Categories
Death DIY Estate Legal Documents Uncategorized Wills and Trusts

UPDATE ON “DEATH AND TAXES”

CHUCKING OUT AND BALANCING THE BOOKS

I have been away because I have been working assiduously on my mother’s estate and now have some new information to impart.  Again, my experience has been, at least partially, determined by the fact that I live in Virginia, and, thus, am subject to the laws of the Commonwealth, but, I think that some of these points are universal.

In terms of getting rid of stuff:

This sounds easy, but, believe me, unless your relative/friend was uber organized or had already given everything away, and/or designated which items were intended for specific people, this can be a huge job.

There are a number of options:

Goodwill and Salvation Army are two obvious choices. The Salvation Army will accept/pick up furniture that is clean (i.e. in good shape, not covered in pet hair, etc.)

Other choices include: The Celebration Church and some “Pickers”/Junk Shops.

1-800-Got- Junk charges to pick up.

In some cases you may want to go to Auction houses — usually you will have to transport the furnishings yourself.  Frankly, after a million trips to Goodwill and the Dump, I am tired of hauling stuff. Find someone who will pick up!

Some thrift stores will accept old clothing — but, they will want clothing that is very fashionable and, frankly, they don’t pay you very much for the beautiful old dress or coat that reminds you so much of your departed loved one.

I got an excellent tip on another place to dispose of those old, cool pieces of clothing and other items: high school and college theatre departments.  This is especially true with high school theatre departments because they truly have no budget for costumes or props.  It makes me feel better that these clothes/hats/dishes, etc. will have a new and dramatic life!

THE ACCOUNTING

I have been told that some people actually enjoy this aspect of handling the estate.  I think I would not have minded it so much if I haven’t felt like the stakes were so high.  I’m probably too nervous about it, but, here’s the skinny:

If you have to remember anything, remember to SAVE EVERYTHING and MAKE SURE YOU HAVE A PAPER TRAIL.

Specifically;

1. Make sure you have bank statements from the date of death, which is frequently not the date that the Estate opened. The Commissioner of Accounts will want this to verify the value of the bank accounts as of the date of death. And, will want to see the expenses (funeral, etc.) that between the date of death and the opening of the estate.

2. DO NOT use online bill pay. This is something that no one really tells you. The Court wants a true paper trail of all financial transactions and online bill pay makes that difficult to establish. So, play it safe and pay by check!

3. Be sure to keep your deposit slips and copies of every check that you deposit — even little ones.

4. Keep all copies of invoices/bills, etc.!!!

5. If you do a distribution to the heirs, make sure that they endorse the checks, rather than having a spouse or someone, deposit the check directly to the bank account. The Court wants to make sure that the person to whom the check was written was actually its’ recipient.

You are going to need those invoices, cancelled checks, bank statements, even deposit slips, as back up when you submit the Accounting. Make copies of everything for yourself, because the Commissioner of Accounts will take the originals.

In Virginia, the Commissioner of Accounts can charge you extra if they don’t “like” the way the Accounting was done.  It varies from locality to locality, mostly because some Commissioners of Accounts are more persnickety than others. 

I’ll keep you posted. I’m thinking, give everything away, go off the grid and get a trust. This ain’t pretty….just sayin.

Categories
Death Estate Legal Documents Uncategorized Wills and Trusts

Death and Taxes, Literally, Part 2

POST MORTEM

Starting from Scratch-1

There is a lot to take in here, so, I’m breaking this up into 2 parts.

On the other hand, if you are like me, starting from scratch as Administrator, was entering more uncharted territory. Here are some basics that will be helpful. It is MUCH easier if there is a WILL and you are appointed Executor. It would be wonderful if your loved one had given you financial Power of Attorney, because it will speed the process for you.

Process

The hospital or hospice caregiver or coroner will send the death certificate to the funeral home. The mortuary usually will get a few (10 ?) copies for you. You may need more, and they are not cheap — approximately $12 each.

If you need to get additional copies of the death certificate you can go to the Bureau of Vital Statistics. Generally, this office is part of the state Health Department.

