To-do list after a loved one dies


Q. My sister recently passed away. What benefits from Social Security are available to her husband (her benefit was larger than his). Also, what protective measures should be taken to protect her identity from being stolen, and what other legal measures are needed after the death of a spouse?
— Sister

A. We’re sorry to hear about your loss.

When a loved one dies, there is a lot you can do to protect their identity.

First, though, the Social Security benefits.

“Her husband is entitled to the greater of his benefit or her benefit, whatever is higher,” said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton. “This is why it is extremely important that you plan out your Social Security benefits in terms of when you retire. It is not just about you if you are married.”

Some might argue it doesn’t matter if a deceased person’s identity is stolen, but we disagree.

There are many things you should do when someone dies.

First, your brother-in-law should contact Social Security and inform it of the death.

Next, Lynch said, he should contact the three credit bureaus to inform them, and put a freeze on your sister’s credit.

In order to do this – and most of the other suggestions we have – copies of the death certificate and letters testamentary will be needed so your brother-in-law can handle the finances.

Then he needs to inform their attorney and/or tax preparer, and all investment custodians and financial institutions they work with, of the death.

“In the event that there is a non-qualified account – non-retirement – then there should be a step-up in basis on at least 50 percent of the account and possibly 100 percent of the account, depending on the circumstances,” Lynch said. “In either case, we need to get the fair market value of each of the investments as to the date of death ASAP.”

This information should be immediately communicated to both the accountant and the attorney, he said.

Then make sure the investment custodians increase the cost basis as needed, Lynch said.

If there is an IRA, there are choices to be made.

For a spouse, the account can be treated as a rollover IRA or an inherited IRA, Lynch said.

“This is very important,” he said. “An inherited IRA requires minimum distributions annually but does not impose a 10 percent penalty on withdrawals,” he said.

Next, review life insurance policies and see your options so you can decide what makes the most sense based on cash flow needs, he said.

Your brother-in-law, if there were wills and trusts, should meet with an estate planning attorney to understand what funds are going where, and if there

Once he has a handle on the finances, Lynch recommended a tax projection be calculated in order to determine if any changes need to be made to withholding or estimated tax payments.

And finally, the surviving spouse/beneficiary should sign proper forms for all brokerage accounts and new account forms in order to reflect the new ownership and title, and also to legally place trades in the decedent’s account, Lynch said.

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