tremendous burden off your shoulders when it comes time to execute final wishes.
  • Besides making funeral arrangements, you will have to determine if there was a will, report the death to various entities and close financial accounts.
  • You will need certified copies of death certificates to claim the deceased person’s assets, including life insurance policies and brokerage accounts.

Everyone experiences loss at one point or another in life. It’s natural. However, many people underestimate the amount of paperwork involved to settle their loved one’s affairs. From making funeral arrangements to obtaining death certificates, the process can be stressful if you don’t know where to start.

Having a plan in place can help you better navigate this difficult time. You should also reach out to family members and consider obtaining the help of lawyers and certified public accountants (CPAs) to ensure you don’t have to handle everything on your own.

We’ve put together a checklist to help you prioritize your tasks and delegate where needed.

After-Death Checklist: A Guide To Managing Your Loved Ones Death

It can be overwhelming trying to figure out what to do when a loved one dies. Having an after-death checklist can lessen the burden.

Here are some key steps to consider when a loved one dies:

  • Acquire a pronouncement of death
  • Alert friends and family
  • Implement burial plans (based on will or last wishes)
  • Report death to Social Security and other government agencies
  • Obtain certified copies of death certificate
  • Identify all assets and liabilities
  • File insurance claims
  • Determine if there was a will
  • Close bank and brokerage accounts
  • Send copies of death certificate to major credit agencies
  • Terminate memberships and subscriptions that are not in use
  • Terminate health insurance policies
  • Settle a loved one’s outstanding financial debts
  • Notify election office of death

Remember that timing may vary depending on your circumstances. If this was an unexpected death, it may take longer to access all the required information to begin the final arrangements. This is another reason why planning early is important.


Immediately Following The Death Of A Loved One

The first task on your list will be to obtain a legal pronouncement of death. If your loved one died in a hospital, a staff member will provide you with a pronouncement of death form.

The process is different for deaths that occur in the home. You will need to call a medical professional to pronounce them deceased.

Next, you want to alert friends and family of the death. Send out text messages or share on social media to spread the word. Remember to take a careful approach during this step. Use your judgment to determine the best way of informing those who need to know.


What To Do Within The First Week Of Losing A Loved One

The first week can be a whirlwind of emotions and roadblocks without a proper plan in place. Here are some steps you can take to better manage your priorities.

Make funeral arrangements
Your loved one may have recommended what they wish for their last requests. This may include burial and estate planning. Contact their funeral home, make the burial arrangements and determine if there was a prepaid burial plan in place.

If your loved one did not share their last wishes, it might be best to reach out to close family or friends for assistance. Research funeral prices and outline the expected costs. Then, determine how you will pay for the funeral. The Department of Veterans Affairs offers burial benefits for qualified individuals.

Report death to Social Security and other government agencies
The funeral home usually reports a person’s death. If you need to report it yourself, you’ll need to call the Social Security office at 1-800-772-1213 (TTY 1-800-325-0778).

Obtain certified copies of death certificate
You can contact the Vital Records office of the state where your loved one died to obtain copies of the death certificate. You’ll need the certified death certificate to file insurance claims and access bank accounts. You can request at least 5-10 copies of the death certificate. It all depends on the number of assets that your loved one held.

Identify all assets and liabilities
You typically need certified copies of the death certificate to claim assets that may be in your loved one’s name. Here are a few types of assets that you may need to inquire about:

  • Deeds and titles
  • Insurance policies
  • Safety deposit boxes
  • Brokerage accounts
  • Employer benefits
  • Retirement assets

You probably won’t be responsible for any outstanding debt that your loved one left behind. If you co-signed on any type of asset or debt that has gone unpaid, you may be responsible. Many in the family mistake debt as “inherited” when this is not always the case. Money from the estate is used to pay the debt. State laws on inheriting debt may vary, but liabilities commonly go unpaid if there isn’t enough from the estate to pay the debt.

File insurance claims
Reach out to your loved one’s life insurance provider to submit a claim. Here’s the standard process:

  • Contact the insurance company and inform them about the death.
  • The insurance provider will send a packet of forms and instructions to follow.
  • Submit the death certificate and completed forms.
  • The insurer usually pays claims within 30 to 60 days of receiving all requested information.

Determine if there was a will
A will can help you determine how assets should be allocated. It can also help you manage any other requests that your loved one may have had. This includes identifying the executor of your loved one’s estate. The executor is the person appointed to carry out the instructions of the will.

Here are some items to consider:

  • An executor files the will with the probate court. You can consult with an estate attorney for guidance. An executor typically has a limited number of dates to submit this. Check with your probate court for more information.
  • Wills become public record once they have been processed through the County Clerk’s office.
  • The executor must notify the appropriate authorities about the death.

If your loved one died without a will, your state law will determine how assets are managed.


Within The First Month Of Losing A Loved One

There are steps of action that should be taken within the first month following the loss of a loved one. These can vary, depending on how much was prepared initially and where the loved one passed. However, this is a great baseline to follow if you’re unsure.

Close bank and brokerage accounts.
Identify all financial accounts in your loved one’s name. Notify the institutions about the death and provide a certified copy of the death certificate. They will release the funds to the beneficiaries on the account.

