Author Archive

What to Do When Someone Dies
By: Susan G. Parker, Esq.*
*Licensed in New York and Florida

When someone dies, aside from the eventuality of getting your lawyer involved to handle the estate administration, there are practical realities of the death itself, and arrangements to be made from the time of the death, through burial and beyond. In my experience, most of the state law protocols are similar, even if they have different rules concerning how to file a petition, admit an estate for probate, or the time limits on creditor claims.

Here I’ve classified the post-death concerns into three segments.

• The first covers the actual death, through the funeral arrangements – the initial shock phase.
• The second phase, which begins after the funeral, covers getting organized or “the lay of the land” as I call it. If you were a baker, you’d have to have the ingredients in hand before you start the process. That’s a good analogy for phase II.
• In the third phase, you enlist the help of a seasoned professional, likely an attorney, to shepherd the decedent’s estate through probate (if the decedent had a will) or through the jurisdiction’s estate administration process for intestacy – i.e., people who die without a will.

Most jurisdictions have a simplified procedure for decedents who have small estates, with or without a will. If no last will and testament is found, generally a family member in closest relationship of lineage to the decedent is appointed to shepherd the intestate estate administration. If there is no will, state law will determine how the decedent’s assets are distributed.

POST Death – PHASE I – Funeral Arrangements

Call 911. For starters, with respect to the death itself, if your loved one dies at home, call 911 or the Coroner’s Office in the county where you live. The deceased’s body must be picked up eventually through the funeral home, or hospital if organs are to be donated. Decisions regarding burial or cremation may have to be made, and a search should be made of the decedent’s personal papers to determine wishes/instructions.

Funeral Arrangements. Often it’s good to be accompanied by another family member or trusted friend to make arrangements, because you may be in a state of shock or hopeless overwhelm. I’d recommend contacting three funeral homes or mortuaries to determine rates, particulars, etc. The rates can vary wildly in the same geographic area, and these fees are often negotiable. While I’m not recommending you hunt for bargains, I am suggesting you not be gouged at a time when you are emotionally distraught.

In some jurisdictions public assistance may be available for funeral arrangements, or the decedent may have already purchased a package from a religious society or similar group which provides benefits or actual services/burial plot. If the decedent is a veteran or in the military, or the child, spouse or dependent of a member of the military, there is likely a VA benefit available for burial/funeral arrangements upon request.

Guard Decedent’s Property/Communications. When a death is announced in an obituary column, you’re putting the world on notice that a person has died and it’s important to guard against break-ins that may occur when the family is at the funeral. The decedent’s perishable property or property at risk must be specially protected. For example:

• If desired, publish an obituary.
• Check the decedent’s house and make sure house is secured, especially during the funeral or wake!
• If you are unsure whether outsiders (cleaning folks, caretakers, etc.) have keys or alarm codes, change them so you can make sure you know who is authorized. They will contact you if they can’t get in. Contact neighbors if they may have information.

Get Multiple Copies of Death Certificates. As part of estate administration copies of the death certificate is needed for many purposes. For example, it must be submitted as part of any federal or state estate tax return, to claim life insurance benefits and any employee benefits/pensions owned by the decedent. The number of original death certificates you’ll need depends on the nature and complexity of what the decedent owns, and how many agencies, businesses, former employers, insurance companies will request them. It’s a good idea to get at least 5-10 and more can be procured later. In some jurisdictions the cost is less if they are obtained at the outset from the funeral director or coroner’s office.

Post Death Phase II – Gathering Information

Make a List. To make sure you’ve got everything prepared to delve into estate administration, you need to get an idea of what you have to get in order. A truly organized decedent has left a list of all important documents, locations, and they are easily retrievable by next of kin or trusted friends in a nice tidy folder that says “open when I die.” Since this is rare in reality, most likely it will be up to you to get the lay of the land. Following is a list of items you may want to address sooner rather than later:

