It’s not unusual for a person to pass away and leave behind some unpaid debt.
For the heirs — typically the surviving spouse or children — the question often is what, exactly, happens to those obligations. The answer: It depends on both the type of debt and the laws of the state.
A person’s assets — no matter how meager or massive — become their “estate” at death. That includes their financial accounts, possessions and real estate. And, generally speaking, it’s the estate that creditors go after when they try to collect money that they’re owed.
“Fortunately for surviving spouses or other beneficiaries, in most cases that debt isn’t something they’d be responsible for,” said certified financial planner Shon Anderson, president of Anderson Financial Strategies in Dayton, Ohio.
However, there are some exceptions.
First, though, some basics.
The process of paying off all your debt after your death and then distributing any remaining assets from your estate to heirs is called probate. Each state has its own laws governing how long creditors have to make a claim against the estate during that time. In some places it’s a few months. In other states, the process can last a couple of years.
Each state also has its own set of rules for prioritizing debt that should be paid from the estate, said Steven Mignogna, a fellow with the American College of Trust and Estate Counsel.
“In most states, funeral expenses take priority, then the cost of administering the estate, then taxes and then most states include hospital and medical bills,” Mignogna said.
However, he added, not all of a person’s assets necessarily are counted as part of an estate for probate purposes.
For instance, with life insurance policies and qualified retirement accounts (e.g., a 401(k) or individual retirement account), those assets go directly to the person named as the beneficiary and are not subject to probate. Additionally, assets placed in certain types of trusts also pass on outside of probate, as does jointly owned property (e.g., a house) as long as it is titled properly.
In fact, a person could pass away with an insolvent estate — that is, one lacking the means to pay off its liabilities — and yet have passed on assets that didn’t go through probate and generally can’t be touched by creditors.
However, a handful of states have “community property” laws, which make debt at death a bit more complex.
Generally, those states view both assets and certain debt that accumulated during the marriage as equally owned by each spouse — meaning a surviving spouse could be responsible for paying back the debt, even if it was only in the decedent’s name.
“Debt that couldn’t have been avoided during the marriage — like medical expenses or a mortgage — generally becomes the responsibility of the surviving spouse in community property states,” said CFP Bill Simonet, principal advisor at Simonet Financial Group in Kyle, Texas.
Yet that doesn’t mean you’d have to pay all of it, he said.
“A well-structured letter with a copy of the death certificate can lead to debt being discharged,” Simonet said. “In the probate process, you let the company know the estate has little to no assets to cover the debt and you ask that it be forgiven.”
Also, any time you jointly own debt — i.e., you cosigned a loan — you’re expected to continue paying if the other person passes away.
“You can ask for debt you cosigned to be forgiven, but don’t expect the request to work,” Simonet said.
It’s worth noting that federal student loans, unlike most forms of debt, are forgiven if the student dies. Parent PLUS loans — often held by parents to help pay for education expenses not covered by other forms of financial aid — are discharged if either the student or the parent who took out the loan passes away.
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There are a number of documents that unwed partners can put in place if they want to make sure each is protected if the other person dies.
Maggie Kirchhoff and her partner of 13 years, Matt, have no intention of ever getting married.
They also know it means they won’t get the automatic rights and protections that legally wed spouses get — particularly when it comes to death.
“A lot of spousal rights are inherent with a marriage certificate,” said Kirchhoff, a certified financial planner with Business & Personal Finance in Denver. “For unmarried couples, though, you have to make a concerted effort to cover all your bases.”
The number of unmarried couples who live together reached 18 million in 2016, a 29% jump from 14 million in 2007, according to the Pew Research Center. Among adults age 50 and older, however, the increase was 75%: About 4 million were cohabiting in 2016, up from 2.3 million in 2007.
Although the arrangement has gained broad societal acceptance, according to a separate Pew Research report, such couples still face some key differences from their married counterparts.
For example, filing a federal tax return as a couple is off the table. If your employer happens to extend health insurance to your partner, the amount your company contributes is taxable to you (vs. being tax-free for a spouse).
And, as mentioned, end-of-life considerations need some attention.
About five years into their relationship, Kirchhoff and her partner — who also is a CFP — signed a variety of documents that will dictate what happens if one of them either becomes incapacitated or dies.