Send copies of the death certificate to major credit agencies.
The three major credit-reporting agencies in the U.S. are Equifax, Experian and TransUnion. Report your loved one’s death to the credit agencies to prevent any fraudulent activity. You can find their contact information by visiting the Federal Trade Commission’s consumer information.

Terminate memberships and subscriptions that are not in use.
Check mail, email and bank statements to identify gym memberships or digital subscriptions that need to be canceled. Have account or member ID numbers handy to expedite the process.

Terminate health insurance policies.
If you haven’t already, now is the time to file a claim with your health insurance to ensure the policy has been closed upon the death of a loved one. Contacting the insurance agency should be the best way to get in contact with the claims department and start this process.

Settling a loved one’s outstanding financial debts.
Repaying debts falls on the deceased person’s estate. This is not the responsibility of a particular family member. However, the executor or power of attorney is responsible for paying these debts using money from the estate. This is done by selling assets or using any other funds provided by the estate.

Notify the election office of death.
Notifying the election office of a death does not fall on you directly, as a family member of the deceased. Once you’ve filed for a death certificate, this record is then used to remove deceased participants from the voter registration list.


Who Gets The $255 Social Security Death Benefit?

The Social Security Administration (SSA) provides a lump-sum payout of $255 to qualified individuals following the death of a loved one. In order to receive this benefit, you must first apply by calling the Social Security office at 800-772-1213. The following individuals may qualify if they meet criteria outlined by the SSA:

  • Surviving spouse
  • A widow
  • A surviving divorced spouse
  • An eligible child

What Happens To A Person’s Estate After They Die?

If your loved one has an estate plan, it can save you or a loved one from financial loss or litigation on settling an estate. The estate plan helps families determine what happens after a loved one dies. It typically includes the following items:

  • Will
  • Executor
  • Healthcare directives
  • Beneficiary designations

If there is no estate plan, you’ll need to consult state law for details on who receives assets. Generally, it passes to parents, spouse, children or other relatives.


The Bottom Line

Saying goodbye to a loved one is difficult enough without the stress of sorting through paperwork. The best course of action is to identify the most important steps in the process and move forward from there. Take time to review wills, estate plans and life insurance policies. Don’t forget to seek out help and use the resources available to you. Consult family members and experts to avoid managing the process on your own.


References

Centers for Disease Control and Prevention. (2021). Where to Write for Vital Records.

Federal Trade Commission consumer information. (2021). Free credit reports.

National Conference of State Legislatures. (2021). Voter registration list maintenance

Social Security Administration. (2021). If you are the survivor.

USA.gov. (2021). Find my state or local election office website.


Complete Article HERE!

Pandemic Ignites Millennials to Focus on End-of-Life Planning

Group portrait of a creative business team standing outdoors, three quarter length, close up

by Jackie Lam

As the coronavirus pandemic increased anxiety and upended many lives, it led U.S. millennials to get more serious about end-of-life planning.

According to new research from 1Password, a digital security and privacy platform based in Toronto, and digital estate planning platform partners Trust & Will and Willful, 72% of U.S. millennials (ages 25 to 40) with wills created them or updated them in the past year.

In addition, 34% of these millennials have talked about their digital assets with their parents in the past year.

More than two-thirds of millennials don’t have a will

While the pandemic brought greater focus to end-of-life planning among millennials, they’re still largely unprepared. According to the 1Password findings, 68% of millennials don’t have a will.

In turn, respondents estimate descendants would lose access to an average of $22,500. Plus, only 38% have clarity over who should handle their digital assets after they die.

Among those who do have a will, here’s what sparked it:

  • COVID-19 crisis (55%)
  • Having a child (36%)
  • Death of a celebrity or public figure (22%)
  • Buying a house (17%)

With a digital handover, the top priority for respondents is giving their executor login credentials to banking and financial accounts (67%). Interestingly, 57% of millennial respondents say granting access to social media accounts is more important than giving access to email, subscription and e-commerce accounts.

The pandemic provided a wake-up call for millennials and their end-of-life planning, no doubt. But there are some areas of estate planning that are murky. And it’s not just about the respondents themselves.

The survey finds 51% of millennials will be responsible for the execution of their parents’ wills. However, just 36% have access to their parents’ online account passwords.

While we already noted that 34% of respondents say they’ve chatted with their parents about their digital assets in the past year, 52% have never discussed it with their parents or can’t recall the conversation. Among those who have handled the execution of wills, 63% say it was more challenging than expected to access accounts after a death.

Millennials use old-fashioned ways to store documents

Old-school ways of handling important documents reign supreme among the millennial crowd. More than 4 in 5 (81%) report keeping paperwork — think birth certificate — in a physical location like a safe deposit box, safe or filing cabinet.

They share their passwords mainly by way of a written list (41%), then verbally (39%) and digitally (25%), such as through email, Google Docs, the cloud or a PDF.

As for storing passwords, 51% say they store their passwords by memory, while 25% keep them on a piece of paper. One in 5 (20%) millennials say they use a password manager.

The report also found that 48% of millennials trust their significant others the most for emergency access to their passwords, more than twice as much as their second choice — their parents (20%).

