Coping With the Death of a Spouse: A Guide for Handling Financial and Legal Matters
The following guidelines are for common legal and financial matters a surviving spouse must handle. It is designed for recent widows and widowers who do not understand how to deal with the legal and financial aspects of the death of a spouse and who have simple estate matters. This guide may also be particularly helpful for a child of a deceased who is helping the grieving spouse or is helping to dispose of the surviving parent’s estate.
What Comes First
The first thing the widow or widower must deal with is making funeral and burial arrangements. Make sure a trusted friend or family member assists you in making these arrangements since this is a highly emotional period in your life. The funeral director is a good source of information and usually provides the surviving spouse with the Death Certificate. You may need several copies of the Death Certificate
If either of you were veterans, funeral or burial plots at a Veteran’s cemetery may be available. Contact the Veterans Agency in your town for assistance.
The surviving spouse must deal with many financial issues. Among these issues include: Social Security, Veterans benefits and other government benefits, life insurance, private pensions, income supplementation and access to funds of the decedent. Each of these areas is discussed below.
Joint Bank Accounts:In Massachusetts, joint bank accounts are available to the survivor immediately. At most, a death certificate and affidavit stating that the surviving spouse is the joint tenant is all that is necessary. Be sure to keep the monthly bank statements of these accounts which show the balance as of the date of death. You will need this information for the estate tax return.
Social Security: Social Security must be advised of your spouse’s death. Failure to notify this agency will lead to overpayments since these benefit payments stop upon your spouse’s death. As a surviving spouse, you may be entitled to increasing your own social security benefits. Contact your nearest Social Security office for information and assistance.
Veterans’ Benefits: The Veterans’ Administration should be notified as soon as possible if your spouse was receiving benefits. You may be eligible for veteran-related benefits yourself. Your local Veterans’ Agent is the best source of assistance.
Life Insurance and Annuity Benefits: If your spouse named you as the beneficiary of a life insurance policy or an annuity, you must submit a claim form and a Certificate of Death before receiving the proceeds. Contact your local agency of issuance. If no local agency exists, contact the company’s home office (the address and phone number should appear on the policy). You need to retain the policy number and the amount of the policy because it must be reported in the deceased estate tax return.
Private Pensions: Notify the issuer of the pension plan of your spouse’s death. Depending on the election of benefits made by your spouse, you may be entitled to continued pension payments. If you are unsure of the status of the pension, ask to speak to the Human Resources Department of the company.
Surviving Spouse’s Income Status: Frequently the loss of one’s spouse means the loss of income. It is wise to contact a professional for review of your financial status. You may wish to consult an attorney as well. Your local senior center can set up an appointment for you with a S.H.I.N.E. counselor. S.H.I.N.E. is an acronym, which stands for Serving the Health Information Needs of Elders. A S.H.I.N.E. counselor can meet with you and explain financial eligibility requirements for publicly funded programs such as Medicaid.
Some other benefits to which a surviving spouse may be entitled include Supplemental Security Income, Food Stamps, Veterans Benefits, real estate tax abatements and/or deferrals, fuel assistance and housing assistance.
What Comes Next
Wills and Probate: If your spouse left a will, it needs to be probated. Probate is a matter of transferring title to assets that were in your spouse’s name according to his or her will. If there was no will, inheritance of assets occur by the laws of descent and distribution. If only limited assets were in the decedent’s name alone, simplified transfer and probate methods exist.
Jointly Held Assets: Jointly held assets such as a car, home, or bank account do not pass through probate. However, only one motor vehicle may be transferred to the surviving spouse without probate. The surviving spouse simply has to take the title and a Certificate of Death to the Registry of Motor Vehicles and sign an affidavit asserting that he or she is the surviving spouse. You must contact your insurance agent first so you can present proof of current insurance to the registry.
Full Administration: If the assets of the decedent exceed $15,000, a full administration of the will through Probate Court is necessary. Although it is conceivable a lay person may administer an estate of this size, it is advisable a lawyer be retained.
Voluntary Informal Administration of Small Estates: If the decedent left less than $25,000, a surviving relative or a non-relative named Executor (currently known as “Personal Representative”) in a will may apply for a voluntary administration in estates. Application cannot be made until at least 30 days after the death of your spouse. The voluntary Administrator must complete all necessary Probate forms and information, along with related filing fees.
Estate taxes are widely misunderstood. They are not state income taxes or real estate taxes, but rather a tax levied on property which changes hands or control because of a person’s death. The taxable estate includes all probate and non-probate assets of the decedent. Also included are either part or all of jointly held assets, most life insurance, transfers in contemplation of death and other less common types of property (including some annuities).
Many widows and widowers are unaware of the existence of this tax or of the necessity of filing a return even if a tax is not owed. Too often they become aware of the need to file when they attempt to sell their home and find they cannot because there is an estate tax lien on the property.
Massachusetts does not monitor deaths in the state for the purpose of taxation, nor does the state have any idea of the value of the decedent’s estate. The estate tax lien is Massachusetts’ way of obligating you to provide the state necessary information. When anyone dies owning property in this state, a lien is placed against that property. This lien prevents the transfer of the property until the state is paid the appropriate estate tax or is satisfied no tax is owed. To remove the lien either an estate tax return needs to be filed or an affidavit of no estate tax can be signed by the survivor releasing the lien.
As things settle down, you may revisit your own will to make sure the terms of distribution are appropriate. As the surviving spouse, other simple estate planning documents become essential to assure your needs are met. The Durable Power of Attorney allows you to select someone within your family to take care of your finances in the event you become incapacitated without court intervention. A Health Care Proxy allows you to appoint a person to make life-sustaining medical decisions if you become unable to give informed consent.
Depending on the size of your estate, you may wish to review alternative planning tools. For tax reasons, you may wish to begin gifting to your children or create a trust to ensure a special needs child is taken care of upon your death.
Information provided by: Patricia Mello & Associates, P.C., Attorneys at Law
Consult an elder law attorney knowledgeable in Medicaid law for detailed
information on these and other asset protection strategies.