Journal of Financial Planning: September 2014 Jamie P. Hopkins, J.D., RICP ® , is an associate professor of taxation at The American College and the associate director of the New York Life Center for Retirement Income. Email author HERE . Ilya Lipin, J.D., LL.M., is an attorney in Philadelphia. […]
I used to think this way too. But then a business friend in town called me to let me know he was hacked. He has a small business just like I do. He didn’t even know it happened until government authorities contacted him to let him know. Lucky for him and his business and employees, they guided him through the process of fixing the hack.
Only the big boys get hacked, right? SONY, Target and Home Depot got hacked. The ransomware Wanna Cry only hit larger businesses. So why should I worry? Well, after some light research, here is why I should worry:
- Almost half of all phishing campaigns now target small companies.
- Only 5% of small companies carry Cyber Liability Insurance.
- The average data breach costs $4,000,000 to correct.
- The average cost per stolen record is $221 to correct! Ouch!
Turns out if you’ve been hacked and had records stolen, you need to hire a computer forensics firm to look at your computers and figure out how and where the hack happened. You’ll have to upgrade your security software and hardware. By law in almost every state you must contact each individual affected by your hack and provide them credit monitoring for a year. Your business could be sued by injured third parties. You could be penalized or fined by state government authorities if you were negligent in any way.
Recently in my emails, I have been asked to help sneak money out of foreign countries. I have been told by banks I don’t use that there has been suspicious activity on my account so please login with your username and password below. I have received dropbox files and have been asked to click and open them, but I have no idea who the sender is. The best one lately was from a realtor with an attachment stating that it was the closing statement for a recent client who purchased a new home and needed insurance. It wasn’t a client or prospect. That one almost got me; it was tailored for an insurance agent. I now believe the hackers are targeting small businesses.
Anyone who connects to the internet is vulnerable to be hacked! The average premium for a Cyber Liability Insurance Policy is only 0.1% of your company’s revenue, a small price to pay for Peace of Mind!
Why tech businesses are tackling society’s most taboo subject
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Death will happen to us all, but it’s not something we like to talk about or prepare for. The UK population is now older than it has ever been – by 2039, more than one in 12 of the population is projected to be aged 80 or over – and the death rate has risen. There were 602,786 deaths in the UK during 2015, according to the cumulative England and Wales, Scotland and Northern Ireland figures, up 5.4% from 2014. But some digitally-focused entrepreneurs have spotted an opportunity in the rise, and see this traditional industry as ripe for disruption.
Death in the modern age comes with an entirely new set of issues – how to handle our online legacies, such as our tweets, Facebook posts, playlists and other virtual creations. It is a question that has occupied Suelin Chen, founder and CEO of online end-of-life planning service Cake. The platform differs from others as it also provides a concierge facility to handle posthumous profiles online.
“Most people haven’t thought about what they would want to happen to their online accounts after they’ve passed away. We help people understand that there might be precious memories or even actual assets in their Dropbox, Gmail, Facebook, Instagram accounts, etc,” she says.
Chen says the terms and conditions for each site vary and this can be a potential problem for grieving relatives. Also, digital legacy is such a new concept, it is often missed by traditional will makers. “[Wills] are not typically updated enough to manage how often the digital landscape of our lives change. Legacy-building in the digital age is a whole new frontier.”
Dan Garrett, founder and CEO of London-based startup Farewill, is aiming to make it easier for people to update their wills. The business enables people to create a will online for £50 and make updates for just £5 a year. Before launching, Garrett spent time interviewing funeral directors to gain an insight into their work. He discovered that more than half of all people fail to draw up a will and of those who do, most documents are old and unreflective of the owner’s final wishes.
Garrett and all of his team have training in writing wills and the business has created around 2,000 so far. “There are a lot of costs and problems if you die intestate,” he points out. Latest figures estimate the average cost to an estate of dying without a will is £9,700 because of unclaimed assets and poor tax planning.
For some, the financial burden of organising a funeral can also be vast. Insurance company Sun Life found that the average cost of a death in the UK is £8,802 once funeral costs, probate and the send off have been paid for. A 2014 report by the University of Bath estimates that 100,000 people cannot afford to die.
