My friend and attorney, David Wood, wrote this. It’s helpful and comforting. What’s a widow to do- not only emotionally, but legally?
In 2009, my mother became a widow. Dad’s health had been poor for several years so it wasn’t much of a surprise when he was taken to the emergency room one last time. After his passing, Mom was in a daze for several weeks. Dad had taken care of the monthly bills, and the taxes, and handled the finances. These things were foreign to her. She needed a helping hand in a big way. Here’s what we did.
First, we took care of the funeral and started the grieving process with her. Dad had left some memorial instructions which was helpful. It is an emotionally taxing time; being supportive and present is critical. Legal and financial matters can wait a few days while we deal with raw feelings and sadness.
Second, once the funeral and burial were done, we needed to get down to business. We gathered records. It is imperative to account for all financial assets, legal documents, and property. We found account statements, called the bank, contacted the financial advisor, and gathered all the information about the estate. This included insurance policies, veterans’ benefits, and social security information. With all the information at your disposal, you can make good decisions or hire the right people to help with those decisions. If the decedent left a will or had a trust, it is crucial to understand those documents and their function.
Third, we ordered ten death certificates (you will probably need more of these than you think). This can be done through the funeral home or Utah’s vital records office, https://secure.utah.gov/vitalrecords/. Various entities, like insurance companies, the County Recorder, and the Social Security Administration, require an original death certificate, so having plenty on hand is useful and time-saving.
Fourth, we paid a visit to the Social Security Administration, the county recorder’s office, and the bank. We let the SSA know of Dad’s passing and filled out the necessary forms to claim the death benefit that is offered. (No form is necessary if the spouse is receiving a SS spousal benefit.) The SSA form is here: https://www.ssa.gov/forms/ssa-8.html. The visit to SSA is also important to prevent fraud by those who might try to pilfer a SS number that is no longer in use.
At the county recorder’s office, we filed a death certificate and affidavit to take Dad’s name off of the home deed. The home was owned as Joint Tenants with Rights of Survivorship, which is the most common form of ownership for a married couple. Once those documents were filed, mom owned the home 100% personally. The best way for a person to own her home (or a couple to own theirs) is in a Revocable Living Trust. Mom sold her home not long after. We established her trust and then transferred Mom’s new home into the trust when she moved.
At the bank, we made sure that accounts that were jointly owned by my parents were placed in Mom’s name and then eventually we transferred those to her trust as well. Mom suggested my name be on the account as a joint owner. I explained to her that putting your child onto your bank account is a terrible idea, even if your child is an estate attorney. Better is to name the child as a Payable on Death (POD) beneficiary. The POD has access to the money when the owner dies. But better still is to place the account in a trust.
The reason for the trust is primarily to avoid having to go through the probate court process. Probate costs several thousands of dollars and takes months, even when there is no dispute. Property held jointly, like the home or bank accounts, easily transfers to the surviving spouse without probate. However, when the surviving spouse passes, that property is subject to probate unless a probate avoidance plan (like a trust) has been implemented. Mom can add a child as an owner or a POD, but when mom dies, that child has complete ownership and control of the money. A child does not have to share with siblings or anyone else. A trust, on the other hand, lets all of the children be beneficiaries and requires the trustee to divide the money equally if that is what Mom wanted.
Fifth, if there is property of the decedent that was not jointly owned but for which the widow is the beneficiary, like an IRA or an insurance policy, a claim must be presented to the appropriate custodial institutions. All will have a process to follow and forms to complete. These institutions will need a death certificate as well. An insurance company will require the submission of the necessary forms and the insurance policy. Make a copy of everything before sending anything to others!
If there are assets for which the widowed spouse was not the beneficiary, she should consider the available options to acquire ownership and control of that property. For instance, if dad had a separate bank account or own some stock or a business at the time of his death, mom could present a death certificate and affidavit of survivorship to claim those. Unfortunately, if the value of those assets exceeds a certain limit (currently $100,000), probate is likely required IF no planning was done.
Sixth, the IRS wants their cut. When a person dies, a tax return must still be filed for the year he passed away. IRD (Income in Respect of a Decedent) must be paid for any untaxed income earned during his final year. It is a good idea to have a tax preparer or CPA assist in this area to make sure it is done right. The fee they charge will be money well-spent!
A word on debts of the decedent. In Utah, a surviving spouse is generally not responsible to pay the debts of the decedent spouse unless both their names were on the debt. However, this does not mean the debts go away. They are owed by the decedent’s estate. Depending on the size and type of the debt, creditors will demand repayment from the remaining assets of the estate. If there are debt issues, it is helpful to talk to an attorney knowledgeable in this area to know which obligations take priority.
Finally, the very best thing to do is plan ahead. Make sure ownership of assets and property is correctly structured. Have directions and instructions for survivors. Don’t lock up documents in a place that is inaccessible. Let your loved ones know you have a plan. Unfortunately, people generally do not plan ahead even though it is a fairly well-established fact that the mortality rate for humans is 100%! Don’t be a non-planner!
David G Wood, Esq.