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What to Do After a Loved One Passes
Patricia Bloom-McDonald • Apr 05, 2018

The loss of a loved one may be the most traumatic event you will ever experience. Even if your loved one’s passing had been expected, the reality of the moment often hits hard.  You will need some time to reflect on your loss and to make arrangements for your loved one’s cremation or interment.

There are important things to do once the initial shock is over to protect your loved one’s assets and to provide for the decedent’s spouse and beneficiaries of his or her estate:

1.  If your loved one is to be interred, contact the funeral home. You should know if your loved one left pre-arrangements with a funeral home or a separate document stating how her final disposition should be handled. If he or she was a veteran, then the VA will pay up to a certain amount for funeral expenses, will provide a small plaque for the grave and may offer a graveside ceremony. There may be VA benefits for a surviving spouse or dependents; it is important to locate the veteran’s discharge papers (DD214).

2.  You will need several certified copies of the death certificate for banks and other institutions. Accounts have to be closed out, life insurance and credit card companies notified, and automatic payment plans terminated. The funeral parlor can provide copies of the death certificate or you can obtain them from the town in which your loved one resided at death.

3.  Friends, pastors, rabbis, other family members, and associates should be notified.

4.  If the decedent was still working, you need to notify the Human Resources Department of the death and inquire about the decedent’s retirement plan and other benefits to which the surviving spouse or dependents, if any, are entitled to receive.

5.  Hopefully, you or someone close to the decedent was advised of documents like a trust agreement, life insurance, and retirement accounts. If there is a Last Will and Testament, then an administrator or personal representative was nominated who needs to be advised of such. This also applies to anyone who is taking over as trustee for any trust established by the decedent since this person will have to be advised about his or her fiduciary duties and obligations in administering the estate and trust.

6.  Contact the Social Security Administration about reporting the death. If minor children or a spouse survived the decedent, then ask about death benefits.

7.  If there is a life insurance policy, the beneficiary will need to report the death to the insurance company in order to obtain the benefits and the beneficiary will need an original death certificate to present to the insurance company together with the original policy.

8.  If your loved one had a social media presence, then find out if he or she left passwords, although most allow easy ways to change them if necessary so you can have access. Email accounts need to be closed down. Facebook has a process for closing out an account and for memorial events for others to see. Delete all other accounts but allow a time for the decedent’s friends and associates to express their condolences and to share memories.

9.  Most importantly, contact an experienced probate administration attorney who can represent the estate regarding any probate matters and properly advise you and the family regarding how to handle the decedent’s assets, debts, and the tax implications when assets are finally distributed to various family members or other beneficiaries.

No action regarding assets should be taken until the matter is discussed with an attorney. If assets are sold or the title changed, this can have significant tax consequences that may be avoided if properly handled.

Consult Probate Administration Attorney Patricia Bloom-McDonald

Although retaining an attorney may not be your first priority after a loved one has passed, retaining one to handle the affairs of the decedent and oversee the administration of any probate matters can make your life and that of your family so much easier. Attorney Patricia Bloom-McDonald is an experienced probate lawyer who can advise you on how your loved one’s estate is to be handled in regard to claims against the estate and so as to avoid delays and unnecessary costs and taxes. Contact her today if a loved one has passed to schedule a complimentary one hour consultation on what steps need to be taken.

 

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Using a Credit Card When You Have a Special Needs Trust