Among the business’ investors are Zoopla and Lovefilm founder, Alex Chesterman, venture capital company Kindred Capital, and Wonga founder, Errol Damelin. Garrett says the nature of his investors is a sign of his own ambition. “Alex Chesterman changed the whole real estate market so I was really excited to bring him on board – we want to do the same with the death industry. The industry is ripe for disruption. I think the fact it hasn’t been is more of a reflection of it being a taboo, than of technical difficulty,” he says.
Perhaps because of its taboo nature, the death and funeral industry lacks the transparency of other sectors. Kim Bird is attempting to alter this with her Cardiff-based company About the Funeral, which was founded in 2012. The business received £250,000 from the investment consortium InspireWales, including GoCompare founders Hayley Parsons and Kevin Hughes (Hughes is on her board), and aims to bring price comparison services to the funeral market. “People are unfamiliar with buying a funeral. They either haven’t done it before, or not for a long time.”
Bird, who previously worked in the funeral industry as a bereavement support volunteer, says there are calls from both the public and parliamentarians (including Frank Field MP, chair of the work and pensions select committee) for greater transparency in the industry. She points to research from YouGov suggesting 85% of people want funeral prices published online. “The main challenges have been the nature of the market. It is a traditional industry – changing it is a big challenge,” she says.
It is early days for her company, which has so far signed up 100 funeral directors to its subscription service, but Bird believes now she has the funding and an experienced board, she is well placed to make a difference. “These days, the internet is where most people go for information and About the Funeral is just an extension of that. Many industries have been disrupted in this way – the insurance industry has been through it and now price comparison is the norm for that sector.”
Derrick Grant, who recently launched his funeral director’s network Willow, says he was shocked by the sheer cost of funerals and felt that grieving families were all too often getting a raw deal. “Having watched a friend struggle to pay for his wife’s funeral, I wanted to understand why it was so expensive. After doing research, it became obvious that a lot of the cost is simply because we don’t have the time or access to question the traditional funeral process,” he says.
Grant launched his business in December 2016 with a handful of independent funeral directors connected to his site. Users fill in a simple questionnaire and are directed to the provider who most closely matches their needs. The business makes money through the sale of funeral products such as coffins, flowers and celebrant services. Grant says people often pay large sums for these and it is easy to undercut his competition. He believes he is also making the process easier.
“There are a lot of questions to answer at a time when most people aren’t concerned with paperwork and chasing phone calls,” Grant says. “Booking a cremation can take several phone calls to agree a time and date. Digitising processes so the public and funeral directors are on equal footing and can make decisions faster will make huge differences in the industry. Talking about death is becoming easier, but it’s still difficult to understand what to do when you lose someone.”
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4 Ways To Protect Your Accounts From Beyond The Grave
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Hanging on to online passwords is hard enough when you’re alive, so how can you ensure continued access to important business accounts when your not?
A key aspect of today’s digital economy is businesses of all sizes running operations online. In small businesses, whether it’s accessing cloud technology, social media, e-commerce or financial transactions, the keys to these accounts often lie with the business owner, who stores passwords and logins in a place they deem secure.
This could range from a piece of paper in the bookcase, to an excel file on the computer.
However, there is one grim eventuality which is often not considered: what happens if that business owner suddenly passes away? If vital accounts that house customer data or legal documents are blocked off to anyone who doesn’t have access, the business itself could be at risk.
At least half of all business owners are expected to continue working beyond current retirement age, and yet few think about what will happen to their digital information when they pass. Business owners need to ensure that someone can carry on their business with ease, in the case of unexpected death. A digital estate plan should be created to ensure that everything is covered, while still maintaining the security of key information.
These four tips should get you thinking of the best ways to secure the digital legacy of your business, should the worst happen:
Value your digital assets
Maintaining an inventory for all your digital assets is crucial. This is everything that is electronically stored; from email accounts, to internet banking, social media accounts, and paid-for domain addresses.
As your company increases in size, these will become increasingly harder to track. Larger companies have more employees, clients, suppliers, and vendors, and therefore a variety of technology, and accounts, to manage.