In other words, they created an estate plan.
Remember, “estate” simply refers to everything you own — i.e., financial accounts, real estate and your belongings.
Experts say that creating a plan for what happens to your estate — regardless of how meager or massive your assets — is key for unmarried couples who want their commitment to each other protected in the event of death.
“If I’m married and die without an estate plan, it would be a mess, but the general default would be that everything ends up with my spouse,” said Nick Rosenbauer, an estate planning attorney and founder of the Rosenbauer Law Office in West Chester, Ohio.
“But if I’m not married, the default wouldn’t be my partner,” Rosenbauer said. “It might be my kids or my parents or siblings, but my partner who isn’t legally my spouse would be out of the picture.”
If you die without a will — called dying intestate — the courts in your state will decide who gets what. That process is public and often messy if would-be heirs have competing priorities and conflicting notions of what is rightfully theirs.
That said, a will alone won’t necessarily cover all your bases.
If you want to make sure your tax-advantaged retirement accounts — i.e., Roth and traditional individual retirement accounts, 401(k) plans and the like — end up with your partner, make sure that person is the named beneficiary on those accounts.
Even if you have a will that states otherwise, whoever is listed as the beneficiaries on those accounts will get the money. Same goes for insurance policies and annuities.
If no beneficiary is listed, where the money goes depends partly on the retirement plan agreement and on state law. Typically, though, those retirement assets would end up being included in your assets that are subject to probate.
That’s the process of the court validating your will (if there is one) after your death. If there is no will, the court will pass everything on according to state law — which typically means assets will go to the closest living family member who, again, is not going to be your unmarried partner.
Probate is also when creditors can come after your estate for amounts owed and other would-be heirs can contest your will.
Bank and brokerage accounts
If both of your names are on checking, savings or investment accounts, there’s no worry about either of you being able to access them if one of you were to die. The same can’t be said for those with only one person’s name on it.
For any account with only your name on it, contact your bank to find out what form needs to be filled out so the money is left directly to your partner.
“You’d either want to add what’s called a transfer-on-death or payable-on-death designation,” Kirchhoff said.
Again, without those designations, the assets would end up in probate and distributed either in accordance with the will or state laws.
The family house
Regardless of whether you split the mortgage — or whose name is on that loan — the person named on the deed is the owner.
“If the house in one person’s name, it won’t automatically pass to the partner,” Kirchhoff said. “It would become part of the probate estate.”
One option is to make sure both of you are named as joint owners on the deed, “with rights of survivorship.” In that case, generally speaking, you each equally own the house and are entitled to assume full ownership upon the death of the other.
However, there could be other factors to consider before adding a partner’s name to an existing deed, including the cost, tax implications or protection from potential creditors. In other words, you might want to consult with a professional before making the move.
Another option is to leave the house to your partner in your will. Remember, though, any asset passing through the bounds of your will is subject to probate and the potential snags that can come with that.
Consider a trust
Depending on the complexity of your financial situation and the type of assets you own, a trust could be one way to ensure that your partner ends up with what you want them to without any of it being subject to probate.
However, there are other considerations that should factor into whether you create one or not, including whether it would make sense tax-wise, and if the cost (which can be several thousand dollars) is worth it.
It also is probably worth letting any pertinent family members — i.e., adult children, parents or siblings — know the general intentions included in your estate plan.
While you don’t necessarily need to go into dollar amounts, managing expectations can help avoid discord between your partner and any other family members.
“I always recommend that clients discuss these plans with family to avoid hurt feelings or missed expectations,” said Eric Walters, a CFP and managing partner and founder of SilverCrest Wealth Planning in Greenwood Village, Colorado.
Generally speaking, your partner has no legal say in your medical treatment if you end up in a situation when you cannot make decisions yourself.
If you want to give the person that right, you can give them a durable power of attorney over health care. That will let your partner — or whomever you name — make important health-care decisions if you’re unable to.
This is separate from a living will, which states your wishes if you are on life support or suffer from a terminal condition. This helps guide your proxy’s decision-making. And if you have no one named, medical personnel must follow your wishes in that document.
Additionally, you might want to give your partner durable power of attorney for your finances. This would allow them to handle your money, including accessing your accounts as necessary, if you cannot.