If you’re prioritizing end-of-life planning, decide who will be granted access to your digital accounts and online passwords and list out all your debts. This might include:

If you need help managing credit card debt, consider working with a financial counselor or credit counseling agency.

Complete Article HERE!

If you have a child with special needs, here’s how to plan for their life after you pass

by Deborah Nason

  • Are you the parent of a child with special needs? Breaking down planning for their life after you’ve passed can ease the process.
  • Any plan should address money management, self-care and housing.
  • Be sure to work with professionals, such as a financial advisor and an attorney, with experience in the field.

For parents who have a child with special needs, planning for their loved one’s life after they themselves are gone can be overwhelming. Breaking the process down into manageable parts and working with specialized professionals and companies can help.

“The three main structures a family should put in place to provide future protection for their child relate to money management, self-care and housing,” said certified financial planner Michael Beloff, partner and Chartered Special Needs Consultant with Belvedere Wealth Partners in Stamford, Connecticut.

Money management: If the child receives government benefits, such as Supplemental Security Income or Medicaid, parents will usually establish a so-called special needs trust that will shield assets to allow the child continued access to those benefits. The trustee is the person who oversees the funds and other trust provisions not under the child’s control, Beloff said.

Life insurance is essential, said CFP Colin Meeks, founder of Maryland Financial Advocates in Baltimore.

“It’s the cheapest way to fund a trust,” he said. “Because you need to know what’s left over [from your estate] in order to care for the child, it creates that certain bucket of money.”

Self-care: Parents must arrange the services their child will need to live independently or semi-independently (e.g., household management, medication management, doctor visits, personal care, etc.).

These supports may be overseen by a court-appointed conservator (or guardian, depending on the state) who makes all decisions regarding an individual’s financial and/or personal affairs, or by a person with power of attorney, who can make decisions, as well as the individual, Beloff said.

Parents are encouraged to write a “letter of intent,” a common planning tool that serves as a guide for those who will care for the child in the future.

It should cover family history, medical care, benefits, daily routines, diet, behavior management, residential arrangements, education, social life, career, religion and end-of-life decisions, according to the Autism Society.

Housing: With respect to future housing for the child, location is more important than the house itself, said CFP Andrew Komarow, founder of Planning Across the Spectrum in Farmington, Connecticut. Parents should think beyond keeping their loved one in the family home, he said.

“It’s more important to look at the individual,” Komarow said. “What interests and supports do they need?

“Parents may consider retiring to a community that supports the interests of the child.”

There is a trend toward more community-based living, said CFP Gordon Homes with WestPoint Financial in Indianapolis.

“State-administered Medicaid HCBS waiver programs allow people with disabilities to live in a house or apartment,” he said. “The state, in turn, provides staffing for a group of similar residents.

Sometimes, a group of families will purchase a collection of houses or condominiums, Homes said. “We’re seeing people rehabbing houses for roommate living, resulting in neighborhoods of people with special needs,” he said.

Building the team

One important role for a financial advisor is coaching parents on how to approach other family members and friends regarding the care of the loved one with special needs going forward, according to Homes at WestPoint Financial.

“They need these assurances in the conversation: that the government benefits will remain in force, there’s a source of money, there’s a team — such as a care manager, behavioral therapist, personal attendant care giver, guardian, etc. — and there’s a letter of intent,” he said.

The benefits of a special needs trust

  1. Coordinates available resources
  2. Ensures continuation of government benefits
  3. Provides supplemental needs for life
  4. Improves quality of life
  5. Directs final distributions

Source: Colin Meeks, CFP, Maryland Financial Advocates

It’s essential to work with specialists in this type of planning, Komarow said.

“A trust is not just a financial plan,” he said. “Specialty trust companies may be staffed, for example, by social workers who will arrange for daily living needs.”

But parents also have to find attorneys experienced in special needs planning, Komarow added. “Don’t tell them what kind of trust to set up,” he said. “Instead, let them know what you’d like to see happen, and let the attorney tell you what is the right trust for your situation.”

A special needs trust could add an additional $3,000 to $6,000 to a regular family estate plan, depending on its complexity and the area of the country, according to Charles Italiano, assistant director at Westchester Disabled on the Move.

Komarow recommends parents check the websites of the National Elder Law Foundation and Academy of Special Needs Planners for help with finding specialized professionals.

Complete Article HERE!

Finding someone to handle your end-of-life, after-death affairs when you have no friends or relatives

Without friends or family, you’ll need to find support. And you may need two different kinds of help, because you could potentially have a situation where you need one type of assistance while you are alive and another after you have died.

By Ilyce Glink and Samuel J. Tamkin

Q: I was wondering if you can help me. I thought you may know of a business firm, not an attorney or health-care provider, that can act as my “end-of-life-agent.” I want to be prepared as I have no family to ask or friends young enough that I would trust. My attorney says that he can draw up trust documents, but he can’t be my “end-of-life” agent.

It seems that no attorney can (be my end-of-life agent) due to it being against their liability insurance. So, what I’m looking for is a business person who can read my end-of-life wishes and carry them out. I need someone who agrees by contract to carry out my specific written wishes. Of course, when that is needed, they will be compensated for this in my estate. Do you have any suggestions?