The easiest way to store important details is to catalogue passwords and usernames for online accounts, even down to WiFi configurations, and of course, making sure it stays up to date. Consider using a password manager, such as LastPass, as an easy and secure way to help you do this.
Create secure login details
If you’re starting to think about the digital legacy of your business, it might be worth checking the current state of your account login details. In a global study by LastPass, 91% of us are aware that reusing passwords across different accounts is risky, yet 61% continue to do so.
This increases your chances of getting hacked, and therefore puts your whole business at risk. Of course, it’s never easy to think of and remember so many different combinations of characters and numbers, so the easiest thing to do is to use a password generator, to create randomised sequences for each account.
Don’t under-estimate social media
We all know the benefits of social media for business: drive customer engagement and loyalty with existing customers, attract new customers, and increase brand awareness with influencers, and amongst competitors.
Unfortunately, in the case of death, there’s currently no continuity across social platforms for what to do. Apart from Google’s Inactive Account Manager, and Facebook’s legacy contact feature, you’re largely left in the dark when it comes to your social media presence. If you’ve signed up for an account using a personal email, it will be even harder for others to gain access. Therefore, it’s vital that as a small business, that you have a recovery plan to suit your individual needs.
Passing on the information – don’t put it in a will
The average Brit holds 19 online accounts, so as a business you will undoubtedly hold many more. Keeping track of all these accounts can be hard enough, let alone finding and remembering the passwords. Naturally, you might think that the safest place for your passwords is in a will.
However, as soon as the owner is deceased, these become public record. Your accounts, and business, are therefore left vulnerable, open for anyone to access. New and existing usernames, emails and passwords need to be securely recorded, with access given to authorised parties in the event of the owner’s death.
As a business owner, you’ll probably be familiar with the concept of calculating risk, and not leaving things to chance. It’s important to apply this same attitude to the digital future of your business.
While it’s not always easy (or nice) to prepare for death, planning and foresight will ensure that the remaining management can continue the business with ease and minimal disruption. In order to prevent fiscal and emotional repercussions, pick your successor, and give them the tools to continue leading your business.
Settling Estate: What Do I Do When Someone Dies?
Settling the estate can be a trying process, particularly for those grieving. By following these practical steps and being aware of state law, you can ease the process for everyone involved. Settling the estate means safeguarding your loved one’s property during the administration process, paying debts and taxes, and distributing the assets of the estate to those who are entitled to receive it.
Note: The following legal and logistical information is most readily applicable to residents of California. However, where California’s laws or procedures differ greatly from those of the majority of other states, we have made an effort to make our out-of-state readers aware of this.
1. Initial Tasks
Handling the estate starts with a few practical tasks:
Determine Who Is the Executor or Trustee
Consult with an attorney if it is unclear who has been appointed by the will or trust.
Arrange for Temporary Care of Minor Children and Other Dependents
Your first task is to set up temporary care for any minor children and other dependents of the person who died. You might need to look into day care, hospice, or pet care services for temporary assistance until a longer-term solution can be found. For information on the legal process, see 3. Minors and Dependent Adults below.
Obtain Certified Copies of the Death Certificate
You will need death certificates for a variety of purposes, so it’s a good idea to have plenty of copies. Read our section about the Death Certificate in Immediate Help for more information.
Look for a Will or Trust
Locate a will, trust, or any other important after-death documents. For tips on locating these documents, see our section on Locating Important Documents in Immediate Help.
Collect the Mail
Collecting the person’s mail protects his or her privacy, but it also serves an important administrative function. The mail will help you identify the person’s property, because account statements and other documents relating to his or her property will arrive by mail. Bills will arrive by mail too, which will help you identify potential creditors.
Paying the Bills
After a death, bills will continue to arrive for expenses incurred during the person’s lifetime. These may include medical bills, credit card statements, utility and cell phone bills, invoices for mortgage payments, tax bills, insurance premiums, and so on. Here are a few tips for how to handle bills:
- Surviving spouses may be personally liable for the person’s debts, depending on state law. If you are a surviving spouse, consult with an attorney about whether and to what extent you should pay your spouse’s bills.
