What To Do When a Loved One Passes Away

Whether your spouse has just passed away or you have lost your mom or dad, the emotional trauma of losing a loved one often comes with a bewildering array of financial and legal issues demanding attention. It can be difficult enough for family members to handle the emotional trauma of a death, let alone taking the steps necessary to get these matters in order.

If you are the executor or representative of the will, you first should secure the tangible personal property, meaning anything you can touch such as silverware, dishes, furniture or artwork. Then, take your time while bills need to be paid. They can wait a week or two without any real repercussions. It is more important that you and your family have time to grieve. 

When you are ready, you should meet with an attorney to review the steps necessary to administer the will. While the exact rules of estate planning differ from state to state, the key actions include:

• File the will and petition in probate court in order to be appointed executor.
• Collect the assets. This means that you need to find out about everything the deceased owned and file a list of inventory with the court.
• Pay the bills and taxes. If an estate tax return is due, it must be filed within nine months of the date of death.
• Distribute property to the heirs. Generally, executors do not pay out all of the estate assets until the period for creditors to make claims runs out which can be as long as a year.
• Finally, you must file an account with the court listing any income to the estate since the date of death and all expenses and estate distributions.

While some of these steps can be avoided through trusts or joint ownership arrangements, whoever is left in charge still has to pay all debts, file tax returns and distribute the property to the rightful heirs. 

New Yorker Article Highlights Abuses in the Guardianship System

Serious problems with the public guardianship system in the United States can lead to elder abuse, according to an in-depth article in The New Yorker titled “How the Elderly Lose their Rights.” Court-appointed guardians can take control of an elderly person’s finances and life and become wealthy while doing so. One expert interviewed describes the guardianship system as “a morass, a total mess.”

If an adult becomes incapable of making responsible decisions due to a mental disability, the court will appoint a substitute decision maker, often called a "guardian," but in some states called a "conservator" or other term. Guardianship is a legal relationship between a competent adult (the "guardian") and a person who because of incapacity is no longer able to take care of his or her own affairs (the "ward"). A public guardian is appointed by the court to serve wards when no family member or private guardian is available.

The New Yorker article, written by staff writer Rachel Aviv, focuses on a Nevada couple who came under the control of public guardian April Parks. As guardian for hundreds of wards, Ms. Parks, took over their lives, sold their belongings, and charged their estates hundreds of dollars an hour while doing so. Over her 12 years as a public guardian, Ms. Parks built relationships with hospitals and medical providers to refer patients to her and found doctors who were willing to declare patients incompetent. Families often found out too late that their loved one was under guardianship and beyond their legal control.

Ms. Parks was just one part of a system that fails to protect vulnerable elderly individuals the way it is meant to, Aviv suggests. The couple in the article lost their home and freedom and were moved around to various assisted living facilities and medicated. After the couple’s daughter notified the media, Ms. Parks was finally removed from the case. She was eventually investigated and indicted for perjury and theft related to her business dealings. Unfortunately, according to the article, other public guardians who are abusing the system are still working.

There are a growing number of stories of seniors who become confused and overwhelmed after losing control of their lives to a guardian they don't know. In response to such abuses, some states have begun making reforms. In March 2016, Florida’s governor signed a law creating an Office of Public and Professional Guardians that is required to create standard practices and rules for public guardians. Nevada has also enacted a number of reforms, including requiring that individuals subject to guardianship be represented by an attorney, that are set to go into effect in 2018. And in a rare display of bipartisanship, Congress recently passed and sent to the President a bill that empowers federal officials to investigate and prosecute unscrupulous guardians and conservators appointed by state courts.

While there isn't a foolproof way to prevent someone from preying on you or a loved one, there may be steps you can take to reduce the chances. A power of attorney allows a person you appoint (and trust) to act in place of you for financial purposes when and if you ever become incapacitated. Having a power of attorney in place may lessen the need for a guardian.

To find out what you can do to protect yourself and your loved ones, consult with your attorney. 

Use Your Will to Dictate How to Pay Your Debts

The main purpose of a will is to direct where your assets will go after you die, but it can also be used to instruct your heirs how to pay your debts. While generally heirs cannot inherit debt, debt can reduce what they receive. Spelling out how debt should be paid can help your heirs.

If someone dies with outstanding debt, the executor is responsible for making sure those debts are paid. This may require selling assets that you would like to leave to specific heirs. There are two types of debts you might leave behind:

• Secured debt is debt that is attached to a piece of property or an asset, such as a car loan or a mortgage.
• Unsecured debt is any debt that isn't backed by an underlying asset, such as credit card debt or medical bills.

When you leave an asset that has debt attached to it to your heirs, the debt stays on the property. Your heirs can either continue to pay on the debt or sell the property to pay off the debt. If you believe this would cause a burden for your heirs, you can leave them assets in your will specifically designated to pay off the debt.

With unsecured debt, although your heirs will not have to pay off the debt personally, the executor will have to pay the debt using estate assets. You can specify in your will which assets to use to pay these debts. For example, suppose you have a valuable collectible that you want one of your heirs to have. You can specify that the executor use assets in your bank account to pay any debts before selling the collectible. And if you want to leave liquid assets, like a bank account, CD, or stocks to an heir, you should designate in your will what you would like your executor to use instead to satisfy debts.

Not everyone needs to spell out how to pay debt in a will. If your debt is negligible or your entire estate is going to just one or two people, it may not be necessary.

Social Security Beneficiaries Will Receive a 2 Percent Increase in 2018

In 2018, Social Security recipients will get their largest cost of living increase in benefits since 2012, but the additional income will likely be largely eaten up by higher Medicare Part B premiums.

Cost of living increases are tied to the consumer price index, and an upturn in inflation rates and gas prices means recipients get a small boost in 2018, amounting to $27 a month for the typical retiree. The 2 percent increase is higher than last year’s .3 percent rise and the lack of any increase at all in 2016. The cost of living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $127,200 to $128,700.

The increase in benefits will likely be consumed by higher Medicare premiums, however. Most elderly and disabled people have their Medicare Part B premiums deducted from their monthly Social Security checks. For these individuals, if Social Security benefits don't rise, Medicare premiums can't either. This “hold harmless” provision does not apply to about 30 percent of Medicare beneficiaries: those enrolled in Medicare but who are not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $85,000 a year, and "dual eligibles" who get both Medicare and Medicaid benefits. In the past few years, Medicare beneficiaries not subject to the hold harmless provision have been paying higher Medicare premiums while Medicare premiums for those in the hold harmless group remained more or less the same. Now that seniors will be getting an increase in Social Security payments, Medicare will likely hike premiums for the seniors in the hold harmless group. And that increase may eat up the entire raise, at least for some beneficiaries.

For 2018, the monthly federal Supplemental Security Income (SSI) payment standard will be $750 for an individual and $1,125 for a couple.