Death legal issues

My dad was single when he passed away. Now his credit card company has called demanding payment of his bill immediately. Should I pay it?

You can’t blame the credit card company for trying to get to the front of the line, but they should know that you cannot start paying bills immediately -- especially if your father’s funds are limited. The law generally requires you to wait until all the bills have come in and then to make disbursements according to the rules. The waiting period and rules vary by state. Unless proper procedures are followed, some creditors could be paid in full while others get nothing.


What happens if someone dies with more bills than they have money to pay them?

It’s not unusual for someone to die with more bills than cash. Even after cars and other assets are sold, there may not be enough to pay off all the bills and debts. If the estate goes through probate, a court decides who get paid first -- and how much. If the estate does not go through probate, the executor must follow specific rules to liquidate assets and pay creditors. If there is not enough money to cover 100% of the bills, children and other family members are not generally required to pitch in the difference. Credit card companies and other creditors write off such losses every day.


What kinds of filing and paperwork fees must be paid when someone dies?

Filing and paperwork fees when someone dies can quickly add up. You may have to pay the mortuary or other institution that fills out the death certificate, and then you must pay the courthouse for each certified copy. If you file for letters testamentary for a probated estate, you pay a fee; if you don’t go through probate, you generally pay a fee to file an affidavit.

These fees are in addition to probate fees and lawyer bills.

If you pay any of these fees out of your own pocket, be sure to track them carefully and, if possible, get reimbursed from the estate.


How do I get a federal ID number for an estate?

You can get a federal ID number for an estate in a matter of minutes, and you don’t need a lawyer to do it. The IRS Web site has instructions for applying for an estate federal ID number. The fastest way to get an ID number is to use the Online Application. You will get the number online, and then you will receive confirmation in the mail in about two weeks.

Don’t be confused by the fact that the Web site refers to an Employer Identification Number (EIN). You use the same form that people use to set up a business; you identify it as an estate on the form.


What’s a death certificate, and how do I get one for someone who has died?

A death certificate is an official document that looks similar to a birth certificate and has much of the same information, plus information about the person’s death.

It is filed at the courthouse of the county where the person died and is used to prove that a person is deceased. Information such as the cause of death is also used for statistical purposes.

When someone dies, the physician or coroner fills out the Medical Certificate of Death, a family member or funeral director submits a Statement of Death, and the death is registered.

As the next of kin or estate executor, you can get the death certificate from the courthouse, either in person or by mail. You will need the certificate to collect life insurance, close accounts and otherwise deal with the affairs of the estate.


My husband recently died. How should I handle the bills that are coming addressed to him?

First, make sure the bills are legitimate. It’s hard to believe, but con men scan obituaries and send phony bills to either the deceased or the survivor, hoping the bill will be paid without question. If you receive an unfamiliar bill addressed to your husband, write the creditor and ask for an explanation. Don’t pay a bill until you’re satisfied that it is legitimate.

If you have a good cash reserve, you may have no trouble paying all your and your husband’s bills. If you can’t pay all the bills now, make an itemized list and decide which bills must be paid and which can be delayed. Pay mortgage payments, utilities, and health and property insurance premiums first. If money is short, or if you are waiting for your finances to be settled, consider writing to the creditors and explaining your situation -- that you know you owe them money and plan to pay it, but you will have to work out a plan based on your changed circumstances.


Do I have to wait before I can collect the proceeds of my late spouse’s life insurance?

If you’re married and your spouse dies, file any necessary life insurance claims as quickly as possible. No waiting period is required. Although the value of the death benefit is counted as part of the estate’s value for tax purposes, life insurance payments pass to the beneficiary outside of probate. Life insurance companies usually pay routine death benefits within weeks. This money provides a necessary financial cushion for the survivor.


What happens to my 401k account when I die?

If you designated beneficiaries when you signed up for a 401(k) account, they receive the money in your account when you die. Otherwise, your estate automatically becomes the beneficiary.

If your beneficiary is your spouse, he or she has most of the same options that you would have if you were leaving your company to take another job. Your spouse can roll it over into an Individual Retirement Arrangement (IRA) or withdraw it all and pay income taxes on it. If your spouse decides to roll it over into an IRA, the rollover should be direct from the employer to the IRA account. This prevents deduction of any withholding tax.

If your survivor withdraws the cash and pays the taxes, the Internal Revenue Service waives its early withdrawal penalty regardless of the spouse’s age. Your spouse will probably not be allowed to keep the money invested in the same 401(k) plan.

A beneficiary who is not your spouse cannot roll the money over into an IRA.


How do I obtain full title to joint tenancy property after the joint tenant dies?

When you own property in a joint tenancy with someone else -- for example, if you own a home with your spouse -- your joint tenant’s interest in the property is automatically transferred to you if the joint tenant dies before you do. To clear the decedent’s name off the official records, you generally must file a death certificate and other documents, such as an affidavit, to establish yourself as the sole owner.

You can usually get the documents needed to establish sole ownership from the attending physician or hospital that recorded the death, or they may be filed at the courthouse.


I’m single, and I hold a large certificate of deposit in joint tenancy with my two children. When I die, how will the CD be divided?

Your children will automatically hold interests in the CD as joint tenants. At that time, they need to make some important decisions.

They can close the account and split the proceeds so that upon their own deaths, their half-shares pass to their own families. That may be the most efficient and fair way to manage the money.

If they keep the CD as joint tenants until one of them dies, the entire account becomes the property of the surviving child.


If I inherit savings bonds with the beneficiary listed as "pay on death," do I have to cash them immediately?

You don’t have to sell the bonds right away. In fact, it’s probably a good idea to keep inherited bonds unless you need the cash or if you can sell the bonds and reinvest the proceeds in something with a higher rate of return. Before you cash the bonds, you will have to provide a death certificate for the original owner.


My wife and I are both drawing Social Security checks. What happens when one of us dies?

When both marriage partners are receiving Social Security payments and one dies, the survivor is entitled to receive the greater of 100% of the late spouse’s monthly benefit or his or her own monthly benefit.

This means that you will be able to choose whether to continue collecting the same monthly benefit that you have always received, or start collecting the amount that your spouse received when he or she was alive. So, if your spouse’s monthly check was $1,100 and yours is $600, you would choose to collect payments under your spouse’s plan so you could receive $1,100 a month.


Who can apply for survivor benefits from Social Security?

If your spouse dies while receiving Social Security payments, you are eligible for "survivor" benefits. In addition to monthly checks, the Social Security Administration will give you a one-time $255 payment to help meet burial or other expenses.

Survivor benefits are also available to minor children if a parent dies, even if the parent wasn’t old enough to collect Social Security retirement benefits. These monthly payments can significantly help with the child’s living expenses and savings for college.



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