- If you are not the surviving spouse, do not pay bills from your own personal bank accounts. If you do, you may be deemed to have assumed responsibility for paying the debt.
- Legitimate bills should be paid from accounts that belonged to the person, and such payments should be made only by someone who is authorized to make decisions, such as a Trustee or Executor. Forward bills to the Trustee or Executor, or if no one is yet serving as Trustee or Executor, hold the bills temporarily without paying them until someone is appointed to serve.
- It is the job of the Trustee or Executor to identify what bills are legitimate, to fulfill creditor notification requirements, and to accept or reject creditor claims. The Trustee or Executor should consult with legal counsel about completing these tasks, because failure to fulfill the legal requirements could expose the Trustee or Executor to liability.
- If creditors press for payment before a Trustee or Executor has been appointed, let them know that all bills are on hold pending appointment of an authorized legal representative. If the creditor threatens legal action or files a claim, contact a lawyer immediately.
Secure the Residence, Automobiles, and Tangible Property
Lock the person’s residence and car, and allow no one to take tangible personal property that belonged to them. Tangible personal property includes furniture, antiques, artwork, as well as personal effects like clothing, jewelry, and personal documents. If there are people you do not know who have keys to the house, consider changing the locks. If you cannot reliably secure the residence, consider packing up the tangible personal property and moving it to a secure location such as a storage locker. If people you do not know have extra sets of keys to the car, move the car to a locked garage.
Notify Credit Card Companies and Credit Reporting Agencies
Toprotect against fraud, notify credit card companies that the person has passed away, and that no one should be permitted to make additional charges to the credit cards following the date of death. Let them know that the Executor or Trustee intends to close the accounts. Send a letter to each of the three major credit reporting agencies, Equifax, Experian, and Transunion, letting them know that the person has passed away and instructing them that no one should be allowed to use his or her name or social security number to apply for new credit.
Notify the Employer
If the person was employed at the time of death, notify the employer. Arrange for delivery of the final paychecks, and deposit the income checks into a bank account held in the name of the person or the person’s living trust. Ask the employer to identify the benefits provided by the employer to the person, such as health insurance coverage, life insurance, and retirement plans.
Notify Social Security
If the person was receiving social security checks, notify the Social Security Administration immediately. Often the funeral home or service provider will send a notice as a courtesy. Otherwise, call the Administration at the phone number provided on their website www.ssa.gov. Some family members may be eligible to collect a portion of the person’s Social Security benefits. Ask the Administration to provide you with information on survivor benefits, or consult with an attorney.
Notify Veterans Affairs Administration
If the person was a U.S. war veteran, call the federal Department of Veterans Affairs and have any veteran benefit payments stopped. There are cash benefits of $300 to $2,000 to the family members of veterans depending on the type of duty and the situation at death. Also, ask the VA about burial benefits, or visit the VA burial benefits page here. You will need the person’s VA number or service number and active dates of service.
2. Administering and Distributing Assets
How the assets of the person who died are administered depends on whether he or she left a will or a trust. To administer his or her property, you must meet specific legal requirements. Failing to follow the process can result in personal liability for the Trustee or Executor. We strongly recommend that you consult with an attorney who is experienced in trust and estate administration to advise you on the legal requirements. The attorney should be licensed to practice law in the state where the person was residing at the time of death. To find attorneys in your area, look up Legal Counsel on our Local Resources page.
Revocable Living Trust
A revocable living trust, also simply called a living trust, has become a widely used estate-planning tool, partly for the purpose of avoiding probate, which is further discussed below. A trust is an agreement between a “Grantor,” the person who creates the trust and transfers property into the trust, and a “Trustee,” the person who holds the property and administers it for the benefit of “beneficiaries.” When a Grantor sets up a “revocable living trust” for his or her benefit, he or she typically also serves as the initial trustee. After the Grantor dies, the trust becomes irrevocable, and a named successor steps in to serve as trustee. The successor trustee must hold or distribute the trust property for the named beneficiaries and in accordance with the instructions set forth in the trust agreement. The trust administration process occurs privately, for example, without Court involvement or oversight.
What if Property is not in the Trust?