25 May, 2023
A special needs trust (SNT) allows you to meet your needs while receiving government benefits, such as Medicaid/MassHealth and Supplemental Security Income (SSI). When you have a special needs trust, you can use it to pay for goods and services government benefits do not cover, such as therapy, education,and housing. Since receiving income directly from your trust would jeopardize your eligibility for benefits, your trustee cannot give you cash from your SNT. When you use a credit card for permitted transactions, and your trustee pays off the balance with funds from your trust, these payments to a credit card company are not considered income. An SSI or Medicaid/MassHealth recipient who is capable of managing their own affairs can therefore use a credit card to make small purchases, and the trustee of the special needs trust need not micromanage every transaction. In the past, beneficiaries of SNTs sent their bills to their trustees for payment. Today, an individual with an SNT who qualifies for a personal credit card may find that using a credit card is more convenient. Credit cards have several benefits. Using a credit card to manage payments from your special needs trust allows you to maintain independence, gain access to some of the advantages of a credit card, and easily keep records while preserving your eligibility for Medicaid/MassHealth and SSI. Although credit cards can help people manage their special needs trusts, there are also several important restrictions and considerations to keep in mind. Consult with a special needs planner to ensure all transactions are acceptable under the trust's rules and comply with government regulations. The Benefits of Using Credit Cards When You Have a Special Needs Trust If you have a special needs trust, using a credit card has many benefits, including: Independence : Allowing you to maintain your independence. You can use your card to make qualifying purchases yourself. Your trustee does not have to make the transactions for you. Access to the Typical Advantages of a Credit Card : Using it responsibly can help you establish or build credit history, which may be important for your future financial needs. Record-Keeping : Credit cards provide easy record-keeping and a convenient way to monitor transactions from your special needs trust, which can also help special needs trustees fulfill their duty to maintain records. When you use your card, your trustee can observe your purchases and ensure that all expenses are allowable under the trust’s rules. Your statements can help your trustee keep track of funds leaving the trust. Benefits Eligibility : While adhering to Medicaid/MassHealth and SSI’s income and asset limits, you can access funds from your SNT. Credit cards can help prevent your trustee from accidentally providing you with cash payments that could affect your eligibility for government benefits. Considerations When Using a Credit Card for Your Special Needs Trust While you can use a credit card to access funds from your special needs trust for certain transactions , restrictions apply. If your trustee sees a charge on your card that could affect your benefits eligibility , they can flag it for review. You cannot use your credit card to pay for food and shelter, which SSI would cover. When administering your funds, your trustee must ensure that any expenditures are for your sole benefit if you have a first-party special needs trust. While using a credit card is appropriate, you should not use a debit card. Debit cards are considered cash income. Best Practices When using a credit card for a special needs trust fund, remember several best practices. Choose a card with low fees and interest rates. Set a clear budget and monitor transactions regularly. Keep thorough records and receipts of expenses. Consult with your special needs planning attorney. A special needs planning attorney can help you navigate the rules that apply to your trust and understand how to use a credit card to preserve your Medicaid/MassHealth and SSI eligibility. 

How an ILIT can help offset estate taxes

12 May, 2023
With the Federal estate tax exemption possibly about to be lowered, it may be time to think about steps you can take to keep your estate from being taxed. An irrevocable life insurance trust allows you to pass on money to your heirs while avoiding both the federal estate tax, as well as any applicable state estate tax which is currently $1 million in the Commonwealth of Massachusetts. Senate Democrats have proposed lowering the current estate tax exemption from $11.7 million for individuals and $23.4 million for couples to $3.5 million for individuals and $7 million for couples. While it is unclear if this proposal will pass, it is likely that some change to the estate tax is coming. Even if Congress does not take any action, the current rate will sunset in 2026 and essentially be cut in half, to about $6 million per individual. In the Commonwealth of Massachusetts, the current estate tax exemption is $1 million for individuals and is taxed at dollar $1.00. A proposal to raise it to $3 Million and the tax to start at $3 Million (not at $1.00) has been submitted in the legislature but has not yet been voted on or enacted. One way to make up for any estate tax your estate may have to pay is by setting up an irrevocable life insurance trust [ILIT]and funding it with a policy that has a death benefit that would pay your heirs some or all of the amount your estate will be taxed. If you purchased such a life insurance policy directly, it could end up being taxed as part of your estate. But if a trust owned the policy, it could pass outside your estate. While a life insurance trust can be highly beneficial, it is also complicated to set up and maintain properly. The following are some of the requirements: Trustee . If you are setting up the trust, you cannot also serve as a trustee. If you are the trustee, you have control of the trust, which could lead to the trust being included in your estate. You will need to name another trusted person or financial institution to act as trustee. Policy ownership . The trust must own the life insurance policy. If you transfer an existing policy to the trust and die within three years, the policy will still be considered a part of your estate. To avoid this risk, the trust can purchase a policy directly rather than receive an existing policy. Premiums . You need to transfer funds to the trust to pay the policy premiums, which creates an issue with gift taxes. A transfer to a trust is usually not subject to the $15,000 yearly gift tax exclusion. For a gift to qualify for the exclusion, the recipient must have a "present interest" in the money. Because a promise to give someone money later does not count as a present interest, most gifts to trusts aren't excluded from the gift tax. To avoid this, you can use something called a “Crummey” power which gives beneficiaries the right to withdraw the funds transferred to the trust for up to 30 days. As part of the process, the trustee needs to send them a letter, known as a Crummey letter, letting them know about the trust funding and their right to withdraw the funds. After the 30 days have passed, the trustee can use the funds to pay the annual insurance premium. You run the risk of the beneficiaries withdrawing the funds, but if they know that by allowing the money to stay in the trust they will receive more money later, it shouldn’t be a problem. Beneficiaries . The beneficiary of the life insurance policy is usually the trust. Once the funds are deposited in the trust, the trustee can distribute the assets to the beneficiaries in the way specified by the trust. For example, if your beneficiaries are minors, you can wait to have the trustee distribute the assets. Keeping the assets in the trust will also protect them from your beneficiaries’ creditors. The downside of an irrevocable life insurance trust is that you do not have the ability to change it once it is set up, although the policy would effectively be canceled if you stopped paying the premiums. If you are considering this type of trust, discuss it with your attorney.
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