In many cases, the funeral home will send the death certificate to the Social Security Administration. It is very important that you know that they have done this for you, because if they don’t send it, you are responsible and you need to see to this right away.

Your other family members must petition the local court (locality where the decedent lived) and unanimously agree for you to be appointed Administrator and that you have complete ability to sell any of the properties and pay the bills. This is extremely important, because if you don’t have full responsibility, then every expense (bill) that is related to the estate will have to be equally divided among the heirs — meaning that each heir is responsible for paying her/his portion of each estate related bill. This is a nightmare scenario, because it is so logistically difficult. You need to have all the control over the estate account.

The court will require that you submit an accounting of the value of the estate at the date of death.You find this amount by looking at balances in checking and savings accounts, money market accounts, as well as the valuation of cars, homes, furnishings, etc. at the time of the decedent’s passing. The best way to figure those is to look at real estate assessments, and DMV records. In the case of household furnishings, you can look at EBAY or other prominent online auction sites.

The court will require you to pay them a percentage of the total value of the estate and require you to contact a bondsman and pay a bond.  Usually the court will have a list of approved bondsmen.

Bank Accounts

Once you have your “papers” (official designation and death certificate) you will need to close out all your loved one’s accounts and open an interest-bearing estate account (the fact that it is interest-bearing shows good stewardship on your part.)  An estate account is one that has been assigned an IRS EIN (Employer Identification Number). I asked “my” bondsman if he had any advice (I thought he might know because he was definitely a ‘veteran’ of thus process) and he told me that I should work go to a local bank to establish the estate account. He said that smaller, local banks tended to be less bureaucratic and easier to work with than large banks.

Anyway, take the counter-checks from the previous accounts and use them to establish an interest-bearing estate account. 

This estate account is CRUCIAL, because it will allow you pay the bills, the first one being the funeral home.

Here is additional information from Virginia Estate Law that gives more a detailed explanation of this process. I recommend you research your own state’s procedure for getting started. The address is: http://www.virginiaestatelaw.com/main/chapters/qualification/procedure.shtml

Place for Qualification. The personal representative must qualify in the Circuit Court located in the City or County where the decedent resided at the time of his death, or, if the decedent did not reside in Virginia at the time of his death, where the decedent owned real estate, or other assets estate assets in Virginia.

Who May Qualify. The personal representative must be an adult (age 18 or older) and must be able to obtain surety on their bond, if required.

A personal representative my be a nonresident of Virginia, but surety is required on the bond of a non-resident personal representative, unless a resident co-fiduciary is appointed.

The Clerk must also be satisfied that the person seeking qualification is suitable and competent to perform the duties of his or her office.

Preferred Person for Qualification. If the decedent had a will, the person(s) named as personal representative(s) in the will are normally appointed.

For intestate decedents (without a will) the law provides certain preferences within certain time frames. Generally, during the first 30 days after the decedent’s death, a sole distributee of the estate, or his or her designee, has preference. After 30 days, the first distributee who applies for qualification, or his designee has preference. After 60 days the clerk may grant administration to one of more creditors of the decedent, or any other person, provided that it can be shown that appropriate efforts were made to locate the preferred parties.

Factual Information. At time of qualification, the clerk will require information about the person seeking qualification, about the decedent, an estimate of the value of assets of the decedent’s estate, a list of the decedent’s heirs at law, and other information.

The clerk will also require proof of death of the decedent in the form of a death certificate or possibly an obituary published in a newspaper, if a death certificate has not yet been obtained.

Oath and Bond. The personal representative will be required to give their oath that he or she will faithfully perform the duties of their office to the best of their judgment, and if a will is probated, that the writing is the true last will of the decedent.

The personal representative will be required to give their bond in writing to secure their oath to property perform their duties, with penalty in a monetary amount at least equal to the value of the personal estate of the decedent, and if there is a will that authorizes sale of real property, the bond amount must include the value of the real property.

Surety. Unless surety on the personal representative’s bond is waived by will, corporate surety will be required (normally issued by an insurance company) to secure the bond. There are limited exceptions for banks, very small estates, and cases where all the beneficiaries of the residuary estate are also personal representatives.”