• Forward the mail.
• Contact the decedent’s employer, as applicable.
• Read the mail that comes in so you’ll be able to expand the list of who to contact.
• Discontinue unneeded services related to decedent’s home. For example, discontinue telephone, cable, internet; continue utility services.
• Formulate list of decedent’s advisors (accountant, attorney, broker, etc.)
• Stop subscriptions.
• Stop credit cards.
• If applicable, determine if decedent has internet use/accounts requiring passwords and getting access to those online accounts to discontinue or monitor, as needed.
• Discontinue government benefits such as social security, etc. Benefits will only be paid until date of death and overages must be repaid.
• Prepare list of names for monthly benefit items such as: pensions, IRA distributions, annuities.
• Create a list of accounts from bank, brokerage, investment account statements.
• Compile contact information for decedent’s attorney, accountant, investment advisors, insurance brokers. Contact executor/trustees or others who will be responsible for estate administration if known or named in testamentary documents.
• If no testamentary documents are found, determine if decedent had a “family” attorney or filed a will with a local government (county) which may permit such practices.
• Locate safe deposit box.
• Obtain claim forms for any outstanding benefits or insurance which decedent owned or in which he had an interest.
• Contact major credit bureaus to report the death to protect against fraudulent post-death transactions. (Equifax (888) 766-0008, Experian (888) 397-3742, TransUnion (800) 680-7289).

Review Incoming Mail. This will provide a lot of information as to who the decedent had business or other interactions with that may have a bearing on the estate.

• Send change of address forms, as necessary.
• Determine contacts who may be relevant for purposes of starting or stopping any benefits or services.
• Beware of fraudulent invoices that may be attempted once notice of death is published. When you review incoming mail, you’ll get an idea of credit card payees. Make a list of the credit cards/outstanding balances.
• Formulate list of vendors who the decedent may owe money and who may owe money to the decedent.

Locate Legal Documents and Important Papers. As you begin looking through the decedent’s belongings, keep hold of any of the following documents which will be needed.

• Locate the decedent’s important papers:
  • Last will and testament
  • Trusts, if any
  • Other estate planning documents
  • Marital certificates, divorce papers, birth certificate, social security card and other legal documents which have a bearing on the estate and beneficiaries.
  • Mortgages and deed/title to real estate, if applicable
  • Loan documents
  • Military discharge papers
• Secure automobile owned by decedent and locate insurance policy

DO NOT TRANSFER TITLE TO ASSETS OR MAKE ANY DISTRIBUTIONS OF ANY KIND TO ANYONE WITHOUT CONSULTING AN ATTORNEY!

Phase III – Launching Estate Administration

To launch estate administration, you need to appoint a personal representative, identify the estate assets and be prepared to deal with government agencies, such as the IRS, Veteran’s Administration and Social Security Administration to finalize accounts on behalf of the decedent. Depending on the nature and extent of the decedent’s assets, there may be issues as to “cash needs” during the period of administration and availability of assets that affected survivors need to live on. These will be the initial concerns of the personal administrator.

Following is a list of items which impact this process:

• Final wages owed the decedent which may include:
  • Accrued vacation, sick days
  • Compensation per employment agreements
  • Unemployment or disability benefits

• Medical bills outstanding and payments due from insurers, Medicare, Medicaid and workers compensation claims or disability policies.
• Debts which may be due to or owed by the decedent. Also consider assets that may be encumbered by debt (e.g. home mortgage.)
• Death benefits
• Begin to inventory major estate assets including:
  • Homes
  • Investments
  • Business interests
  • Artwork/Collections
  • Trusts

As the process begins, the personal representative should open a new checking account in the name of the estate which is used to receive decedent’s assets, sell securities, pay debts and administration expenses, insure the family cash needs (e.g. for spouse and children if applicable) are available to them and to distribute assets.

If you have any questions or concerns, and I can be of assistance, please contact me in New York at (914) 923-1600 or in Florida at (561) 625-9946.

I recently hopped on the IRS website and learned it’s National Small Business Week. After recently being chided by a family member for missing his birthday, I don’t want to be caught short again. HAPPY NATIONAL SMALL BUSINESS WEEK!

Since no one has sent me a greeting card on this one (and I own two small businesses) maybe it’s not a new alliance between the IRS and Hallmark. So what gives?