If the person set up a revocable living trust, but his or her property was never transferred into the trust after death, you should consult with an attorney. Depending on the circumstances and state law, such property could potentially be confirmed to be property of the trust. If not, such property will be subject to probate, as discussed below.
Last Will and Testament
If there is no trust, but the person left a will, the assets of the estate must be administered through “probate.” Probate is the Court process for settling the estate of someone who died. A family member must petition to have the will admitted to the Court and ask for an Executor to be appointed. Once the Executor receives “letters of administration,” he or she must fulfill the legal duties set forth under state law (For example file an inventory of assets, notify creditors, and pay debts and taxes.), and after the administrative tasks are completed, the Executor must distribute the estate property in accordance with the instructions in the will and under the supervision of the Court. Probate fees can run into the tens of thousands of dollars, depending on state law, and probate can take one to two years to complete. High fees and long delays are two of the reasons why many people decide to set up revocable living trusts—property in a trust generally is exempt from probate.
No Estate Plan
If the person left no trust and no will, he or she is said to have died “intestate.” An intestate estate is subject to probate, too. Under intestacy, the person’s property must be given to whoever is entitled to receive it under state law. Typically, a surviving spouse and descendants are the first in line to inherit. If the person had no surviving spouse and no living descendants, then his or her parents would generally inherit next, and if parents are no longer alive, siblings and their descendants are typically next in line. The specific rules of intestate succession vary by state law.
Small Estate Administration and Spousal Petitions
In some states, there are exceptions to the probate requirement. If your loved one’s estate is a “small estate” as defined under state law, a simpler process may be available to transfer assets to the beneficiaries. In California, for example, if the estate has no real property with a date-of-death market value of more than $50,000 and the estate has a total value of less than $150,000, the beneficiaries of the property can have the assets transferred to themselves by completing affidavits. Also in California, if the person is survived by a spouse, the surviving spouse can use a spousal petition to take title to property he or she is inheriting, instead of having to conduct a formal probate proceeding.
Joint property, such as real property titled in joint tenancy with right of survivorship or joint bank accounts, transfers automatically to the survivor upon the death of either joint owner. Joint property typically is not subject to probate under state law. If you are the surviving owner, you must complete paperwork to remove the owner who has died from the title. For example, for real property, an affidavit of death of joint tenant must be recorded with the County where the property is located. The affidavit removes the name of the person who died from the property and places it entirely in the name of the surviving owner.
Pay-on-Death Account or a Totten Trust
Pay-on-death (“P.O.D.”) accounts or a Totten trust automatically transfer to the payee upon the death of the owner. Like joint property, these type of accounts bypass probate. You should notify the banks where the person held accounts of his or her death, and provide them a copy of the death certificate. The banks will then contact any beneficiaries directly. If you are the beneficiary, the bank will likely ask you to complete forms to transfer the account to your name.
Life Insurance Policies and Retirement Plans
Life insurance proceeds and retirement plans are paid directly to the beneficiaries named on the policies and plans and are not subject to probate. If the person failed to name beneficiaries, however, the life insurance proceeds and retirement plans will have to be paid to the person’s estate, which could trigger a probate. Contact the institutions holding the life insurance policies and retirement plans, and inform them of the person’s death. The institutions will contact the named beneficiaries directly.
3. Minors and Dependent Adults
Guardian of the Person
If the person who died left minor children, and the other parent is no longer alive, a guardian “of the person” will have to be appointed for the children by the Court. The guardian of the person is the individual who is granted physical custody of the children and is responsible for their care and upbringing until they reach age 18.
Nomination of Guardian by Person Who Died
If the person left a will, check whether the will included a nomination of guardian. A nomination of guardian is the parent’s expressed wish for who should take custody of the children in the event that both parents have died. Courts typically place great weight on the wishes of the parents when appointing a guardian, but keep in mind that the wishes of the parents will not necessarily be determinative. The Court may appoint a different person if the Court believes that doing so would be in the best interest of the children.
