Here's a very interesting article that addresses what happens if your parents die broke. I think this is something that we all wonder from time to time how situations like these are handled when it comes to settling a loved one's estate.
The author writes: "[l]egally, you're probably not on the hook for their debts. But anything they owned could be. Here's what you need to pay, in what order."
Click here to read more.
Student loans are an interesting type of debt. It's not necessarily bad debt as it is for a good purpose. Interest rates and repayment plans are usually reasonable. But as debt goes, you cannot discharge your student loans by filing for bankruptcy. If you die, however, they are forgiven. Nice to know that some things can't follow you to the grave or crematorium.
Are you dealing with unpaid medical bills from a loved one's estate? Here are some tips to help you get through the medical mumbo jumbo.
First, wait for all of the bills to come in. It is okay and often recommended not to pay these bills right away. You want each medical facility or insurance company to get a chance to submit their bills. This way you can see if there are duplicate charges or other errors among the bills.
Second, scan the bills for some of the most common medical billing errors:
Third, there are consultants that can help you make sense of medical billing. You can Google them or go to HealthGrades and download a medical cost report that contains typical list price and average rate for procedures for approximately 50 common procedures.
Fourth, ask the medical facility for an itemized bill if you do not already have one. Upon request, one should be provided to you at no charge.
If you are handling decedent's affairs in probate as a personal representative of the estate, please be sure to consult with your probate attorney about the bills and keep excellent records. You never want to blindside your attorney in probate -- always inform, ask and get permission!
It is common for a Will or Trust to be stored in a safe deposit box. But what happens when the original box owner passes away? And there is no other joint owner of the box? Who can retrieve the Will or Trust? Or even see if there's a Will or Trust in the box?
Banks are notorious for restricting access to safe deposit boxes when the original box owner has died. California law addresses this issue by allowing a person in possession of a key to a safe deposit box to see if the box contained estate planning documents.
California Probate Code Section 331 authorizes a person who has the key to a safe deposit box of a deceased person to have access to the box, even before any action has been taken with the probate court.
The financial institution shall first obtain proof of the decedent’s death and reasonable proof of the identity of the person seeking access.
The person may then:
1. open the box (under the
supervision of an officer or employee of the financial institution),
2. make an inventory of the
contents,
3. remove instructions for
disposition of the decedent’s remains, and
4. after copies have been made and
placed in the box, remove wills and trust instruments.
Except for the disposition instructions, wills and trust instruments, no other contents shall be removed under these provisions. The person shall deliver all wills found in the box to the clerk of the superior court, and mail or deliver a copy to the person named as executor.
It is rather common to come across checks that were issued right around when a loved one passes away. The question is what to do with those checks.
If probate will be opened, then you will need to inventory those checks and deposit them into the estate checking account as part of probate. This can be done after the court has ordered probate and appointed a personal representative of the estate. Checks do have an expiration date so you may have to ask the issuer of the checks to reissue the checks after probate has been formally opened.
Another option is to deposit the checks directly into the decedent's existing checking account. Let's say you have a check for a small amount ($100) and the bank is unaware that the decedent has passed away. You could write the words "for deposit only" on the back of the check with the account number and either hand it to the teller at the bank or drop it in an express deposit box. If the checking account has a transfer on death beneficiary then all of the funds in the checking account will go to the named beneficiary.
If the estate will be handled by a Trust, you will want to open an estate checking account through the Trust and deposit it there. The Trust will instruct who the estate beneficiaries are.
If there is no Trust and no probate will be opened, you will still have to open an estate account. You can do this via a small estate affidavit as allowed by California Probate Code Section 13100, et. seq. as carefully described in this pamphlet by Los Angeles County Superior Court.
In reality, it is best to wait a while before informing the banks where your loved ones had accounts that he or she has passed away. Most banks and other financial institutions will block any further account activity even if it is a joint tenancy account once they learn that an account holder has died. Note that depositing a check in a joint tenancy account is really depositing it into the surviving joint tenant's account. This is because the surviving joint tenant now owns the account.
