So…mom just died today. In addition to the arrangements for the decedent, I’m needing to wrap-up some expenses stuff. Her trust will go on for a while as a separate entity, taking RMDs and paying its own taxes. However, I’m uncertain about some other things.
For example, I routinely receive invoices for services that were rendered one or more months ago (especially medical, since they have to bill insurance first). Am I still able to use her credit card to pay those bills now that she’s deceased? Or is that credit card fraud? I had planned to cancel them after the bills stop coming, but maybe I can’t use them anyway? The mortuary will handle termination of social security. I’m assuming Medicare goes away once they stop receiving bills from doctors? I’ll need to cancel her supplemental policy (when? now? or should I wait a month to be sure all invoices are received by them?). Also her LTC policy (again, wait a month so the facility can submit her last claim?).
Eventually I will have to talk to a trust lawyer to see what elements of her trust can be merged with ours. I’ll also take the opportunity to update our trusts, and plug a few holes I found when dealing with my mom’s will (both living and last wills) to make it easier on my survivors when I go. We thought her wills were adequate, but there was enough ambiguity that I was having to make judgment calls as best I could. Our wills are similarly structured, so we need to add to clarification for the future to make it easier for 1poorkid.
From a recent family death, everything operates off the date of death. Medicare and the supplemental will pay all bills up to the date of death. Regarding the credit card, if you are listed as an authorized user you may be able to use the card. We chose to open an account in the name of the estate and fund it ourselves, then we were refunded the money by the estate later. Keep receipts for everything as you can get reimbursed for driving, mileage, hotels and meals if you have to travel to handle these affairs. My wife says that the funeral home goes off the social security number to notify important parties. She also says different states may have different laws/rules. HTH…doc
[Edited out a section because it may be incorrect.]
You should no longer use her CC as it would generally be considered fraud. If you used her CC because you had POA, that POA is no longer valid. Any unpaid bills should come out of her estate assets.
You can usually cancel insurance immediately. Any bills will include the date of service and the insurance company will still be responsible. You want to avoid having the insurance companies either autodebit her account (and then deal with the delay of having to get the money back) or worse, cancel a policy for failure to pay.
All the above being stated, talk to her bank about much of this. They deal with this on a daily basis and likely know better than anyone.
Since you have your Trust lawyer, give him a call and likely him or the staff paralegal can help sort out the details… That Trust likely spells a lot of it out.
I was Executor back in the late '70s for my Dad’s estate, no trust, few assets, so it was relatively simple to divvy up and pay the bills… As noted by others, avoid using her CC unless it’s a joint account…
You have my condolences, it takes time to get through it all… At some point we all get there…
I don’t have a trust lawyer anymore. He died of a brain tumor several years ago. I’ll have to get a new one.
I’ll close her CCs tomorrow, assuming they allow me. If my POA is no longer effective, it may be tricky. I am now the head of her trust, but her CCs are not in the trust name.
She does have two bank accounts. One personal, one trust. I’ll have to talk to someone about that, also. Probably only makes sense to keep the trust account.
On the practical side, you may have a hard time doing much of anything until you get the death certificates in hand. Financial institutions won’t really do anything without that. On the other hand, if you are an authorized user or joint account holder on any of her accounts, you can continue using those as needed to pay bills. About the worst thing you can do is call them to tell them about the death and not have the death certificates handy. They will likely shut down everything until that shows up. And in the mean time, you might lose all access - including on line access. So tread carefully. My opinion is that there is no harm in waiting a week or two before you start contacting banks and brokers.
It’s also important to take a beat and take care of yourself. We all handle grief differently, and there is no right or wrong way to grieve. As my family said, you do you.
In case this is helpful, my mother-in-law’s IRA became a “Beneficiary Distribution Account” BDA as my wife was the beneficiary. We had full control of it but it did require beginning minimum required distributions the year following her passing, counted as income to us.
On CCs, she had actually co-named my wife on at least one of them, so that was ok to keep using for years (it may even still be open.) I’d opt for paying them off and closing them ASAP in today’s hacked/fraud-racked world.