Assets of Minors
If both parents have died, their minor children will also likely inherit their property. Minors, however, cannot legally manage their own assets. If the parents left the property to the children in a trust, the Trustee will be in charge of managing the assets for the minor children under the terms of the trust. If there is no trust, the Court will likely have to establish a guardianship “of the estate.” The guardian of the estate is responsible for managing the minor’s assets until age 18.
If the person who died was caring for an elderly parent or another dependent adult, check whether the dependent adult has a general durable power of attorney or a living trust. If so, the adult’s affairs should be handled by his or her agent or trustee. Contact that agent or trustee, and contact the adult’s attorney, and inform them of the person’s death. If there is no power of attorney and no trust, the Court may have to establish a conservatorship for the adult. A conservatorship is similar to a guardianship, except that the subject is an incapacitated adult, instead of a minor child. A conservatorship gives the conservator authority over the incapacitated adult’s physical care and financial matters.
To learn how to establish a guardianship for a minor or a conservatorship for an incapacitated adult, consult with an attorney.
4. Tax Considerations
If you are serving as Trustee or Executor, you should consult with legal counsel and an accountant about whether estate tax returns must be filed. The estate tax is a tax on all property owned by the person at the time of death. In addition, you may include in the estate certain gifts made during life for estate tax purposes.
Federal Estate Tax
In any given year, there is an applicable federal estate tax exemption. The value of the estate that exceeds the exemption is subject to the tax. Under the Tax Relief Act of 2010, the applicable exemption for 2011 was set at $5,000,000, and in 2012, the exemption increased to $5,120,000. The 2011 and 2012 maximum federal estate tax rate is 35%. In 2013, however, the exemption is scheduled to drop down to $1,000,000, and the maximum rate is set to increase to 55%. Anyone whose estate at the time of death has a value in excess of the applicable exemption amount in that year is required to file an estate tax return. You may need to have property appraisals done to determine accurate date-of-death values. In addition, for a married person who passes away in 2011 and 2012 with a surviving spouse, an estate tax return may be filed to preserve the “portability” of the person’s federal estate tax exemption, even if the value of the estate is below the exemption amount. For help deciding whether to file an estate tax return, please consult with an attorney or accountant.
State Estate Taxes
Also ask your attorney or accountant whether the state where the person who died was living has a state-level estate tax. The state-level applicable exemption amount and tax rate may differ from the federal estate tax. A few states, like California, have abolished the state estate tax.
A personal income tax return must be filed for the first part of the last year of the person’s life through the date of death. The surviving spouse may file as married jointly on behalf of both spouses. For the second part of the year, a fiduciary tax return will have to be filed for income earned by the person’s estate or trust after the date of death. For example, if the person owned rental property held in a trust, the trust would have to file an income tax return, reporting rental income for the second part of the year following the date of death. Special rules apply to income earned during life but received only after death. Seek the assistance of an attorney or an accountant to prepare the income tax returns.
Tax ID Number
You’ll need to get a tax ID number for the Estate or Trust in order to file a fiduciary tax return. For more information on how to obtain a tax ID number, visit www.irs.gov, or ask your attorney or accountant.
Capital Gains Tax
Capital gains taxes are based on an appreciation in value. For example, if someone purchased stock in 2002 for $300,000 and then sold it in 2012 for $400,000, there would a capital gain of $100,000. That “capital gain” of $100,000 would be subject to a 15% federal capital gains tax, as well as state capital gains tax. The purchase price of $300,000 in this example is called the “basis” and the sale price of $400,000 is called the “amount realized.”
For property that is inherited, however, the basis is “stepped up” to the full fair market value at the date of death. In the example above, if instead of selling the stock, the owner dies when the stock has a value of $400,000, and the heirs of the person then immediately sell the stock for $400,000, the basis would be stepped up from $300,000 to the $400,000 value on the date of death, and there would be no capital gain. Capital gains tax could be due, however, if the value appreciates between the date of death and the date of sale. If you have inherited property and are considering selling it, consult with a tax professional about whether a capital gains tax could be due.
What, if any, insurance policies of the person who died should be kept in effect following the date of death?