And, Kirchhoff said, don’t forget to put contingent decision-makers on those documents.
“If there’s a likelihood that you and your partner are going to be traveling together, and something were to happen to both of you, then who’s in charge?” she said.
Similarly, if you and your partner have dependents, make sure you designate a guardian for them in your will. Otherwise, that decision will be left to the courts.
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Life Is About More Than Your Possessions
Have you considered how to pass on your non-material assets?
When people find out Debby Mycroft helps people write ethical wills, she always gets a predictable response: The Lament.
“They say, ‘Oh, I wish I had a letter from my dad or grandmother or great aunt,’ whoever that person was. I have not come across a single person who has not wanted a letter from that special person,” says Mycroft, founder of Memories Worth Telling.
Unlike legal wills, ethical wills — also known as legacy letters — are not written by lawyers, but by you. They can include life lessons, values, blessings and hopes for the future, apologies to those you fear you may have hurt or gratitude to those you think you have not thanked enough. Traditionally, they were letters written by parents to children, to be read after death.
People who do not have children address them to friends or groups. One of Mycroft’s clients was placed in child protective services when she was quite young because her parents were addicts. “She had a rough upbringing. She intentionally decided not to have children herself. But she wanted to write an ethical will to other foster kids to let them know [they] can survive this,” Mycroft explains.
Why Write an Ethical Will?
Think that your life isn’t important enough to warrant an ethical will? Mycroft disagrees, saying, “You don’t have to be a war hero or a Nobel Peace Prize winner for your story to have value. When people accept awards at the Olympics, they thank the people who had an impact on their life, like Mom or Dad, who was always there to take them to training.”
But there’s an even more important reason you might want to consider a legacy letter. According to Barry K. Baines, author of Ethical Wills: Putting Your Values on Paper, such documents can bring enormous peace of mind.
Baines recalls one dying patient who was bereft because he felt there would be no trace of him when he left. “The first wave would wash away his footprints. That sense of hopelessness and loss was overwhelming,” says Baines. The man rated his suffering at 10 out of 10; after he wrote his ethical will, his suffering reduced to zero.
Don’t wait until you are on your deathbed to do this, Baines warns. As soon as you articulate your values, suddenly you start to live your life more intentionally. Especially if you share it.
“Live your life as you wish to be remembered,” Baines advises. Plus, he adds, legacy letters can help with making amends, addressing regrets and healing relationships.
Ethical Will: Telling Your Own Story
If you don’t feel capable of writing your legacy letter yourself, you can use an online template, take a workshop, read a book about it or work with a professional writer.
But don’t judge your skills harshly. Baines finds that whether people are educated or not or if their letters are simple or complex, they always have a certain elegance because of the truth they contain. “When the families get one, they just glow,” Baines says, adding, “This is a unique gift that only you can give.”
When you write your letter, don’t just say, “My core values are consideration, gratitude, kindness, simplicity,” advises Mycroft. Tell a story about how you’ve lived these values.
In her own legacy letter, Mycroft told her kids about a temp job she had as a teen. She appeared nicely dressed in a skirt, blouse and heels. When she walked in, the employers gave her a funny look and asked, “Why do you think you are here?”
She explained the agency had sent her out for secretarial work. Then her employers handed her a hard hat and steel-toed shoes. “That’s when I look at them quizzically.”
Turns out they were a plastic-bag manufacturer and she was supposed to sort through damaged goods to salvage the ones that could be sold.
“I was so angry that that agency had sent me out on that job. It was hot and humid in Virginia. I was fuming,” Mycroft says. “When I got home, my parents started grilling me. They said, ‘Did you agree on this job?’” And Mycroft confirmed that she did.
They asked what the contract said. Mycroft replied that the contract was pretty clear. Did she sign the contract, her parents wanted to know?
“Yes, but,” she says she told them. “And my parents said, ‘You signed it; you’re committed to it.’”
Mycroft stuck with the job as promised. “That was my first lesson in integrity, perseverance and diligence,” she recalls. She did what she said she would do. As a postscript, she got fantastic jobs from the agency over the rest of the summer. They knew they could count on her.
What Goes Into the Legacy Letter and What Stays Out
Ethical wills are often likened to letters from the heart, so perhaps the best advice is to literally write a love letter.