Funerals

Funerals are expensive. For a conventional funeral you can expect to pay anywhere

  from $7000 – $18000 depending on the casket, any services at the funeral home, etc.

  Here are some services that they may offer:

Providing facilities for memorial service or funeral

Dealing with necessary paperwork to enable burial or cremation

Providing information to family and friends

Placing obituaries in newspapers

Setting up a catered meal at another location following the funeral

Arranging special musical requests

Ordering and caring for floral tributes on behalf of family and friends

Accepting donations for named charities

Arranging for vehicles and staff for funeral and graveside services

Making arrangements for transfer of remains for funeral and burial services

Recording donations received

Keeping record of persons who attended any funeral or memorial service at the funeral home.

I am not sure about green funerals, and what is offered in conjunction with those rites, but, for me, the fact that the funeral home helped with some of the ins and outs of paperwork concerning the death certificate, etc. were extremely helpful.  I had way too much on my plate as it was. 

 

Next Up – Paying Bills, Closing Accounts and the IRS

Categories
Death Estate Legal Documents Wills and Trusts

Death and Taxes, Literally

Why you need a will, and what to do if you are appointed Executor or Administrator.

Part I

ESTABLISHING YOUR ESTATE – WILLS AND TRUSTS

A will is a roadmap for your loved ones to follow regarding your estate. I can’t emphasize enough how important it is for you to provide them with directions regarding your money and property after you have passed away. You will save them an inordinate amount of time, upset and confusion in an already sad situation by taking care of this important and not necessarily difficult legal matter. I know because my own mother passed away without leaving a will, despite our pleading with her for many years before her demise.

We have been faced with a dizzying number of big decisions concerning everything from the most basic aspects of funeral planning to the disposition of real property.

My siblings elected me “Administrator” (a less powerful version of ‘Executor’ because she died intestate). “Intestate” is the legal term for someone who has died without a will.

LEGAL INSTRUMENTS

Every state has different laws concerning estates and trusts. Here is a link to a website with contains this pertinent information. It will be helpful for you to look at your state’s code on estate law.

http://estate.findlaw.com/planning-an-estate/state-laws-estates-probate.html

Basic Wills

You can go to Law Depot, Legal Zoom or any number of sites if you want to create a will quickly and inexpensively.  “Testator” is a legal term for the person who makes/creates the will.

You can also go to an attorney who specializes in Estate Law.

Holographic Wills

Or, you can write a holographic will, which is a will that is handwritten and signed by the testator (that would be you). Not all states recognize holographic wills, and, in states where they are acceptable, they must meet some specific requirements. The minimal requirements are:

*Proof that the testator actually wrote the will

*Proof that the testator was in full possession of her/his mental capacities

*The will must contain the testator’s wish to disburse personal property to beneficiaries

In many states a holographic will must contain the maker’s (your) signature. If you decide to go this route,  just go ahead and sign it the document….anything to make life easier for your beneficiaries.  Handwritten holographic wills do not have to be witnessed or notarized. If it is typed, you will need to have it witnessed. I think that the logic behind handwritten vs. typed is that it easier to commit fraud with the typewritten document.

Leave the holographic will in a place where it will be easily found. You don’t want your heirs to feel like they are in a mystery novel.

I took this definition from Investopedia, where they have defined various types of wills, too.

Here is a link:https://www.investopedia.com/terms/h/holographic-will.asp

Trusts

Elderlawanswers.com has a good definition of Trusts. One of the chief benefits of Trusts is that they allow for a seamless transition of financial responsibilities from the decedent to the trustee.

Here is their definition:

“One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a ‘trustee,’ holds legal title to property for another person, called a ‘beneficiary.’ A trust usually has two types of beneficiaries — one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.”

https://www.elderlawanswers.com/understanding-the-differences-between-a-will-and-a-trust-7888

Household Objects

If for some reason you do not designate “who gets what” in your will, at least put pieces of tape on the bottom of items around your home, and write the name of the recipient of each piece.  This is an easy way of letting everyone know which item goes where.

Next Time – Starting from Scratch After Your Loved One Has Passed Away