Loss does not take a vacation over the holidays and sometimes it seems this might be the time when some of the greatest losses occur. Whenever you have to face the death of a loved one it is difficult.
Here is some information to pull matters together at that difficult time. Keep it available in a time of need so you know what to look for and what to do.
The first thing to do after handling final arrangements for your loved one is to locate the will if there is one and determine the location of accounts. Even if there is a will, depending on titling and other issues, it is not always necessary to probate (record) it and administer an estate. You can check with an elder law or estate attorney to find out.
In Pennsylvania there is an inheritance tax that impacts everyone except spouses who are effectively not taxedĀ ā the rate for spouses is zero percent. However, sometimes a spouse needs to probate anyway to get access to certain assets. Also, some assets such as jointly titled accounts and property are taxed for inheritance tax purposes even when probate is not necessary. Check with an elder law or estate attorney if you are unsure.
If your family member was receiving Social Security, there may be a reckoning with Social Security for the last month of benefits. It is best to keep the account open for a few months to be sure. Funeral directors are often helpful both in notifying Social Security, so you do not have to, and in providing death certificates.
If your husband or wife passes and his or her Social Security was higher than yours, then you will ultimately receive the same monthly benefit that he or she would have received but your benefit will end. If your benefit was higher, it will stay the same. There is also a $255 death benefit that you can claim from the government in either case.
If you are an executor, you need to follow the provisions of the will in making distribution. First you need to determine what assets are part of the estate. Then you need to identify creditors (including the government if taxes, including Inheritance taxes are due) and pay them. Some assets may not be part of the probate estate such as life insurance with named beneficiaries, retirement accounts with named beneficiaries, jointly titled assets or payable on death (pod) or transfer on death (tod) assets. Just because they are not part of the probate estate does not mean taxes are not due although life insurance is one asset exempted from Pennsylvania inheritance tax entirely. You need to know how assets are handled. Ask if you are not sure.
You should not assume that, because you are the closest surviving relative of the decedent you are responsible for that personās bills. You might decide to pay them as a matter of personal pride or perceived moral obligation but legal responsibility is something different. The bills will first follow the estate of the deceased person and Pennsylvania and other states have specific rules concerning how bills are to be paid for an āinsolvent estate,ā that is, one where bills are higher than assets. If you are dealing with an insolvent estate, the state where your loved one resided at death lists an order of distribution in which bills are to be paid. In Pennsylvania at the very top are costs of administration such as filing fees, executorās fee and attorneyās fee and payment of funeral bills. Do not pay credit card bills first if you do not think there is enough in the estate to pay all bills. In Pennsylvania, medical bills, including payments from Medicaid for medical care incurred within six months of the personās death are given higher priority than older medical bills. Credit card bills are unsecured debt and are on the bottom of the pile.
I hope this helps. An estate may be handled in an orderly manner. Proceed cautiously and know your rights and responsibilities.