Methinks the new improved friendlier IRS has some marketing savvy afoot. Since, the nation’s chief tax enforcer has requested and is slated to receive funds for a 17% manpower increase (up to 16,500 new employees,) my sense is this “holiday week” is to remind us of tax goodies – and more potential “gotchas” for this new army of tax police. But cynicism aside, there are some great new tax credits if you hire more people and/or provide health insurance.

A tax credit is a direct dollar for dollar offset of your tax bill. If your CPA says you owe $10,000 in taxes, but you are eligible for $4000 in credits, you make the check out to the IRS for only $6000. It’s more valuable than a tax deduction.

If you’re planning to hire new people, or subsidize employee health insurance, there are some excellent tax breaks available now. I know this is bit long for a blog post, but for some it may be easier than checking it out on the IRS website at: www.irs.gov/businesses/small/index.html.

New 35% Health Care Tax Credit for Providing Health Insurance

Small employers who offer health insurance coverage for the first time or maintain coverage they already have get this credit in 2010 if they pay at least half the cost of single coverage for their employees. The credit maxes out at 35%.

For tax years 2010 to 2013, the maximum credit is 35% if you have 10 or fewer full-time equivalent (FTE) employees, paying annual average wages of $25,000 or less.

The credit is completely phased out for employers with more than 25 FTEs or with average wages of more than $50,000.

For some, the key here will be getting the right “average wages” number.

Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 people.

Two New Benefits for Employers that Hire and Retain Recently Unemployed

If your business hires workers after Feb. 3, 2010, and before Jan. 1, 2011, who were previously unemployed, you may qualify for a 6.2-percent payroll tax incentive. This basically wipes out the employer share of social security taxes on those wages. If the new hire stays on for a year without a decrease in wages you can also get up to $1,000 new hire retention credit as well.

Here is some of the “fine print” on this one:

New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause.

Family members and other relatives generally do not qualify.

The new hires must certify (i.e. swear they are not lying) that they were not employed for more than 40 hours during the 60 days before beginning employment with that employer. IRS Form W-11 can be used to meet this requirement.

Tax Credit for Hiring “Hard to Hire” Unemployed Workers

If you hire “certain” ex-felons, welfare recipients, veterans, and minority youth, between the ages of 18-39, you can claim credits. Although the labeling may seem offensive, the tax savings are real. The credit is available for small businesses in 43 states and Washington D.C., if you get the needed “certification” and file with the state workforce agency within 28 days after the eligible worker begins work.

There are special rules about what credits can be taken together – so make sure your business maxes out your entitlements.

Blasting Through Info Overload

According to experts, most of us are bombarded with over 3,000 messages a day. Yeah, you can minimize them but even if you don’t pick up a newspaper, watch tv, go online or listen to the radio – odds are you’ll see a sign by the side of the road, get something in the mail or have a friend alert you to something you absolutely must know about. There’s no escaping them. Messages are everywhere.

Unlike a hundred years ago, when people craved news and information, now we get too much. And with too much, we go numb, we tune out – it’s just too much to take in so we don’t. How much can you really eat at the info overload buffet?

What’s worse, is that most of the messages we get are skewed by marketing hype or someone else’s agenda – so it’s hard to know what to believe or trust, even if the messages have gotten our attention.

After 3000 or so messages a day, what can you really take in? Most people go numb, they tune it out, nothing gets through and they only take notice if a friend or trusted source endorses the message. So being a trusted adviser is a good way to get yourself heard.

In fact, for businesses today, the number one way to get prospects or customers to notice you, is to be endorsed as an expert, or by someone others admire and trust. That’s how you get clients to notice you and get your voice heard in an info overload world.

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Opportunity Knocks in Real Estate Despite the Crisis – May 2009

The altered U.S. real estate market, triggered in large part by the meltdown of the market for securities backed by sub-prime mortgage loans, has ushered in a new economic reality. Value matters more than ever. And even as the experts sort out the changing economic tides affecting the U.S. and global economies, opportunity is knocking.

Since real estate is all about making money – either by buying low and selling high, generating positive cash flow, or capitalizing on government give-aways to fund investments – today’s market with its abundant foreclosures and new government programs presents opportunities. For the first time in years, middle class earners with regular paychecks and money saved, can afford to buy a home. And if they are first time home buyers, they can benefit from an $8,000 tax credit.