Homeowners and Renters Insurance
You should maintain the homeowners and renters insurance policies so long as the property remains in the Estate or Trust, to protect the Estate and Trust assets in case of property damage or lawsuits. Cancelling the coverage could actually expose the Executor or Trustee to liability for breach of fiduciary duty, if property damage or lawsuits deplete the assets as a result of lapsed insurance coverage. The Executor should inform the insurance company of the death in writing and request that the Estate be added to the policy as a “named insured” as soon as possible in order to secure the same rights as the person who died.
You should consider maintaining the insurance policy on the car if the rates are favorable. Most auto insurance companies will continue to cover the vehicle and the new legal owner at the same rate under the “permissive use” clause of the insurance agreement. Alternatively, if the car will lay idle during the administration period, or if it will be sold, you can consider registering the car for “planned non-operation” with the state DMV and cancelling the insurance policy, to save expenses for the Estate.
Thanks to COBRA (Consolidated Omnibus Budget Reconciliation Act, 1986), if the person who died received employer health insurance, surviving spouses and dependents will be eligible for continued coverage following his or her death, if they were originally covered. You can contact the insurance company or the employer in order to remove the person from coverage, while continuing coverage under the existing policy for qualifying family members.
6. Assets of the Estate
Certain assets raise unique issues that the Executor or Trustee may need to address.
If the personal residence of the person who died was a rental, to save ongoing expenses, the Executor or Trustee may decide to terminate the lease, vacate the premises, and place all of the tangible property in storage until they are distributed. If the person owned his or her own home, check whether the will or trust hands over the residence to anyone. If not, the Executor or Trustee should determine whether any of the residual beneficiaries wish to take ownership of the property, provided there are other equal assets that can be distributed to other beneficiaries.
Alternatively, the Executor or Trustee may sell the property and distribute the net proceeds. A title search should be done to find out whether there are mortgages or liens against the property. If the residence is underwater, the Executor and Trustee would have to decide whether to pursue foreclosure, a deed in lieu of foreclosure, or a short sale as a means of disposing of the property. For assistance with underwater properties, you should seek the advice of an attorney and a realtor.
If the surviving spouse, minor children, or other family members were residing with the person at the time of death, they might have the right to continue living there during the administration of the estate or trust, depending on state law. Consult with an attorney about whether occupants can be allowed to remain in the person’s home and for how long, or whether they will have to move from the premises.
Other Real Estate
If the person who died owned other real estate, check whether there are tenants occupying their property. If so, look for a copy of the lease agreement among his or her papers, and arrange for rental income checks to be sent to the Executor or Trustee. Find out whether the person had hired a property management company, and if so, request a copy of the property management agreement. If the property will be sold, you should consult with an attorney and a realtor as to whether steps should be taken to remove the occupants from the premises before the property is listed for sale.
If there is no trust, the accounts of the person who died should be retitled to the name of the estate. To do so, the bank will likely request from you copies of the death certificate and the letters of administration, as well as the Estate’s tax ID number. You can consolidate cash accounts into a single Estate account for ease of administration.
If the person was the owner of a small business, check the will or trust for instructions as to the disposition of the business. The death of the owner can result in a sudden and steep decline in the business value. To mitigate against potential loss, you can immediately contact any co-owners or senior staff members to arrange for the continuing operation of the business, and to set up a system for collecting income and paying expenses during the administration of the estate or trust. The executor or trustee should decide as quickly as possible, based on the instructions in the will or trust, whether the business will be closed, sold, or liquidated. If the business is put up for sale, an appraiser may be needed to determine the value of the business. If the person was a licensed professional, for example an attorney, architect, dentist, or psychologist, the state may impose special rules regarding the winding up or sale of the business. Consult with an attorney to discuss the legal requirements.
You should identify items specifically entrusted to anyone in the person’s estate plan documents, and secure such items until they are ready to be distributed to the beneficiaries. If there are valuable vehicles, artwork, jewels, or antiques, consider having those items appraised. All remaining items of tangible property are typically distributed equally to the residual beneficiaries—that is in shares of roughly equal value, as the beneficiaries agree among themselves. For example, one way the beneficiaries can divide up the items is to take turns choosing them; perhaps you can draw cards to determine who gets to choose first. Read our blog post about dividing family heirlooms for tips.
