07 Nov Sudden death without a will

Q. The husband of my neighbor suddenly passed away at 68 without leaving any will, trust or even informing her about the finances. She is also in her 60s and is completely perplexed at what to do. They are well off financially. She has no idea where what is and is asking for help. What is the best way to help her?
— Neighbor

A. We’re sorry to hear of your friend’s loss.

It is times like this that the last thing one needs is the extra burden and stress of putting their financial house in order, said Gregory Chebuske, an Accredited Investment Fiduciary with U.S. Financial Services in Fairfield.

He said you can start to help by instructing her to make a list of all assets and gather the most recent statements and any other supporting documents. She should also call the human resources department from her husband’s employer to obtain retirement accounts and benefits, he said.

She should also contact her CPA for help and ask for a copy of her tax return, Chebuske said, because the tax return will be helpful for locating accounts.

Next, check home and work for files and collect all incoming mail for up to one year.

“Most banking, investment, and retirement accounts will send statements monthly or quarterly. Insurance companies will send statements quarterly or annually,” he said.

Exactly what happens next will depend on what kinds of assets they have.

How the asset is owned will determine how and when it is distributed, Chebuske said.

“Some forms of ownership can be transferred immediately, while others require an order from the probate court,” he said.

Chebuske said retirement plans and IRAs are owned by the individual and transferred by beneficiary designation. The trustee or custodian will transfer the account upon proof of death, he said.

Beneficiary designations also apply to annuities and life insurance policies, and the insurance company will pay the amount owed to the beneficiary shortly after receiving proof of death.

“Other accounts that will pass directly to a designated successor owner are bank accounts payable on death (POD), security accounts transfer on death (TOD) and joint tenants with rights of survivorship (JTWROS),” he said.

Assets owned individually or by tenants in common will not transfer directly and will be distributed by probate, Chebuske said.

“Probate is the court-directed process of making sure that debts and taxes are paid and the remaining assets are distributed according to the wishes of the deceased,” he said. “Since her husband did not have a will, state intestacy law will determine who gets the assets in the estate.”

Most intestacy laws follow the family tree, he said, so where the assets are owned will determine if she will receive the assets entirely or if they will be divided between herself and children.

“She will need to go to the surrogate’s office for the county in which she resides,” Chebuske said. “She should bring a death certificate and marriage certificate. She will also need to provide the same documents for the Social Security office in order to receive her benefits.”

“Although she can do these things on her own, it can be emotionally taxing, so she may want to get someone to assist her in organizing everything so that all of the pieces of the puzzle can be put together leaving no stone unturned,” he said.

He strongly recommends your friend work with a financial professional to avoid making any mistakes that could lead to major unnecessary tax consequences. Also, this will help make sure she receives and maximizes all benefits to which she is entitled.

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This post was first published in November 2016.