A: There are two parts to your question. First, you may face end-of-life decisions while you are alive, which may pertain to your health or financial matters. Second, you have decisions to make now as to what happens to your estate once you have passed on and who will carry out those wishes.

While you are alive, we can understand how your attorney would see a conflict in making health-care decisions for you or even deciding when to tell the doctors that they should no longer provide medical assistance. In this situation, your attorney would like to know that you have chosen a friend or relative to make those decisions.

We’ll start by saying that most estate attorneys would advise you to have a last will and testament, a power of attorney for health care, a power of attorney for financial matters, and a living will.

The last will and testament lets people know how you wish to distribute your money and personal property after your death. The power of attorney for health care lets a family member or friend make decisions about your health care, if you cannot, and work with your doctors to carry out your wishes regarding your health.

The power of attorney for financial matters allows someone other than you to attend to your finances, including paying bills, selling assets and taking care of your financial affairs when you are incapacitated. Finally, a living will is a document that lets the medical community know your wishes as to what medical treatments should be given to you to keep you alive and when to stop any treatment.

If you can’t find a friend or family member to help you with your health care and financial matters if you become incapacitated, your attorneys won’t want to draft those documents and also name themselves in those same documents. Family and friends are key parts of our lives, but some people either don’t have family or the kind of friends they wish to ask this of (it can be a significant ask, depending on what happens) and prefer to have a neutral party handle their affairs when they either become incapacitated or they are at the end of life but have not yet passed away.

These sorts of decisions about when to stop lifesaving medical treatment (even if you have a living will) are emotionally fraught. You want someone to be able to separate emotions from making a tough call, who will be willing and able to carry out your final wishes while you are alive: decisions about your health care, your living situation, and managing financial affairs.

Without friends or family, you’ll need to find support. And you may need two different kinds of help, because you could potentially have a situation where you need one type of assistance while you are alive and another after you have died.

While you are alive, you can still set up a living will. You can deliver a copy of that living will to your personal physician or primary care person. They, in turn, can deliver a copy of the document to a hospital if something happens and you wind up there. You don’t need to appoint anybody on a living will. You just have to make it readily available. Can your local hospitals keep it attached electronically to your file? Perhaps. What happens if you are traveling abroad and you need to go to that hospital? In that case, you might need to carry a copy in your wallet or with your passport.

If you become incapacitated for a longer period of time, you will need someone to step in and handle your financial affairs. While your attorneys can’t help you, they may be able to recommend a different attorney, accountant, financial planner or financial adviser who could assist you. Take care, because this individual (or firm) will control your money when you can’t, and you take a big risk if you don’t know who they are and haven’t thoroughly vetted them.

You should know, once you have passed away, there are companies that can help you with estate issues and assist your estate, such as estate settlement and wealth transfer advisers. For example, if you set up a trust, they can act as the successor trustee and proceed to follow your wishes relating to your estate plan after you die.

Trust companies are also set up to perform the services you’re asking for. These companies usually work with high or higher net worth people. If you fall into that category, you can call on them to help you out.

You won’t have to deal with a particular person, as the company will act as your trustee and whoever is assigned to your estate when you die would work to follow your estate plan. They can be expensive, but perhaps this sort of solution would work. We don’t make specific recommendations, but you can look for a bank or other financial institution in your area that has a trust and estate services department. You can talk to them and see if it’s right for you.

Having said that, if you don’t want to or can’t spend the kind of money that some of these companies charge, you may find an estate planning firm that can work with you in taking care of your estate and follow your wishes after you have passed.

Complete Article HERE!

The many functions of an estate plan

Estate planning to a large extent involves the optimal structuring and managing of your assets while you are still alive.

By Devon Card

A person’s estate is made up of all the assets and liabilities they’ve accumulated during their lifetime and, although estate planning is often perceived as something performed in preparation for death, the reality is estate planning to a large extent involves the optimal structuring and managing of your assets while you are still alive.

As a result, it is important not to perceive estate planning as final stage financial planning designed to secure a financial legacy for your loved ones, but rather as a continuous process of managing one’s assets and liabilities throughout your lifetime to ensure that your estate is optimally designed to achieve both your lifetime goals and your objectives following your death. Being multi-disciplinary by nature, your estate plan can be used to achieve many goals:

Determining estate liquidity

Liquidity in your estate is key to ensuring that your estate costs and liabilities can be provided for without compromising the financial inheritance intended for your loved ones. In preparing liquidity calculations, you will need to take into consideration the potential tax, capital gains and estate duty liabilities in your estate, as well as any debt owing – keeping in mind that when it comes to estate administration, Sars and your creditors will be paid first, following which the remaining balance in your estate, if any, will be distributed amongst your heirs. This means that, if there is not enough liquid cash available in your estate to settle with Sars and your creditors, your executor may need to realise assets – such as your primary residence, vehicles, holiday home, or other valuable assets – in order to pay off the estate’s debts. This, in turn, can severely compromise the financial security of your spouse and/or children, who may well be left destitute as a result of inadequate estate planning.

