Category Archives: Settle an Estate

Paperwork and procedures an executor, trustee or family member must do to manage the financial affairs of someone who died.

Are your digital assets in your estate plan?

Much of our life lives online these days. Email is just the beginning. Do you have a Facebook account? What about PayPal? How about an online bank account?

If you don’t include information about those digital assets in your estate plan, your family may have a terrible problem trying to access and deal with your online accounts. First of all, they will have to figure out what they are and then they will need to find a way to access them.

If your executor can’t track down your accounts, your estate may be at risk for fraud. For example, your Amazon account is probably hooked up to a credit card. If the account isn’t closed after your death, someone may hack it and make purchases which will have to be paid for by your estate.

Putting your digital assets in your estate plan is not a very simple matter. Each of the accounts you hold is governed by a terms of service agreement. You must have clicked on it when you opened the account. The agreement may limit access to the account to just you. To complicate things further, your family member will need your password for access. But it may be illegal for them to use that password. After your death, they will have to show that they have a right to access the account…but may still be unable legally to do so.

22 states have already enacted laws to help clarify how online accounts of the deceased can be accessed and managed. These laws are based on the revised Uniform Fiduciary Access to Digital Assets Act – UFADAA. And several more have introduced bills into their legislature.

There are some restrictions that are intended to protect the privacy of the deceased. For example, an executor can manage the digital property but may not be allowed to read the contents of email messages.

There are three parts to the revised UFADAA act:

1) If a service provider offers an online way for the user to state post-death wishes, the account owner’s use of that path determines what happens to the account. An example is Google’s Inactive Account Manager.

2) If there is no way provided after the account owner’s death or the account owner doesn’t use any tool available, the account owner’s directions in a will or other legal document will stand.

3) If the first two parts do not apply, the terms of service agreement that was clicked on when the account was open will determine how the digital assets are handled.

Other things you can do to be prepared are:

1) Create a list of your electronic accounts and include your log on IDs and passwords.

2) Use a password manager tool such as LastPass and share the information with your executor.

3) Think about putting all of your estate documents into an online vault like Dropbox or Everplans.

4) Put your digital asset plan into your estate documents. The more specific you can be, the better.

5) Think about writing a statement of intent in general that can apply to all of your accounts, even ones you may have forgotten about when writing your list in #1.

6) Decide and spell out clearly what information you want your executor to have access to. Do you want her to read all of your emails? You might want to limit what she can see.

7) Pick your executor carefully and make sure that person is at least somewhat tech savvy.

For more information about digital assets and estate planning, check out our website http://www.diesmart.com.

Credit card debt after death – what you need to know

It’s often incredibly difficult to cope with the death of a loved one. A creditor knocking on your door makes it even more difficult.

Can a creditor collect a credit card debt owed by your deceased parent or spouse?

There is not one simple answer to this important question. There are many factors to be considered. Here are 10 questions and answers to help you understand what may happen.

Are family, friends or heirs responsible for your debts?
When you take out a credit card in your name, you’re agreeing to repay whatever you borrow. That obligation usually doesn’t extend to anyone else. The only exception is if you had a joint account holder. That person would be responsible for all debt incurred through use of that credit card, even if the debt was not run up by that joint account holder.
Direct creditors to the executor.
When you die, your obligations will transfer from you to your estate. The executor of your estate will be responsible for handling all of your estate’s financial issues, including your debts. If a family member gets a call about a debt and isn’t the executor, he or she should direct the caller to the executor and tell that person not to call again.

Notify creditors and the credit bureaus.
The executor should notify any known creditors as soon as possible about the death. They should also notify the three main credit reporting agencies – Experian, Equifax and TransUnion – and request that the accounts should be flagged “Deceased: Do not issue credit”. This will help prevent a very common problem – identity theft of the deceased.

The executor should also request a copy of the deceased’s credit report. This will help him to identify any outstanding debts.

Find out who’s responsible.
As previously mentioned, people who request credit together are equally responsible for the total debt. The same is true with a co-signer of a loan, who by cosigning is guaranteeing the debt of the borrower.

Authorized signers on credit card accounts, however, aren’t liable. They didn’t originally apply for the credit; they were just allowed to ”piggyback” on the account of the person who did.
Stop using credit card accounts.
If you’re an authorized user on a credit card account, you shouldn’t use the card after the main cardholder dies. Because you’re not liable for the debt, this could be considered fraud.

A surviving spouse can request a card in his or her own name. However, it will most likely be a new card application, based on the survivor’s credit history, income, etc.
Don’t split up all of the belongings yet.
Nothing should be distributed until after the estate has settled its debts. If there’s not enough money in the estate to pay those debts and belonging have been distributed, the heirs could become responsible for those debts.

Ask creditors for help.
If a surviving spouse is a joint account holder and is having trouble paying the bills, he or she may be able to work something out with the creditors. He or she may be given time to get organized or to come up with the needed money.

Community property states are different.
If you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and, if you choose it, Alaska) one spouse can be liable for the debts of the other, even if they didn’t agree to them or even know about them. In these states, the surviving spouse will most likely be responsible for any credit card debts.
If an estate can’t pay, the lenders lose.
If the estate has more debts than assets to pay them, creditors may be forced to write off those debts.
When in doubt, contact an attorney.
Figuring out what to do about estate debts can be complicated so you might want to contact a probate attorney for help.