Another option you have is to sell the remaining tangible property– for example, in an estate sale. There are many companies that manage such sales in return for a fee or percentage of total sales, or you can conduct one yourself. The net proceeds would then be distributed to the beneficiaries. Look up Estate Liquidation & Moving services on our Local Resources page. You can also make donations of the remaining items to one or more charitable organizations. Listed below are resources for donating different types of items:
- CDs and DVDs
You may be able to sell CDs and DVDs at a local used record store or online. Alternatively, you can try donating items to your local public library or school, or to organizations that are building libraries, as described in this article by Planet Green.
- Computers and Electronics
There are many regional options for recycling obsolete or damaged computers or electronics, or so-called “e-waste.” Some organizations will pick up these items for you. You can search the EPA’s directory for such organizations near you.
- Children’s Toys
New or gently used children’s toys, stuffed animals, or books can be donated to Stuffed Animals for Emergencies (SAFE), an organization that collects items to benefit children during emergency situations such as fire, illness, accidents, neglect, abuse, homelessness, or floods.
- Art Supplies
Items like art supplies, boxes, string, fabric, and paperboard can be donated. Web search “Creative Reuse Center” to locate a center near you where you can donate such miscellaneous items to help teachers, businesses, and artists.
- Wedding Dress
You can donate used wedding dresses to charitable organizations such as Brides Against Breast Cancer, a group that is funding an initiative called Making Memories to help those who are losing the battle with breast cancer.
You will have to determine, based on the person’s will or Trust, who is the intended beneficiary of his or her automobile. To transfer title to the beneficiary, contact your state’s DMV and complete the required paperwork. Be prepared to provide the DMV with a certified copy of the death certificate as well as copies of valid registration papers and insurance coverage. If there is no named beneficiary for the car, and no residual beneficiary wishes to have the car, the Executor or Trustee may decide to donate it rather than trying to sell it. Habitat for Humanity, for one, accepts donated cars, sells them, and uses the funds to help build and secure affordable housing for at-need families.
Similar to batteries and electronics, you should safely dispose of leftover medications. They are generally comprised of a wide variety of chemicals that can be hazardous when combined, and highly environmentally detrimental when they end up in landfills or filter into the water supply. The federal Drug Enforcement Administration recommends taking medications to local take-back centers. To find a take-back center near you, ask your local pharmacy or contact your local water management agency. You can also donate leftover medications to organizations such as the Afya Foundation and Aid for AIDS, which channel unused medications to Third World countries.
Email and Networking Accounts
Consider hiring termination services to terminate the person’s email accounts and social and business networking accounts on websites such as Facebook and LinkedIn. Each company has its own policies as to what happens to online accounts after death, and whether the person’s online personal information or records can be accessed. See 7. Digital Death for more information.
Asset Search Services
Finally, if you think the person who died may have had other unidentified property, you can consider hiring asset search services in order to locate any unknown assets, such as real property or accounts in other states. You can search state databases, or use services like Missing Money to locate unclaimed assets or property.
7. Digital Death
With so much of our lives online, digital property is becoming an increasingly important part of estate planning and settling the estate, just like physical property. When someone dies, their online accounts, including email and social media accounts, will live on unless otherwise dealt with.
Digital Estate Services
The person who died may have stipulated their wishes in their will regarding their digital property. He or she may have also used an online service. Some companies allow you to create a “digital safety deposit box” with all of your account information stored in one place, and a beneficiary listed for each account. Whoever the person named as a “verifier” will be asked to verify his or her death, and then the beneficiaries of the person’s respective accounts will be notified.
If no arrangements regarding digital property were made, or if you cannot find out if they did, you may still be able to access or delete their online accounts. Currently, Gmail and Hotmail will mail the person’s information to the estate holder. Facebook will not grant access to the account, but if you contact them you can request that the person’s profile be taken down or turned into a memorial page.
Only five states – Oklahoma, Idaho, Rhode Island, Indiana, and Connecticut – currently have laws regarding digital property assets, though more are likely on their way. For information on individual state laws where they exist, visit the Digital Estate Resource page. Or for Digital Asset Services, visit our Local Resources page.