What to consider: Life cover is an excellent mechanism for creating liquidity in your estate and for avoiding the forced sale of assets intended for your loved ones. It is, however, important to ensure that your life cover is appropriately structured to achieve the goal of creating liquidity. Where you nominate your estate as a beneficiary to your life policy, the proceeds will be paid directly into your deceased estate in the event of death and, as such, can be used to settle debt. Remember, however, that the proceeds of domestic life policies are considered deemed property in your estate and will be taken into account for estate duty purposes, so this should be factored into the calculation.

Ensuring beneficiary nomination

Rather than being a once-off task, beneficiary nomination is something that should be reviewed and updated as your personal and financial circumstances change through your lifetime. Further, understanding how beneficiary nomination works in respect of each type of policy or investment is important to ensure that your objectives are met.

For instance, while your children are minors and legally not capable of inheriting, you may use a testamentary trust structure as the beneficiary for your life cover; whereas as your children reach the age of majority, you may want to name them personally as the beneficiaries to this cover to ensure that the proceeds are paid to them directly.

Further, if your intention is for the proceeds of your retirement funds is to provide for your loved one’s financial security, it is important to understand the limitations that Section 37C of the Pension Funds Act brings to the process. Unlike beneficiary nomination on life policies, the distribution of retirement funds benefits (being pension, provident, preservation, and retirement annuity funds) lies ultimately with the fund trustees whose job it is to identify all your financial dependants and to allocate the benefits accordingly – and their determination may not be in line with your wishes.

What to consider: Make a concerted effort to review the beneficiary nomination on your policies and investments on at least an annual basis, and upon any major life event such as the birth of a child, a death in the family, marriage, or divorce.

Drafting your legacy documents

Naturally, an important part of estate planning is to ensure that your legacy documents are appropriately drafted and valid and that they are fully aligned with how you wish your estate to be distributed in the event of death. Along with a well-drafted will, the collation of an estate planning file can be invaluable to your loved ones and to expedite the process of winding up your estate. Essential documents to include your estate planning file include obvious ones such as your birth certificate, marriage certificate, antenuptial contract, divorce certificate, maintenance orders, title deeds, trust deeds and share certificates. Other information that can be kept close at hand includes gun licences, codes for your safe, loan agreements, digital passwords and log on credentials, and alarm codes.

What to consider: A living will can be a valuable document for your loved ones should tragedy strike. In this document, you can provide much-needed guidance to your family and medical doctor regarding end-of-life medical care and treatment – something that can provide great comfort to your loved ones who may be faced with tough medical decisions. Through a living will, you can request that medical treatment that would prolong your life be withheld in circumstances where you are in a permanent, vegetative status, irreversibly unconscious, or where there is no hope of recovery.

Protecting the inheritance of minors

If you have minor children, structuring your estate to ensure that they are adequately provided for in the event of your passing will be imperative. Remember, children under the age of 18 may not inherit lump-sum payouts or other assets directly as they are deemed not to have the legal capacity to manage such assets. Thus, if you intend to nominate a minor child to a life insurance policy or bequeathing immovable property to them, it is important to understand the estate planning mechanisms available to ensure that your objectives are achieved. This could include the formation of a testamentary trust in terms of your will with your minor child as the named beneficiary to the trust. In the event of your death, any assets intended for your minor children can be left to the trust which, in turn, will manage the trust assets until your child reaches the age of majority.

What to consider: If you have a minor child, your will should also make provision for a legal guardian for your child in the event of your death. While your nominated guardian can also be a trustee of the testamentary trust, it is sometimes preferable to keep the roles separate for the sake of maintaining checks and balances.

Ensuring efficient estate administration

Effective estate planning allows one to put mechanisms in place in advance to ensure that in the event of your death the winding-up processes can be expedited and unnecessary delays can be avoided. Simple steps such as ensuring the validity of your will, communicating the location of your original will, appointing a professional executor, and keeping a file of all your estate planning documents, can be hugely beneficial when it comes to streamlining the estate administration process.

For instance, if you no longer have a copy of your marriage certificate, your executor will need to apply for a copy at the Department of Home Affairs which, in turn, will delay the administration process.

What to consider: Executorship is a highly specialised function that requires expertise in finance, deceased estates, trusts and accounting. As a result, think carefully before appointing a family member or close friend as executor. Inexperience and/or lack of understanding with regard to the estate administration process can cause unnecessary delays. Also, remember that family relationships and dynamics change over time, and it may be preferable to appoint a fiduciary expert to this role.

Reducing tax liabilities

While it is not possible to avoid paying tax, proactive estate planning gives you the opportunity to structure your estate so as to reduce the tax obligations of your estate in the event of death. Estate duty, which is essentially tax paid on the transference of wealth from your deceased estate to your beneficiaries is levied at 20% of the dutiable amount of an estate up to R30 million, and at 25% on the dutiable amount exceeding R30 million. Very simplistically, the dutiable value of your deceased estate will be calculated by adding the value of your property, deducting any allowable expenses, and then deducting the Section 4A rebate, keeping in mind that as a South African resident you will be taxed on your worldwide assets.

There are, however, a number of mechanisms that you can use to reduce the estate duty liability in your estate so as to maximise the inheritance of your loved ones. Compulsory retirement funds, including pension, provident, preservation and retirement annuity funds, are not considered property in your deceased estate and these benefits will not be subject to estate duty.