For more information about identity theft of the deceased or how to settle an estate, check out our website, www.diesmart.com
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Are you missing out on unclaimed billions?

Have you told your family if you have a life insurance policy? Do they know where to find the paperwork needed to claim its benefits after you die?

Many people take out a policy, stick the paperwork in a drawer somewhere and then forget about it. They don’t tell anyone the policy exists or who the beneficiaries are. When they die, their policy goes unclaimed.

The amount of unclaimed benefits is enormous – $7.4 billion in this country alone. According to the Florida Office of Insurance regulation, that’s the amount major life insurance companies have agreed to pay out, but haven’t.

Of that amount, $5 billion will go directly to beneficiaries they find; the balance will go to states whose unclaimed property departments will search for and pay beneficiaries.

Florida began investigating the life insurance industry in 2009 and there are now 41 states involved in the effort. It was concluded that insurers weren’t doing enough to pay out on life insurance policies where insured people had died but the beneficiaries hadn’t filed claims.

The life insurance companies weren’t quick to pay out benefits but they were very quick to stop making payments when annuity owners died. They used the Social Security Administration’s Death Master File to identify customers who had been collecting annuity payments and immediately stopped sending money to them but did not use the same file to identify life insurance policy holders who had died and whose beneficiaries should have received benefits.

To date, 25 life insurance companies have made settlement agreements and others are still being investigated.

The industry now supports a national standard that requires life insurers to use new technologies to identify policy holders who have died and their beneficiaries who have not yet filed claims. Twenty states have enacted laws based on this standard.

Granted, insurance companies have paid out $600 billion to beneficiaries who have filed claims in the past ten years. However, $7.4 billion is not just pocket change.

How can you find out whether you’re a beneficiary of a forgotten or unknown life insurance policy.? In addition to checking thru the deceased’s records and storage areas, here are a few things you can try:

Check bank statements of the deceased to see whether any payments were made to life insurance companies.
Look through tax returns to see whether any interest income from life insurers was reported.
Go through address books for names of insurance agents or financial advisors; contact them to see whether they have any information about policies that were taken out.
Check with former employers and professional organizations to see whether they had issued any policies.
Search the MIB Group, Inc. database. They provide a data sharing service for life and health insurance companies and offer a policy locator service for consumers. For a cost of $75, they will search for policies taken out since 1996 from one of their 420 U.S. and Canadian member companies.
Check state unclaimed property offices. You can also conduct a multi-state search on MissingMoney.com.

The best thing to do is to avoid this problem in the first place and tell your beneficiaries or, at the very least, your attorney or the person who will be your executor that you have taken out a life insurance policy. Don’t let the insurance companies keep money that should be in your family’s hands.

For more information about estate planning and end of life issues, go to www.diesmart.com.

Will you get a call from a debt collector?

Did you know that if someone dies with unpaid bills like a balance on a credit card account, a family member or close friend will get a call or letter from a debt collector.

A few years ago, the FTC (Federal Trade Commission) issued new guidelines related to this subject. The guidelines “widen the universe of people who could receive collection calls or letters”. This makes it very important that anyone receiving such a call or letter knows his legal rights and obligations.

Debt collectors read the obituaries and then check to see whether the person who just died has any surviving relatives. If so, they immediately begin sending out letters or making phone calls and harassing them for whatever is owed.

Rules vary from state to state but, in general, here are a few things that usually apply.

Family members or friends are not obligated to pay out of their own pockets for debts incurred by a deceased person.
If a family member or friend has co-signed a credit card or loan application with the now deceased person, that relative or friend is probably obligated to repay the debt.
If the deceased left a will and the estate is in probate, debt collectors can attempt to collect their money from the assets of that estate.
Assets that are specifically bequeathed to someone or that were jointly owned by the deceased and another person generally go to that person outside of the estate and are usually not reachable by debt collectors. In the 10 community property states, assets are generally considered joint property and can’t be touched by a debt collector.

What does this mean for you? If someone close to you dies and you are contacted by a debt collector, don’t give that person any information or commit to anything. See assistance from a local credit counselor or attorney to get guidance on how to proceed. Otherwise, you may find yourself paying money to a debt collector unnecessarily.

For more information about settling an estate, go to www.diesmart.com.

Seen a digital assets & legacy infographic?

We came across a very easy to read and understand infographic. It provides important information about estate and digital asset planning. Although the data is based on a survey done in the United Kingdom, the figures are probably very similar to what would be found if the same survey were done in the United States.

In light of the digital all-encompassing digital world in which we live, it’s especially amazing that almost 75% of people believe that it’s important to be able to view a loved one’s social media presence after their death. Yet less than 5% of those people have used the Facebook and Google tools available to enable this to happen.

Less than 10% of people have made any plans for their social media accounts to remain active after they die and only 3% have made any plans for purchased digital assets.

Only about half of the people queried have shared with anyone the password for their mobile phone or computer.

Digital planning is a critical part of putting your estate plan in place prior to your death. Otherwise, your wishes may not be carried out and, even more importantly, your heirs may not be able to access your online assets. Since no one knows when he or she is going to die, it’s important for everyone to take the necessary steps and put together a legal estate plan now.

For more information about digital estate planning, go to www.diesmart.com or purchase our book ACCESS DENIED: Why your passwords are now just as important as your will.