Love letters don’t recriminate. They don’t judge. They don’t scold. A love letter is there to show how much someone matters to you.
Criticisms and judgments should be left out, advises Mycroft. It’s okay to include regrets and family secrets, even if they hurt. If worded properly, these could bring the family to a place of acceptance and understanding.
She notes, “Sometimes when those things are hidden for so long it causes a lot of resentment — as in] why didn’t they tell me I was adopted? I wish I had known.”
“Definitely avoid manipulation,” Mycroft advises. “Legacy letters are beautiful expressions of love and encouragement, telling other people what is so fantastic about them. I do not think they should be hands reaching up from the grave slapping you or saying, ‘I told you so.’”
Think about how your letter might be received. Baines worked with a woman who had a very hard life. “Every part of her ethical will was blame and guilt-tripping,” he recalls. While some people can turn around a bad experience and use it is an example of what not to do, this woman could not.
“It almost seemed like she was purposely trying to hurt people,” Baines says. But eventually she realized that and gave up, sparing her family the hurt she would cause them.
Get a Second Opinion
Baines believes writers should show their legacy letter to a trusted friend before passing it on, to avoid inadvertent errors. Your reader might say, “You mentioned your two children, but you only write about one and not the other.” That could be extremely hurtful.
Baines also urges people to share the letters while they’re living. It might be painful, but there’s still potentially an opportunity to mend wounds. After you die, there’s no recourse at all.
What About Videos or Selfie Videos?
Some people make videos or selfies of their ethical wills, but keep in mind that technologies can become outmoded.
Mycroft gave both her children the letter and a video of her reading the letter so they not only have her words, but can also hear her voice.
“I’ve heard of people saving voicemails of people who have passed on,” she says. “Can you imagine saving a voicemail and all it says is ‘Susie, are you there? Can you pick up? Hello?’ If you’re willing to save that message just to hear their voice, how much more powerful would it be to hear your voice reading that letter?”
The Time Is Now
The time to write your spiritual legacy is now. Mycroft provides a case in point about her mother, who knew the family lore and lineage.
“I gave her one of these fill-in-the-blank family history books because I wanted to make sure it was preserved,” says Mycroft. “Five years later, when she had passed away and I went to clean out her office, I found the book. It was completely empty.”
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It’s not easy nearing the end of your life, but that doesn’t mean you need to be stressed.
Death may be the ultimate stressful moment in our lives. Just thinking about the end is enough to cause your heart to beat faster. And while some levels of depression and anxiety are inevitable, those feelings need not overwhelm the death experience for you or your family. In fact, it’s possible to die well — to experience a sense of wellbeing as you approach the end. You can leave this life with a feeling of closure and a sense of contentment. That’s the difference between completing your life and merely ending it.
But stress disrupts well-being. It distracts you from prioritizing love, family, and dignity. Worry and fear interrupt precious time with family and friends. That’s no one’s idea of a good death. And while it’s easy to think you’ll skip this stressful step and go suddenly from a heart attack or stroke, the reality is the majority of us will need end-of-life care. So, put some thought and preparation into your passing now. Reducing stress will make it easier for you to say goodbye, and for your loved ones to let go. Here are six ways you can make dying the experience you want, rather than the experience you get.
Finalize Your Burial Arrangements
Preparing your burial arrangements lowers stress in several ways. For one, it puts you in control. Eliminate worry by outlining the type of service you want, the manner of internment, and the organ donation process. Burial arrangements also relieve financial stress from your family and friends. Carrying out your last wishes doesn’t have to be a financial burden for your family. So, find the best final expense insurance policy to cover costs. Or get a pre-paid funeral plan that kicks in after you’re gone. You’ll feel less stress knowing everything is taken care of.
Finally, by tending to your funeral arrangements yourself, your loved ones can focus more on spending time with you in your last day. And their grieving will be easier when they’re not weighed down with administrative tasks. Mourners often feel guilty devoting time to such business matters after a loved one dies.
Create a Living Will
If you become incapacitated before death, someone will have to make decisions for you. That’s a heavy responsibility to place on a family member or friend who may only have a rough idea of your wishes. But without a health care power of attorney (or proxy) to speak for you, you may end up being kept on life support longer than you’d prefer, or the opposite. An advanced directive or “living will” is a legal document that lists specific medical treatments you wish to receive and those you don’t. The directive takes the decision-making burden off your family’s shoulder.