Living annuities are very useful estate planning tools because they also fall outside your estate and are not estate dutiable, while domestic life policies can also be used effectively to provide financially for your loved ones while ensuring that no estate duty is payable on the proceeds. Trusts, which are dealt with in the paragraph below, are also effective in housing growth assets and reducing estate duty liabilities in one’s deceased estate.

What to consider: When using living annuities and domestic life policies to reduce your estate duty liability, it is important to correctly nominate your beneficiaries.

Structuring growth assets appropriately

In terms of the Income Tax Act, death is considered a capital gains event and the deceased person is deemed to have disposed of their assets for an amount equal to the market value of the assets at the date of death. While the Act provides for a once-off exclusion of R300 000 in the year of death, any amount thereafter will have an inclusion rate of 40% subject to tax as per the deceased’s marginal tax rate. To avoid unnecessary CGT being charged in the event of death, an estate plan can help structure growth assets, such as property or shares, to reduce the tax liabilities in your deceased estate.

An effective mechanism for housing growth assets, particularly those intended for future generations, is an inter vivos trust during one’s lifetime. As the trust founder, you would need to either donate or sell the asset to the trust in the form of a loan account following which you would relinquish control of the asset which, going forward, would be managed by the trustees on behalf of the nominated beneficiaries. By transferring a growth asset – such as a holiday home – to a living trust, all growth on the property will remain in the trust and only the loan account to the seller will be repayable on death thereby reducing estate duty.

What to consider: As a trust founder, it is important to fully understand the implications of transferring an asset into a trust structure. Once the asset is transferred, you are no longer the owner of that asset, and your trustees are responsible for taking full control of the asset and administering it in accordance with the trust deed.

Complete Article HERE!

Surviving Spouse Financial Checklist

— Preparing For The Road Ahead

By Jonathan I. Shenkman

The death of a spouse is devastating. There is the obvious sadness experienced due to the loss of a loved one. However, there is also the challenge of losing a life partner who helped you make various important decisions. For years, or perhaps decades, a couple likely worked together to tackle important decisions about their kids, home, health, vacations, and of course finances. After a spouse’s death there are still many important money choices that need to be made to prepare the surviving spouse for their future. Navigating through those responsibilities may seem overwhelming. Working through a financial checklist may make the process a bit more manageable. Below are ten steps to consider.

1) Obtain copies of the death certificate: Having a death certificate is essential to winding down the affairs of a deceased person. You will need to submit it under many situations, including each time you claim benefits like Social Security, life insurance proceeds, payable on death accounts, or veterans’ benefits.

The easiest way to obtain a death certificate is through the funeral home or mortuary at the time of the death. It’s advisable to ask for multiple official copies, usually at least 10, since many requests will require an original. For deaths that occurred within the past few months, you can also get a death certificate from your state’s Department of Health or Office of Vital Statistics.

2) Contact Your Advisors: If you work with a team of trusted advisors, such as an attorney, accountant, and financial advisor, you should reach out to them relatively early in the process. These professionals may have all the pertinent files regarding your family’s finances, so you don’t have to go searching for them.

Your attorney should have a copy of the original will in their office and can review it with you and discuss next steps. If probate is necessary, an attorney can guide you through the process and any necessary court filings. Finally, they can also help with determining if the deceased’s estate will cover existing debts in their name or what your liability may be.

Your accountant can address the various tax implications. Taxes for a deceased spouse should be filed and paid in the year of death. This includes filing Estate Tax Form 706 and any other forms that may need to be filed with federal, state, and local tax authorities.

Immediately following a spouse’s death, your financial advisor can help process the transfer and consolidation of certain accounts. For example, the funds from a deceased spouse’s IRA can rollover to the IRA of the surviving spouse. Additionally, accounts that were titled Transferred on Death or Joint Tenant With the Right of Survivorship will be transferred into the surviving spouse’s name. If the financial advisor also handled your insurance, they could work with you to get the death benefit from a life insurance policy in a timely manner.

The financial advisor can also coordinate with the attorney and CPA on various estate and planning matters. They may set up a designated estate account with funds for the executor of the estate to settle the deceased person’s unfinished affairs. If any trusts were established for estate planning purposes, the advisor can address how these fit into the broader estate plan and ensure they are funded and implemented correctly.

Looking forward, you should set up a planning meeting with your team of advisors to assess your new financial reality and share your goals for the future. Together, they will be able to put together a customized plan to reach those objectives. They may also be able to serve as a sounding board, helping to facilitate prudent decisions, and shouldering some of the responsibility your spouse shared while they were alive.

3) Contact The Social Security Administration: Be sure to reach out to the Social Security Administration (800-772-1213). You may be entitled to Social Security survivor benefits and you should also put the deceased person on the Social Security Master Death Index to prevent potential fraud. Additionally, you may want to speak to your financial advisor about coordinating social security benefits with your other financial and income goals.

4) Reach Out To Your Spouse’s Employer: In addition to informing the employer of your spouse’s death, it’s worth speaking with their human resources department about any potential benefits such as life and medical coverage and retirement or pension plans. There may also be compensation due, such as stock options or bonuses that were already earned. If your family was covered through your spouse’s medical insurance, you will need to ask how long you can continue that coverage. There is typically extended healthcare coverage through COBRA for 18 months. If your spouse belonged to a labor union, you should also contact the union to see if they offer any assistance.

