Who Pays Your Debts When You Die?

According tk15365456o a U.S. News and World Report story out this week, most probably your unpaid bills will be subtracted from any inheritance you leave to your loved ones.

In 2013, more than 61% of senior households had an average of $40,900 in debt.  And it’s likely that many will die with those debts unpaid.

If you don’t have any assets, your debts may die with you.  However, if you have assets, your creditors may be able to collect what they’re owed from those assets and the amounts subtracted from what your heirs will inherit.

How debt is handled depends largely on the state in which you are living at the time of your death.  Nine states are “community property” states.  That means your spouse is responsible for any debt incurred during the marriage.  In other states, a spouse is not responsible for bills that are solely in the other spouse’s name.  And some types of assets, such as retirement accounts and life insurance payouts, usually can’t be claimed by creditors.

The story goes on to list six things to do if someone you love has debt when they die:

1)      Consult a probate attorney.

2)      Notify creditors of the death.  Once this is done, those accounts are frozen.

3)      Catalog your loved one’s assets.

4)      Determine what your loved one owes.  That will help determine what, if anything, needs to be sold to pay the debt.

5)      Have beneficiaries file for assets that pass without probate.

6)      File tax returns.  Even after death, tax returns need to be filed on time.

For more information about estate planning and helpful hints on what to do when settling a loved one’s estates, check out our website www.diesmart.com.

Ghosting – Do you know what it is?

th1EAZMTEQAccording to Wikipedia, ghosting is a form of identity theft in which someone steals the identity, and sometimes even the role within society, of a specific dead person (the “ghost”) who is not widely known to be deceased.

As our population ages and more and more people are dying every day, identity thieves are keying in on this fact for their gain.  An Ohio family found out about ghosting the hard way about a year ago when one of these thieves stole over $2.2 million from their deceased father’s estate.

“Ghosts” steal a deceased person’s personally identifiable information and use it for things such as account takeover, tax refund fraud, medical ID theft and driver license ID theft.  They also apply for new credit cards and loans using this information.

By the time the family of the deceased finds out about the theft, it may cause problems with the estate and may cause great expense to lenders or others who were fooled.  In some cases, creditors will try to come after the estate, even if the money owed is because of ghosting.

Here are a few helpful hints to make sure a “ghost” won’t cause problems for you when a loved one dies.

Send the IRS a copy of the death certificate.  That way, a “ghost” won’t be able to file a fraudulent tax return and collect any refund.

Send a copy of the death certificate to credit card companies and other financial accounts that were held by the deceased and ask that those accounts be closed.

Notify each of the major credit bureaus and ask them to put a death notification on the accounts of the deceased.

Don’t put too much information in an obituary.  Thieves can use date of birth, exact address, mother’s maiden name to help open new accounts.

Be alert and check the deceased’s credit report for questionable activity.

For more information about identity theft and other issues related to estates, go to www.diesmart.com.


Are your beneficiary designations up to date?

k8758525Do you have a bank account?  What about a brokerage account or life insurance policy?  Have you set up an annuity  or a retirement plan?

You probably have a least one or two of these types of accounts.  When you set them up, you were asked to name a beneficiary for each.  At the time, the person you named was someone you wanted to receive these assets when you died.  It might have been a spouse or significant other.

It’s been several years since you named that person.  Have your circumstances changed?  Are you now divorced or no longer involved with him or her?  Have you remarried or had children you want to be sure are protected?

Most people name a beneficiary and then forget about it.  They never go back and update the information provided so it reflects their current wishes.   They figure it doesn’t matter because they have a current will that designates who should inherit what.  However, it does matter.  Whoever is named as a beneficiary receives that asset when you die, regardless of what it says in your will.   So your ex-husband or former girlfriend may receive a large sum of money that you didn’t want them to have.

Don’t let this happen.  Review your beneficiary designations whenever your circumstances change and be sure that your assets will go where you want them to when you die.

For more information about estate planning, go to our website www.diesmart.com.

You need a will. Why shouldn’t you write your own?

blended familyMost blank will forms are based on the assumption that you are part of a traditional nuclear family with a husband, a wife and a common set of children.  It will further assume that you wish to follow the traditional path of inheritance:  The surviving spouse will inherit the deceased’s assets and they will they pass to the children upon the second spouse’s death.

Instead, as is very often the case today, you may be part of a blended family.  If so, you should definitely see an attorney and prepare a will that will protect every member of that new family.

Let’s look at an example of what might happen if you don’t have a well written will.

John and Susan had both been married previously.  John had two children from his first marriage and Susan had three.   When they got married, all was well for several years.  Then John died suddenly.  Susan inherited all of John’s estate (which included assets he had brought into the marriage).

When Susan died, her three children inherited her assets; John’s children got nothing.  Why, because they were not Susan’s legal children and neither John or Susan’s will legally protected them.  A lengthy legal battle ensued with the biggest winner being the attorneys.

Although this blog is based on an article from the Sydney Morning Herald, it is critical for everyone in a blended family to take heed.

Make sure your legal paperwork protects your family and distributes your assets the way you want them allocated.  Don’t take a shortcut now that may result in unnecessary pain and suffering at a later date.

For more information about estate planning, check out our website www.diesmart.com.

6 other stars who didn’t have wills

AmyWinehouse2004MercuryPrizePA230711There have been numerous stories lately about Prince and the fact that he had no known will when he died.  But he’s not the only famous person who wasn’t prepared.

Here are 6 others who died without a will:

1)      Michael Jackson died in 2009 at age 50.  A will did finally surface naming his mother and children as his beneficiaries.  However, his estate is still in the news.  The IRS is claiming that posthumous projects initiated by the estate are worth more than $434 million and they want their share of the take.
2)      Amy Winehouse died in 2011 at age 27.  She was thought to have a will when she died, but it turned out she didn’t.  Her estate ultimately went to her parents.
3)      Bob Marley died of cancer in 1981 at age 36.  It took more than 30 years before his estate was settled.  Under Jamaican law his estate was to be divided equally between his wife and his 11 children.  Court battles raged for many years to determine who was entitled to Marley’s name and likeness.
4)      Jimi Hendrix died in 1970 at age 27 but the fight for his estate went on for more than 30 years.  The estate went to his father and when he died, Hendrix’s sister was left in control of the musician’s $80 million estate.  However, the court fight was about who had the right to use the singer’s image and it was finally settled shortly before a scheduled July 2015 jury trial.
5)      Sonny Bono died in 1998 at age 62.   His wife Mary Bono has to go through probate court to become the executor of the estate and it ultimately was divided between her and his two children.
6)      Kurt Cobain died in 1994 at age 27.  His wife Courtney Love was the primary beneficiary of the publishing rights to his estate.  In 2010 the couple’s then 18-year-old daughter took control of her trust fund which was more than a third of the estate.  That same year, Love gave up rights to Cobain’s name and likeness for a loan.

Just because these people were not prepared and did not leave wills, that’s no reason for you to follow suit.  Don’t let the probate court decide who should inherit your estate.  Write a will and tell your family and other loved ones what you want to have happen to all of your assets.  You decided and make your wishes known.

For more information about estate planning, go to our website www.diesmart.com.