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 personal 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 Personal Representative
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.
For more information on this topic, the AARP has written an excellent pamphlet, “Prepare to Care”outlining why it is recommended that families TALK and PLAN with establishing clear roles, having a clear understanding of the desires of the elder and the families.
According to a WebMD article, Five things that everyone should do before they die:
No.1. Give someone durable power of attorney to manage your affairs if you become sick and unable to do so yourself. Who is going to pay your bills, deposit your checks, manage your financial affairs and your business if you have one? We're going to live a lot longer in general, and most of us will live under some chronic condition or disability that will impair us. The goal is to live with as much control and quality of life as possible.
No. 2. Write a will or a trust if your assets require it or if you want your affairs kept private after you die. Although the probate process in New Mexico has gotten easier, it is still public which means your will and your death certificate are on file with the probate court after you die. And tax exemption planning is probably not of concern as most assets will pass tax-free, IRA assets will not. It is recommended that families speak to an estate planning attorney so that the family is aware of when taxes will need to be paid, who will pay it, and whether a life insurance policy is necessary to cover that expense.
No. 3. Write an advanced care directive or living will, and give someone medical power of attorney to carry out your wishes about medical treatment at the end of your life. Name someone you trust totally.
Without this, you could end up like Terri Schiavo, the Florida woman who triggered a battle between her husband and her parents after a heart attack left her with massive brain damage. Her husband claimed she would not want to be kept alive in such a condition, but her parents disagreed. "A durable power of attorney for health care enables you to appoint someone as your proxy to make health care decisions for you," says Sabatino.
No. 4. If you have dependent children, name a guardian to take care of them. If you have a disabled child, you may also need to consult a professional who can guide you through the labyrinth of Medicaid and Medicare rules. "Find a specialist who understands the benefits that may be available under Medicaid and Medicare, and who understands how those benefits can coordinate with asset planning," Sabatino says. "If you leave everything to a disabled child, he or she won't be eligible for aid. They will have to use up the entire estate before they qualify for aid. More thoughtful planning would allow the estate to complement public benefits. This is a growing specialty called specialneeds planning."
No. 5. Planning a Funeral Ease the trauma of your death for survivors by preplanning your funeral. "Leave instructions on how you want your body to be disposed of," says Sabatino. "Today, when families are so farflung, how are you going to get your children together for your funeral or memorial service? You can arrange for their travel expenses. You can write your own obituary, or at least a minibiography for death announcements."
Those are the "big five," as Sabatino calls them, but he and other experts suggest a few others:
6. Donate your organs. Carry an organ donation card in your wallet. Keep a second card with your important documents so it will be found quickly should you have an accident. In many states you can become an organ donor when you renew your driver's license. For information, visit www.organdonor.gov. 7. Make sure you have life insurance if your spouse or children will need financial support after you die.
8. Think about longterm care. "Stay out of a nursing home if you can," Sabatino says. "Most people who end up in nursing homes become impoverished and qualify for Medicaid. Don't assume that longterm care insurance will protect you. "You may have a condition that disqualifies you," says Sabatino, "or you may not be able to afford it. Premiums can cost up to $2,000 a year for a 60yearold and double each decade after that." You may be able to give some money to your children so they can help you after you can qualify for Medicaid, but you must do that well in advance of going into a nursing home now that Congress has tightened the rules.
The important thing is to start planning sooner rather than later, according to Dan Taylor, author of The Parent Care Conversation. In his book he offers detailed suggestions on how to talk about these issues with your parents and, if appropriate, with your children. "I think that people do not talk with each other about this because they don't know how to begin the conversation," Taylor says. Taylor wrote the book to help others avoid the problems he encountered after his father developed dementia. Taylor realized that with a few simple conversations, he could have taken much better care of him. "There needs to be a major dialogue between adult children and their aging parents about how best to prepare for and how best to be able to spend these extra years, in terms of quality of care and quality of life," Taylor says. "And the dialogue needs to occur now." Don't begin the conversation by telling your parents what you want them to do, as though you know what's best, Taylor suggests. "A better way to begin is by asking your parents what their view of the future is," he says. "Many [adult children] have no idea if parents are OK financially. They don't know where the assets are. Then something happens that forces them to take control, and by then the parent may not be able to tell them."