If your spouse worked at several companies over their career, it may make sense to reach out to each to see if there are old retirement accounts or pensions that were never rolled over to an IRA. These funds may add up and should not be overlooked.

5) Update All Property Titles: It’s important to update all ownership documents to remove your spouse’s name, including your auto and homeowner’s insurance policies. When retitling your home, determine if the mortgage has insurance that would pay it off in the event of a death. To update the title of a property that is held jointly you must inform the Land Registry of the death and send them a completed “deceased joint proprietor” form (available on the government’s website) with an official copy of the death certificate.

6) Identify Your Spouse’s Debts:  Make time to call each of your spouse’s creditors to determine its policies. Common debts may include a mortgage, credit cards, business loans, and student loans. You should cancel all credit cards in your spouse’s name and update any cards you held jointly.

7) Child Support or Alimony: If your spouse was previously married, their death likely terminates any existing spousal support order unless the parties had otherwise agreed in writing. Discussing the matter with your attorney is advisable to ensure it is handled correctly and all loose ends are tied.

8) Update Your Own Documents: After the death of your spouse, much of your previous financial planning will need to be updated or revised. This includes updating your beneficiaries across retirement accounts, insurance policies and revisiting your power of attorney and healthcare proxy to ensure the correct people are listed in case a need arises. You should also update your tax withholding status and medical coverage through your employer.

9) Keep An Eye On Your Mail: After such a traumatic experience, there will likely be some items that fell through the cracks. A good way to stay on top of closing out your spouse’s affairs is to pay close attention to the stream of letters you receive. Over time you will receive utility bills, charitable solicitations, account statements, subscriptions, and other pertinent items. You can deal with each item as it comes in. This will help alleviate the stress of trying to update everything all at once and will hopefully result in having everything updated within a few months’ time.

10) Consider Postponing Major Financial Decisions: On occasion, drastic changes need to take place immediately after the death of a spouse. For example, if the living arrangement of the surviving spouse is no longer sustainable then selling the family home may be required. However, if a matter is not pressing, then you should wait to act. Unfortunately, widows are preyed upon by unscrupulous salespeople in all lines of work. It’s important to get comfortable telling people that you are putting all major decisions on hold for a year while you get your bearings and heal emotionally. It may also be wise to enlist the help of a trusted family member or friend to serve as a sounding board when making choices about your financial future.

During the initial stages of the grieving process, you may feel like your life has been turned upside down. Your emotional, mental and physical condition has undoubtedly changed. However, over time, with the support of friends and family and the guidance of trusted advisors, you will be able to move forward from this difficult period in your life and prepare for what lies ahead.

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My Dad Is Dead. His Landlord Just Evicted Him.

A jumble of complicated and unexpected logistical tasks can fall into your lap after a loved one dies.

By Stephanie H. Murray

When my father’s heart stopped, I had no choice but to keep moving. He had lived alone, and I understood that managing the logistics of his death—planning his funeral, settling his debts, divvying up his belongings—would be an enormous task. Those looming practical matters infuriated me; I hated that my world-shattering news had not, in fact, shattered the world. It kept spinning along, so I did too. I got the news on a Thursday; flew from my home in the United Kingdom to his home in Savannah, Georgia, on Saturday; and headed to his apartment with my sister on Monday to begin tying up the loose ends of his life. We didn’t have a key to his apartment, but my sister knew the building receptionist and was sure she’d let us in under the circumstances.

Instead, she turned us away. I began to panic: How would we get his suit for the funeral? How would we figure out if he had
life insurance that we could use to pay for the funeral? When would we be allowed to empty his apartment, and would I still be in the country by then?

I had never been to my father’s apartment before—I moved overseas in the fall of 2019, two months before my dad moved to Savannah and six months before the coronavirus pandemic thwarted my plans to visit family—but it hurt to be treated like a stranger there. I wanted to rifle through the artifacts of his life and sink into the happier memories their presence conjured. To sit with whatever remnants of my dad lingered among his belongings. To reclaim what little I could of the visit that COVID had denied me. And I resented the receptionist standing guard at the door to ensure that I didn’t.

I felt certain that there was some misunderstanding, but the only error was mine. Any permission I’d had to rummage through my father’s things had died with him. Successfully navigating the process, referred to as probate, for getting that permission back can be tricky and usually requires the help of a lawyer. Even then, things don’t always go as expected—which is how I ended up collecting my father’s belongings from the sidewalk when he was evicted almost three months after he died.

My circumstances felt bizarre, but it’s not unusual for a jumble of complicated and unexpected logistical tasks to fall into a person’s lap after a loved one dies. Stephanie Handel, a grief and trauma psychotherapist at the Wendt Center for Loss and Healing, in Washington, D.C., told me about pamphlets that the center used to provide recently bereaved people, detailing the enormous list of things they’d need to do in the following weeks and months: contact Social Security, find burial assistance (if they were eligible for it), publish an obituary, order death certificates, contact employers and banks, shut down social-media accounts, cancel subscriptions, handle medical paperwork, hire an attorney, pay taxes. “It’s an intellectually and psychologically challenging task. And it’s a task that you have to undertake when you’re not at your best,” R. Benyamin Cirlin, the executive director of the Center for Loss and Renewal, in New York City, told me.