To get started, have the end-of-life conversation with one or two people you would want to serve as your proxies. And also talk with your doctor so that everyone is on the same page. Living will forms vary by state. So, download your state’s advanced directive form to get started. If you don’t have the resources to create a living will, other forms of non-legal directives can work as some form of “proof” for your wishes. For example, write a letter to a family member expressing your wishes. Or record audio/video explaining what you want. While these aren’t formally recognized legal documents, they work better than nothing at all.
One thing that makes dying harder is knowing you’re leaving behind unsettled issues, old hurts, and past grudges. When possible, make amends with those you’ve hurt or who’ve hurt you. Now is the time for unburdening yourself and being honest with those you love. While you can leave those hurt feelings behind, your loved ones will carry them after you’re gone. And many will regret they didn’t say something when they had the chance. Knowing this will make leaving this life more stressful for you.
So, don’t put off making amends. Request a private audience with a loved one or wait for the right moment to broach the subject. Be honest and take responsibility for your part in the situation. Refer to the past event/issues that caused the rift, but don’t relive it all over again. And don’t bring up their responsibility; just explain your regrets and apologize. They will reciprocate. Think of this less as a discussion and more as a confession. So, listen more than you talk. The goal of making amends is to replace hurt and anger with forgiveness and love.
Revisit the Past
For those facing imminent death, the bulk of the conversation often focuses on medical needs, medications, or staff visits. While these are immediate needs are necessary, don’t forget the past. Revisiting old memories help us replace the current situation with one of our choosing — at least for a moment. Rather than a form of denial of death, recalling memories is an affirmation of our lives and our effect on others. For friends and family, recounting a past event is a handy way to show how a dying loved one impacted their lives. It’s often difficult for the dying person or loved one to find the right words in these moments. Words of condolence or regret can seem empty. But a pleasant or meaningful story can be a beautiful expression of our gratitude.
Recalling old memories is also a stimulating activity for Alzheimer’s patients. It fosters emotional connections and reduces anxiety. Use family albums, music, videos, or heirlooms to help prompt memories. Encourage family and friends who can’t travel or live too far away to send a short letter or audio recording. And don’t avoid humor. Include funny moments, old jokes, or humorous anecdotes. It may feel awkward at first, but laughter is nature’s way of helping us relieve stress and anxiety while connecting us.
Use Music Therapy
Studies suggest that music therapy has emotional and physical benefits for hospice and palliative care patients. Researchers found that patients who listened to music reported “less pain, anxiety … as well as an increase in feelings of well-being afterward.” Music therapy has a profound effect on people with cognitive and mental decline. The rhythmic nature of music requires little mental processing and helps stimulate memories. Choose music that your loved one enjoys, tunes from their childhood era, or a neutral New Age track. But don’t overstimulate; that can create stress. Take note of the other noises in the room. When mixed with many different sounds, even soothing music at a low volume to create a cacophony of stress.
Ask for Pain Medication When You Need It
Palliative care is about making patients feel as comfortable as possible until the end. And pain management and medication are part of this process. Unlike other vital signs, hospitals and staff can’t measure your pain. You have to help them know when you’re feeling discomfort. Still, some patients forego their pain meds because they want to stay awake to see their friends and family. Others see pain medication as “bad” substances or only for the weak or needy. But these are myths. Pain meds are integral to the palliative care process. And there’s no reason to forego pain medications that’s more important their your comfort. You may think you’re being strong for your family, but having to watch you fight intense discomfort will only increase their stress levels. Ask for pain medication when you need it.
These six tips will increase well-being and reduce stress when you’re nearing the end of your life. But once you’re faced with death, it’s important to know when it’s time to let go. Too often, we hold on too long out of a primal urge to keep going or fear of leaving our loved ones. Death is a natural process we all share. Take comfort in that immutable fact. Let your loved ones know you’re ready to go. They, too, will hold on to you, fearing that letting you go is “giving up.” This creates enormous amounts of stress. When it’s time, reassure them that — while you’re not ready to die — you have accepted it.
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Whether or not we want to plan for it, we all inevitably die. A hard subject for some to grasp, death can bring forth a variety of emotions, conflict, or even chaos, depending on whether or not the deceased had a pre-established estate plan.