Each situation is really fact dependent so be sure to consult with an attorney if you have questions.
A little primer on how outstanding debts are handled for those who pass away.
Outstanding debt can range from the last cell phone bill, an electricity bill or credit cards. It also includes unpaid taxes like property taxes or income taxes. Plus those mortgages and other secured loans.
If probate is opened when a loved one passes away, a public announcement of the death is posted in a local newspaper where the decedent lived. In addition, a notice of administration is also sent to all known creditors of the probate proceedings. This allows creditors to come forth and file claim against the estate for repayment of outstanding debt.
There are procedures that a creditor must follow to ensure that their claim is properly submitted. It is up to personal representative of the estate and the attorney to either approve or deny the claim. If the claim is approved then the estate will pay the creditor the amount owed before probate closes. If the claim is denied the creditor then has an opportunity to appeal.
Any final medical bills, funeral expenses and hospice or long-term care expenses can usually wait for payment until the insurance companies have processed their claims, death benefits are paid from any life insurance policies or the estate has liquid assets.
Make sure you do not pay for estate bills and deplete the estate cash at the same time. If you find yourself in this position, tell the creditors of what is going on and when they can expect payment. Creditors are usually very understanding when someone dies and are willing to negotiate repayment terms.
If the estate is or will become insolvent, it will require guidance from the court on how to handle the repayment of debt. Heirs will not be responsible for the debt of a loved one if the estate is insolvent. Though any debts held jointly now become the responsibility of the surviving person listed on the papers.
Consult with a probate attorney for more information.
If you have lost a loved one recently, you may be overwhelmed with grief during this time. You may want to leave the administrative matters for a later day, but the following steps should be taken care of as soon as possible:
Yesterday, I posted about a family arguing over cremation or burial of their father's remains.
Did you know that the state of California has a Cemetery and Funeral Bureau? Their website is very informative about all aspects of funeral, burial and cremation.
Cremations in California must be authorized by a loved one with authority to do so. But did you know that you can pre-authorize your own cremation? To do so, you will need to complete a Declaration for Disposition of Cremated Remains form.
Anyhow, I found this interesting... in California, you may choose any of the following methods of disposition of cremated remains:
Further, cremated remains may not be transported without a permit from the county health department and they may not be disposed of in refuse.
Information excerpted from the California Cemetery and Funeral Bureau website under Cremation.
I got this call yesterday. Someone's father passed away. He had 8 children. Half the kids say that Dad wanted to be buried. The other half wanted to cremate him.
My first question, did Dad have an Advance Health Care Directive?
"No," says the distraught son.
Well, of course not, otherwise I would not have gotten the phone call.
Anyway, did you know that to cremate someone's remains you need to complete a cremation authorization for the company handling the cremation? And this authorization asks you to indicate where you are getting your authority for cremation? Advance Health Care Directive? Surviving Spouse? Majority vote of children?
Seriously.
At least 5 of the 8 kids need to authorize cremation before proceeding with the services.
Interesting, eh?
So, folks, get your Advance Health Care Directives in place. Avoid this mess.
Here's a link to complete one free -- no need to get it notarized, you have two witnesses sign it instead: Office of the California Attorney General.
The executor or personal representative of the decedent's estate is responsible for ensuring that proper tax returns are filed. These tax returns may include the final income tax return of the decedent and any returns not filed for preceding years, the income tax return for the estate and the estate tax return. [Sounds like blah, blah, blah, eh?]
Needless to say, taxes are due on April 17, 2006 for 2005 returns. If you need to file an extension, please do. Handling this aspect of a decedent's estate can be much more time-consuming than normal.
For more information, please consult with your attorney, tax accountant or the IRS. The IRS has more information on its website under Tax Topic -- 356 Decedents.