While the prior real estate boon had some major flaws, there is money to be made as the ground shifts.

Real Estate Always Has Value

The reason real estate investing is how most people get wealthy is because real estate has inherent value. “Value” as the barometer of a good investment is again in vogue. The financials and returns which are not examined, will no longer be passed along thoughtlessly. Too much was lost.

As if emerging from a long coma of only upward market cycles, the reality that even real estate can go down in value has been remembered. The renewed focus on “value” comes as part of this reality. As many became drunk with home equity to fund retirement, expensive colleges for their kids or their own materialism, the hangover may last longer than a few days.

But valuable lessons have been learned.

Read the Fine Print

Whether you were caught short with a bad investment or are now planting seeds for financial success, make sure you check everything you can before you sign on the dotted line. If you don’t understand what you’re getting into – find an expert trusted advisor to explain it to you. Don’t assume you are dense; if we’ve learned anything in the wake of this crisis it’s that the unscrupulous and greedy prey on those who don’t understand and follow like sheep – - even when something defies all logic.

“Due diligence” is making sure you have uncovered all you can about an investment, a property or any deal or transaction. If something doesn’t feel right or make economic sense, walk away. Here’s an example:

Around the time the Madoff scandal broke, a local Florida investment advisor was interviewed some 12 years after she had been ridiculed and shamed for not recommending Madoff’s funds to her clients. She’d checked around and found no reputable trading house handling the volume of trades that Madoff’s funds and activities would have required; it made no sense to her so she gave it a thumbs down. At the time, Madoff’s reps claimed she was jealous of their returns. It took her 12 years to be vindicated, but her clients weren’t ripped off.

In today’s market, the return to fundamentals means that you will look long and hard at what you’re buying, leasing or investing in – to determine if it really has an economic upside. If your real estate activities are not based on sound economics, then you may as well be gambling. But if you do your homework, run the numbers and consider both the upside and downside, you will get better at becoming a savvy investor.

Relationship of Price/Value

The difference between price and value hasn’t been greater in almost 20 years. In many places you can acquire property for less than its true value and if you can hold or lease it – you can make money in the long run. Making money in real estate today may not be the same as in the hey-day of buying and flipping – but with value, the investment is solid. Real estate always has value – even in a declining market.

Compare this with investments in stocks and securities – so called “paper – assets.” The value of these investments is based on the underlying assets. The meltdown in the housing market was triggered by paper assets based on the value of sub-prime mortgages. These were bundled and securities based on their value were issued by financial institutions. When the mortgages were going into default, the “paper” issued also lost its value; paper has no inherent value without the asset which “backs” it.

As recently as two years ago, AAA-rated mortgage backed bonds were selling at a premium. Today they would be selling for 75% below face value, which essentially means they can’t be sold at all — because if buyers can’t determine real value, i.e. they don’t know what those derivative-based assets are worth, they don’t buy them.

Banks and other legitimate lenders are reeling from bad judgment and will likely tighten loan qualifications until their balance sheets are restored. And with or without the trillion dollar bailout – that will take time. As in the early 1980s and 1990s when bank lending was tight, private lenders will step in because money can be made on good properties that always have value.

The Good News

There are two pockets of good news when it comes to real estate. First, the federal government has enacted legislation which provides incentives. For example, new home buyers can take advantage of a “first time home buyer credit” which offsets up to $8,000 in taxes otherwise due. Incentives are also being offered to lenders who renegotiate certain uneconomic loans, and federal funds/grants are available for neighborhoods flooded with foreclosures.

The second bit of good news comes from real estate experts. They observe trends which provide valuable guidance for making good real estate investments today:

• Distress in the housing market is benefiting the apartment market, which now tops the lists of good “buys.”
• Moderate-income apartments in core urban markets near mass transit offer the best buy, a trend that has been reported since 2007
• It is anticipated that commercial markets will recover more quickly than most housing markets.
• Homebuilders will be dumping large tracts for “cents on the dollar” or face foreclosure on their holdings – creating opportunities for those with cash to invest.

Bottom Line: Real estate always has value and if you do your homework, look for value and make sure you understand economic reality, you may just find that opportunity is truly knocking.