What Documents Do I Need When Someone Dies?

This is not a short list, and frankly, it isn’t riveting reading. However, if you have had a family member pass away, this is the information you and your estate planning attorney need to help settle the decedent’s final affairs. An even smarter approach would be to gather these materials before someone dies, but that doesn’t always happen. This useful article from The Balance, “Important Papers to Locate After Someone Dies,” will help, regardless of your family’s situation.

Asset Information:

  • Account statements, including bank accounts, investments, and retirement accounts.
  • Life insurance policies. You may be required to show the original documents.
  • Beneficiary designations. This could include payable on death accounts and transfer on death accounts.
  • Real estate deeds
  • Titles for cars and boats
  • Stock and bond certificates–if held in certificate forms.

Business Documents:

  • Corporate, LLC or partnership documents
  • Account statements
  • Contracts
  • Business licenses
  • Income tax returns

Contracts:

  • Pre- or post-nuptial agreements and amendments, if any
  • Loans
  • Leases

Bills:

  • Utilities, cell phone, credit card, storage unit bills
  • Property tax and mortgage bills
  • Lines of credit or any outstanding loans
  • Medical bills
  • Funeral bills

Estate Planning Documents:

  • Last will and testament, plus codicil(s), if any
  • Revocable living trust and amendment(s), if any
  • Legacy letter, if there is one

Tax Returns

  • Income tax returns – federal and state for the last three years
  • Gift tax returns -federal and state

Death Certificates

  • You’ll need to order several from the funeral home

In addition to these documents, locate the decedent’s Social Security card and Medicare or Medicaid information.

It is a lot of information to gather, especially during a time of grief. Some people find this process cathartic, as they work through years of documents. Others may require help from another family member or a professional from their estate planning attorney’s office.

Reference: The Balance (Jan. 1, 2019) “Important Papers to Locate After Someone Dies”

Suggested Key Terms: Account Statements, Last Will and Testament, Trusts, Life Insurance Policies, Beneficiary Designations. Deeds, Assets, Partnership Documents, Business Licenses, Real Estate Titles, Income Tax Returns, Death Certificate, Tax Returns, Gift Tax Returns

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If Your Will Directs that Your Estate Be Divided Equally Between Children, and One of Them Dies Before You Do, How Will Your Assets be Divided After You Die?

The Carroll County Times recently published an article with this question: “Legal Matters: If predeceased by an heir in a valid will, what happens with that inheritance?” It notes that your will may direct the way in which the estate should be distributed, if one of the legatees dies before you. If not, you can modify your will to reflect how you want the estate divided, after the loss of your child.

As an example, the Maryland Estate and Trusts Code says “[u]nless a contrary intent is expressly indicated in the will, a legacy may not lapse or fail because of the death of a legatee after the execution of the will but prior to the death of the testator.”

This means your child’s estate will receive the share you designated in your will, if that child predeceases you. Whoever inherits the child’s estate, will receive what the deceased child is awarded in the will.

The law in Maryland says that the legatee (the deceased child) has to be specifically named in the will to get whatever share of your estate you directed. The law also points out that if you don’t want to leave part of your estate to the individuals who would inherit from your deceased son or daughter, you must specify how you want your estate divided, if one of your children dies before you.

It might be worth making that legal specification in your estate plan, if you and your daughter in-law have hated each other for 20 years, and you don’t want her to inherit the money or other assets that would have gone to your deceased son.

In early Maryland history, a legatee’s right to receive a share of the estate was not protected, if he died before the author of the will. If the will didn’t have instructions as to how the share should be distributed, if the legatee died before the author, then the share remained in the estate—the deceased legatee’s heirs received nothing.

The common law rule that effectively cut off the deceased legatee’s heirs was modified by an anti-lapse statute adopted in 1810. This transferred the deceased legatee’s share to the persons who shared in his estate according to her will, or, if she left no will, those who shared in her estate under law.

When a legatee doesn’t survive the author of the will by 30 days, state law typically treats this as if that legatee had predeceased the will’s author.

Reference: The Carroll County Times (December 21, 2018) “Legal Matters: If predeceased by an heir in a valid will, what happens with that inheritance?”

Suggested Key Terms: Estate Planning Lawyer, Wills, Inheritance, Intestacy

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How Do I Handle an Inherited IRA?

With an inherited IRA, in many cases the parent is the original beneficiary and the children are the successor beneficiaries. Both the original owner and beneficiaries need to follow some strict rules.

nj.com’s recent article, “Inheriting an inherited IRA? Your payout choices will be limited,” explains that per IRS rules, if you die prior to withdrawing all the funds from an inherited IRA, then the beneficiaries are bound by the same Required Minimum Distribution (RMD) schedule that they’d chosen, when they inherited it.

A person will typically choose either his own life expectancy or the life expectancy of the original plan participant, whichever’s longer. The successor beneficiaries must then keep withdrawing what’s left, according to that same schedule.

However, it’s different if you leave your own IRA to your children. In most circumstances, children who inherit an IRA would be able to withdraw the funds over their own life expectancies.

Note: this is the general rule. The IRA rules are quite complex, and there are many exceptions to the general rules. Ask the financial institution where the IRA is held, if they have any rules concerning their IRAs that may change the general rules.

With an inherited IRA, you need to take annual distributions no matter what age you are when you open the account. This doesn’t apply, if you’ve simply transferred another IRA to your own IRA.

Again, as a general rule, you must take distributions during your lifetime or within five years after the original account holder passed away.

If you inherit a Traditional IRA, you’ll pay taxes on any distributions you take. Rollover, SEP, and SIMPLE IRAs become Inherited Traditional IRAs. In contrast, with an Inherited Roth IRA, you don’t pay taxes on distributions.

To evaluate the potential effect an inheritance might have on your overall tax situations, talk to an experienced estate planning attorney.

Reference: nj.com (December 20, 2018) “Inheriting an inherited IRA? Your payout choices will be limited”

Suggested Key Terms: Inheritance, Planning, Financial Planning, Inherited IRA, Roth IRA, SEP, SIMPLE IRA, Required Minimum Distribution (RMD)

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