To some extent, everyone has assets, but what happens when music is one of those assets—specifically song lyrics and the recording of those songs? We often think about the physical attributes of an estate plan after someone dies—like jewelry, amplifiers, and guitars—but how does a musician plan their legacy that will proceed their death?
Some Minnesota musicians and artists have developed assets over time and have developed their own plans for their music as part of their estate planning process.
Musician Chris Osgood, one-third of the punk-rock trio The Suicide Commandos, has spent time organizing his own musical assets with his fellow bandmates, and for himself, as he continues his own estate-planning process.
“People like myself have a tendency to forget non-physical property is still an asset,” Osgood says over the phone. “When you are doing your death planning, the first thing you think about is, who gets which guitar and objects? The last thing you think about is intellectual property, like your songs, that hopefully will continue.”
Working with musicians, artists, and other talent, attorney Ken Abdo has helped create estate plans that include music assets and legacy planning.
“An artist’s music assets, in the context of estate planning, are really just one of many assets that an artist has,” Abdo says. “The estate planning does not limit itself just to the music aspect. They may have a house, debts, other property, other children. It is part of the whole estate of an individual.”
When you are a musician, prominently known or not, you may have the additional, non-physical assets of copyright, trademark, and even name and likeness potentially included in estate planning. All of these assets together are better known in estate planning as intellectual property.
“When we are talking about music assets, we are really talking about the greater world of intellectual property,” says Abdo. “Copyright is one of those parts. There are two different copyrights involved in the recording of music: there is the underlying composition or songwriting part of it, and then there is the recorded version of that song.”
Protected under United States copyright law, a musician’s compositions and recordings are preserved for 70 years past their death. Musical assets can continue making money well past the death of the musician—an estate plan can determine who benefits from or administers these royalties. Once the copyright period expires, the music enters into the public domain, which helps explain the popularity and exorbitant recordings of songs like “Silent Night,” or other classical hits—because the originator is no longer protected, anyone can write and record the song without the penalty of payment.
Osgood and the other members of The Suicide Commandos have a musical history that spans back to 1975. Planning everything from songwriting credits to publishing rights to trademark, Osgood and his fellow bandmates recently meticulously combed through their catalog and assigned the appropriate credits for their music to each band member.
“When we put out the last record “Time Bomb,” we got a publishing deal from a company called Words and Music down in Nashville,” says Osgood. “It was mandatory when we accepted that contract, to go through each song of our entire catalog and figure out who wrote what and make sure that all parties were content with the fractions. It was easy for us to agree. Songwriting credits are pretty easy to divvy up. Song lyrics hold equal weight to the music.”
A newer technology is helping to preserve intellectual property: holograms. Holographic tours have grown in popularity amongst some musicians, and although the process to create a holographic tour is complicated, it can help protect an artist’s name and likeness, trademark rights, copyright rights, and enable an income source for heirs.
As for reputation and how musicians want people to see their image after death, they can include that in their estate planning under the right of publicity, also known as “personality rights,” which applies to 23 states and controls the commercial use of their identity.
“When you die, that is an asset, where you can bequeath the rights to your name and likeness to another person,” says Abdo. “If you died and were famous and branded, you would want to make sure that your name and likeness fall into the right hands. You would designate that person for trustee, or someone who could shepherd your legacy by making good and correct use with guidance, to keep your legacy going—it survives your death. [For] most people, when you die, you’re dead. But when you are a famous person, you have a name and likeness that has value after your death.”
Although most people do not start their estate planning process until their 50s according to a national survey, Osgood believes being pragmatic is important when dealing with assets- especially when creative assets such as music, are a part of the process.
“It’s still mailbox money and money that can go to someone who is handling my estate,” says Osgood. “I think a lot of people overlook that and don’t think a lot about it. For most of us this side of Steely Dan, it’s not that big of a deal one way or another. It could be, and it often is, if someone’s song gets picked up for a movie or an ad posthumously.”
For anyone that has music as an asset, Osgood believes that musicians should include their work in their planning, even if they do not work full-time in the industry.
“For any creative person, don’t sell yourself short or think that because you are not making a complete living from your art, whatever it happens to be, that it isn’t important or that it wouldn’t be important for future generations,” says Osgood.