What I learned after losing my father was that the laws protecting a dead person’s property are surprisingly robust. If he’s made prior arrangements, the ownership of some of his things will transfer automatically. Banks, for example, allow clients to name a “payable on death” beneficiary on some accounts. In almost all cases, practically everything else—even clothing and silverware—must go through probate before anyone can legally claim it. The fact that my father had a will that named me as his executor did not allow my sister and me to sidestep this process. “The will is just a piece of paper until the probate court has verified it,” Gerry W. Beyer, an estate attorney and a professor at Texas Tech University’s School of Law, told me.

The probate process varies by state and even by county, but it generally involves tracking down an original will and getting any “heirs-at-law”—usually the spouse and children—to acknowledge it. If all goes smoothly, probating a will might take a couple of weeks. But any hiccups—say the original will can’t be found, or a pandemic overwhelms the probate-court system—can slow the process down. And if an eligible heir contests the will, probate can take years, Gregory Matalon, an estate attorney based in New York, told me. In the meantime, the deceased person’s things are in a kind of legal limbo and, except in rare circumstances, no one’s supposed to touch them.

Of course, in many cases, people touch them anyway. Family members take what they want of their relative’s heirlooms and donate the rest. Landlords may pressure a deceased tenant’s family to clear out his apartment. When it comes to items of little personal or monetary value, jumping the gun on probate is rarely a problem, the Ohio-based attorney Joan Burda told me, but prematurely making off with cherished or expensive items can lead to legal trouble down the road. For that reason, some landlords won’t allow anyone into a deceased tenant’s apartment without court approval. Our lawyer advised us to halt my father’s rent payments in the hopes that his building would relax this requirement. If my father was evicted, our lawyer reasoned, we could take his things when his apartment was being emptied.

There are some good reasons to protect a dead person’s belongings—you wouldn’t want the wrong person walking away with their prized possessions—but the rigidity of the process can create nightmares for loved ones with good intentions. One woman I spoke with had to take nine months off work to help her elderly father manage his late wife’s estate—he was the official executor but was unable to manage the task on his own.

These logistical headaches can shape the experience of grief in a variety of ways, Cirlin told me. Sometimes, the people saddled with the practical matters sideline their emotions for a while, which can seem strange to outside observers and can be unsettling for the bereaved themselves. People can feel like “Why am I not crying right now?” Handel explained. “But there are things that need to be done, which means that your ability to be present for your own feelings in some ways needs to be halted.” For others, these responsibilities can heighten grief. Filling out paperwork or donating clothing can serve as “another window into the fact that your whole reality has changed,” as Cirlin put it. Someone may feel they’ve found their footing in the aftermath of loss only for one of these innocuous tasks to pull them back into grief. Especially when the process doesn’t go smoothly—if a loved one’s paperwork is poorly organized, for example, or probate unveils unpleasant information about them—the ugliness of these chores can complicate the fond memories and rosy narratives we want to walk away with. “It’s hard to sit with resentment when you’re missing someone,” Cirlin said.

My father’s apartment building never relented, but with the help of our attorney, we did arrange a supervised visit to search for the will and pick up my dad’s suit. (An assistant property manager for the building declined to comment on specifics of the case, but noted, “Generally we are not allowed to provide individuals who are not on the lease with access to an apartment even if they are related to the resident. We try to work with family members of a deceased resident to allow them to obtain their loved one’s belongings. Our actions were taken with direction from, and in coordination with, the family’s attorney.”)

We couldn’t find his original will, but we printed a copy from his computer and then folded the lone suit hanging in his closet into a grocery bag, along with a pair of black sneakers. My sister slipped a plastic rosary from his bedside into the pocket of his jacket, and as she glanced over her shoulder to make sure the receptionist wasn’t watching, we both began to laugh, quietly and tearfully, at the absurdity of the circumstances. If his estate had anything of value, it wasn’t in that apartment. American property law stood between us and a crusty baseball cap sitting crumpled on the counter, a poem I’d written for him on his birthday that he’d printed and tacked to the wall in his office, a hundred worn books that his excessive underlining had rendered worthless to anyone but us.

On our way out, the receptionist gingerly peeked into our bag to ensure that we hadn’t taken anything we shouldn’t have and then escorted us to our car, where she reminded us that we’d be welcome back once we had the proper documentation.

He was evicted before we got it. Mercifully, the assistant property manager let us know the date and time in advance, so we hired movers to collect my father’s things and put them in storage. But when we arrived to get his belongings off the sidewalk, some of them had been damaged. An open bottle of Drano had soaked the contents of one bag. The praying hands of a statue of Our Lady of Fátima that my parents had gotten on their honeymoon had cracked off her arms. And there was nothing I could do about it, because the laws designed to ensure that my father’s things ended up safely in my possession had exhausted their reach.

“I think, very sadly, what you’re learning is that grief is very messy,” Handel said. It’s inextricably bound up with the tedium and absurdity of human existence. It may be triggered by death, but grief is a province of the living. And life goes on.

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