Bills/utiltiies/etc just call the company and cancel accounts effective DOD.
keep meticulous receipts about anything from the trust account or her bank account. If she had a small estate without remaining property to be distributed, it seems you may not even need a lawyer to take it to probate court (depending on the state.)
When Mom died in March I called the credit card companies and they had some kind of system where they could verify the death. I waited a month or so but I had no problem closing them. I thought they woudl ask for a death certificate, but they didn’t, they just said “So Sorry for your loss”.
I’m picking up death certificates next week. Then I will go to the credit union, call her CCs (2), and give one to her financial adviser. Plus the accountant wants to meet as soon as I have them. I should be able to close out almost everything outside of the trust pretty quickly after that. I’m co-trustee, so I can still be active in managing the trust.
Need to make sure her LTC company is aware also. I’ll be doing that next week. Already canceled phone, renter’s insurance, Medicare supplement, and newspaper. All the other utilities were handled by the community.
I think that’s all for the moment. Unless something comes up at the meetings with the accountant and the financial adviser.
Well, almost everything is handled. The credit union dissolved her account and made it mine. Her trust account still exists, but I’m the trustee. Apparently, her finance guy took care of rolling over the IRA, and is in the process of rolling the annuity (for some reason there is a delay). Her Schwab account is in the name of the trust, and they’re still working on that (someone is going to call me on Monday to discuss something).
My only question at this point is: should I take the trust down to zero and put the assets (just cash at this point) into our trust, or should I let it ride? I know her trust will have to pay taxes for this year, and those rates are worse than individual’s rates. But if I move it into our trust, is that a taxable event? There won’t be much tax on cap gains because of the stepped-up basis, and my liquidating everything shortly after her death.
And RMDs on her IRAs and annuity will have to continue, and be on a 10-yr clock (starting Jan 2024, I think).
Asset values will change from DOD to date of liquidation. That may result in a small taxable event.
Not all assets in the trust may have been held in a taxable account. For example, non-qualified annuities, whether held by a trust or not, do not benefit from stepped up basis at DOD.
Edit: Just went back and reread 1PGs post and it references the need to pay taxes on the trust this year - so it is fair to assume that the trust had other taxable events (dividends, liquidations) that happened prior to passing that will still need to be reported on her tax return.
Hey 1PG, you also state that the tax rates are higher on the trust - but that is usually just on irrevocable trusts. I thought this was a living (revocable) trust? If so, that trust income should be pass through and taxed at your mom’s rate and not at a trust rate.
Living trusts - aka revocable trusts - become irrevocable at death. So no pass thru to the original owner. Hence the high trust tax rates.
However, you can get around those if the trust allows distribution of the trust’s income to the beneficiaries AND those distributions are actually made. Then the taxable income can be passed thru to the beneficiaries.
Yes, it became irrevocable upon DOD. But I am a co-trustee (not a successor trustee). So I should still have access to it. They just need to record the death of the originator, and that it is now irrevocable. Schwab is still dragging their feet on this. They say that absorbing TD Ameritrade is slowing them down in other areas.
Thanks. It wasn’t unexpected. She was deteriorating rapidly the past few years (dementia). The stroke was unexpected, but I had already accepted that the woman who was my mother was mostly gone. The last time we visited her, it took her an hour before she realized who we were. The stroke was probably a mercy. She didn’t last two weeks after that. If my pre-dementia mother had seen my post-dementia mother, she would have been horrified. She wrote in her living will “comfort care”, but it was still horrifying.
And she thought she had covered everything, but even with a trust, it’s a pain in the [redacted] to get everything handled. And I’m a CO-trustee. Not a successor. At least we avoided probate.
Latest problem: her insurance (Medi-gap) is trying to return unused premium. They sent it in her name. But her PoA with me expired when she did, so I can’t sign the check. Initially they sent it to “the Estate of <1poormom>”, but she didn’t have an estate account. The new check is in her name, even though I specified “the <1poormom> revocable trust”, which is the correct title. I could deposit that check since I’m co-trustee. But without PoA, I can’t deposit a check in her name.