Reflecting on artists like Aretha Franklin, who recently made headlines for not having a formal estate plan, Osgood believes that musicians and others who have assets can learn from those public eye experiences.
“It’s a cautionary tale for anyone,” says Osgood. “You are taken aback that somebody of that stature hasn’t given that some thought. Maybe they didn’t because they were afraid of death, or something spooked them. It doesn’t spook me. It’s the last part of life. You have to prepare for it the same way you fill up your car before you take it on a trip.”
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It’s best to notify agencies
By Gerri Detweiler
While it’s not something many people think about until faced with the issue, obtaining a credit report for a dead person is important. You may need to make sure the credit report is accurate and take stock of any creditors you need to notify of the death, or see if there’s any unresolved debt that you’re not aware of.
It’s not uncommon for criminals to try to take advantage of the fact that someone who has died isn’t checking their credit, which can increase the chances of identity theft and credit card fraud. That’s why it’s crucial to handle this process as quickly as possible.
Obtaining someone else’s credit report
In general, only the person who is the subject of the credit report should have access to it. But there are times when you may need to pull someone else’s report, such as the death of a loved one. Other instances may be when you’re checking someone’s credit as part of an application for a job or a rental property or if you’re helping someone work on their credit. Here are some commonly asked questions about obtaining someone else’s report.
- How do you check someone’s credit history? You must have permission to check someone’s credit history, which can be as simple as them checking a box on a rental or job application. Once you have their permission, you can use their Social Security number, name and date of birth to do a background check that includes a credit history.
- Can you look up someone else’s credit file? Yes, you can, but you have to have their permission and their personal information to be able to pull the correct report. This is common in situations where an agency or individual is helping another person repair their credit or address inaccuracies after identity theft.
- Should you notify credit bureaus of a death? Yes, you should notify the three major credit bureaus as soon as possible after a death to ensure that the account is marked as deceased and no one else can open credit in the person’s name.
Obtaining the credit report of the dead
One of the most common situations where you will need to obtain someone else’s credit report is if a loved one dies and you are the financial power of attorney and/or executor of the estate. Here are the steps you need to take to obtain your loved one’s credit report after they’ve died and how to protect their legacy.
1. Collect all the paperwork
It’s a lot easier to begin the process of obtaining a credit report if you already have the paperwork needed. Each of the three different credit bureaus may have different requirements to be able to report someone dead and obtain their report, so you may want to call and find out what documents are required beforehand. The most commonly requested are:
- A copy of the durable financial power of attorney, if applicable
- Proof that you have been named executor of the estate
- Testamentary letters from the probate court
- An official copy of the death certificate
It’s a good idea to get at least one copy of these documents for each of the three bureaus, but you’ll also probably want a copy for yourself and another backup just in case.
2. File the will if necessary
Before you can start the process of obtaining the credit report, you’ll need to file the will with the probate court. To do this, you’ll need a certified copy of the death certificate, which can be obtained from your local health department for a small fee. If there is no will or named executor of the estate, you may need to file with the courts to be named as executor.
3. Submit a death certificate and other documents to the credit agencies
Once you have all of your documents gathered together, you’re ready to start submitting the paperwork to the credit bureaus. Remember that you’ll need to report the death and ask for the report from all three major bureaus: Experian, EXPGY, +2.72% TransUnion TRU, +1.66% and Equifax. EFX, +1.13% Along with the death certificate, power of attorney and testamentary letters, you’ll also need to include a cover letter explaining that the person has passed and that you need to obtain the reports to put their affairs in order. Your letter should also include:
- The deceased’s name
- Last used mailing address
- Social Security number
You may also need to send along a check or pay via phone or online to obtain the report, depending on the bureau’s policies and how recently the credit report was last obtained.
4. Review the credit report
Go through the credit report thoroughly checking for any inaccuracies—name and address misspellings are common—and make note of any open accounts that need to be paid with the estate or notified of the death. It’s a common misconception that all debts are automatically cleared when a person dies, but this isn’t the case, so it’s important to know what will still need to be taken care of. Make sure to be on the lookout for anything unusual–it could be a sign of suspicious activity.
5. Update any creditors and the Social Security Administration
The last step is to update the credit bureaus, any outstanding creditors and the Social Security Administration of the death. You may be asking, “What happens to your credit report when you die?” Until the credit bureaus are notified that a death has occurred, nothing happens to the credit report. Once the proper documentation has been submitted and the request made, the bureaus will mark the account as deceased.
This means that no further credit will be extended in the person’s name and no additional accounts can be opened up, which helps protect against identity theft and credit card fraud. The death certificate should be all that’s needed to complete this step.
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By Beth Pinsker
After helping a girlfriend through the messy, tangled finances left in the wake of a parent’s death, John Kerecz had a message for his own mom and dad: Get your paperwork in order.
A few years later, Kerecz’s father passed away unexpectedly. The 52-year-old environmental engineer from Harrisburg, Pennsylvania went to the house and looked where his father and mother used to keep their important documents, but nothing was there. It was pure luck that he went to the computer to look up a phone number and saw a folder on the desktop labeled “DEATH.”
“Sure enough, everything was there in that folder,” Kerecz says.
Armed with a copy of the will, lists of the financial accounts and insurance policies and other paperwork, Kerecz was quickly able to settle his father’s estate and use the funds to take care of his ailing mother, making him extremely grateful.
The difference between having your files organized or not is about more than just stress; leave behind a mess and it can delay inheritors’ access to funds and cost a bundle in legal fees.
“It could be six months or longer if you don’t have the paperwork in order, and … your family is in the dark, not knowing things, jumping through hoops. It’s not a fun existence,” says Howard Krooks, past president of the National Academy of Elder Law Attorneys.
Taking care of the necessary documents is a hallmark of good parenting, he adds, rather bluntly: “More than any kind of monetary legacy, if you really love them, you’d do this.”
HOW TO GET IT DONE
Compile a list of the financial information your heirs will need upon your death: wills, trust information, investment accounts, legal contacts, etc. You can keep this information in an electronic file – in one master document or several attachments – to serve as a road map to find all the physical paperwork.
Or, you can do what some of elder law attorney David Cutner’s clients do, and just pull out a cardboard box and start piling up the papers.
You have to do more than just gather the information, though, cautions Cutner, co-founder of the Lamson & Cutner Elder Law firm in New York. You have to tell your loved ones you have done it and tell them where to find it. You can either hand over the file immediately or keep it in a safe place (away from the prying eyes of caregivers and potential scammers).
A safe deposit box, by the way, is not a good place to keep these papers, says Cutner, because it’s too hard to access when needed.
Top of the list is a copy of your will, hopefully the most recent version, plus contact details for the attorney who drew it up and any executor named. Also important are trust documents, if they exist, estate experts say.
While power of attorney and living will documents are crucial should you become incapacitated, they will not be useful after your death, says Krooks – your heirs will then be using a death certificate to obtain access to accounts.
The real power in assembling all these items is that it forces you to go through the process of specifying your wishes. Without them, your family would have to put your estate into probate, which is when the state determines the distribution of your assets. This can take up to a year and eat up about 5 percent of the estate, says John Sweeney, an executive vice president responsible for Fidelity’s planning and advisory services business.
Your heirs will need to know all of your account information, down to your utility bills and your tax returns. You can either create a list or include copies of statements in the file, or just directions to where to find them. Also useful is a list of relatives to contact.
Knowing passwords for online accounts is not as important as naming another person on key accounts ahead of time, says Sweeney. This way, if the family needs to make mortgage payments or pay any medical bills, they do not have to wait until the estate is settled.
“Children are often dipping into their own assets to pay for taxes and mortgages when the last surviving parent has passed away,” says Sweeney.
In that same vein, make sure to sign another person up for a key to any safe deposit boxes or home safes, says Krooks. Include clear directions on how to access any other valuables that may be stashed elsewhere, so that it’s not mistakenly thrown out.
Pensions and insurance plans have many different payout rules, so you need to leave behind detailed information about policies. Insurance information should extend beyond life insurance to car, home and boat insurance, says Sweeney. It is also critical to include your Social Security benefit information, he adds.
The job of assembling all of this information can be massive, but most people appreciate it in the end.
“At first they curse us out because it’s so much to gather and put in one place. But by the time they come into the office, they’re really glad they did this exercise,” Krooks says.
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