Dad died without a will. What now?
Dear Liz: My father recently died and did not have a will or living trust. He has a joint mortgage with my mother and two car loans under his name only. Can we just keep paying all the loans even though he is no longer around? And if we do, when the debts are paid, who gets ownership? Lastly, should we call all of his creditors and let them know he has died? Please help, we are in dire need of advice.
Answer: Every state has rules that determine who gets what if someone dies intestate — without a will or trust. The court process where this is sorted out is called probate, and the surviving spouse is typically the executor or person responsible for settling debts and distributing assets. Mortgages and car loans stay with the property that secures them, which means whoever inherits the asset inherits the debt, according to attorney Mary Randolph, author of “The Executor’s Guide.”
If your dad’s estate was small — less than $500,000 — you or your mother may be able to handle the probate process with the help of an accountant. If his estate was larger or you feel you need more help, contact a probate attorney, who can help you get the process started and advise you about your state’s laws. And yes, your mom will need to notify creditors as well as any sources of income your dad may have had, such as employers, Social Security or a pension.
A guide for executors
Dear Liz: Though there seems to be an unlimited number of books and seminars concerned with establishing a family revocable trust or living trust, there also seems to be a shortage of information on the steps a person would take to settle and distribute the proceeds of the trust when the last trust creator dies. Lawyers seem reluctant to reveal the legal steps required. Are you aware of a good publication with a minimum of legalese?
Answer: The book you’re looking for is “The Executor’s Guide” by attorney Mary Randolph from self-help legal publisher Nolo. The book, currently in its fourth edition, outlines the duties of someone who settles an estate or trust, offering a week-by-week and step-by-step guide. You’ll find the book in regular bookstores, online bookstores and at Nolo’s site, at http://www.nolo.com, both in physical form and as an e-book.
The job can be complex and you could be liable for any mistakes, which is why many people choose a lawyer’s help. Such help is all but a necessity if you’re dealing with a large estate (more than $1 million) or with contentious relatives. Even then, “The Executor’s Guide” can give you a clearer idea of what’s involved.
The documents you need, but probably don’t have
Dear Liz: Good news! I wrote to you recently about being unable to find my elderly father’s signed living trust. However, just by luck (or maybe it was prayers to St. Anthony), the original copy of the trust has turned up! So that’s one problem solved. Now I hope you’ll tell people how important it is to sure your parents have filled out durable powers of attorney for finances and for health care. We had a health care power of attorney for him, but my dad never filled out the other kind, which has made it extremely difficult to handle his finances now that he’s had a stroke and is in a nursing home. Our only option may be to get a court to appoint a conservator of his estate but it sounds like that would be complicated, costly, and probably take a long time.
Answer: Every adult who cares about his or her family should have durable powers of attorney for health care and for finances. As you’ve discovered, the lack of these documents can cause huge problems, forcing families to go to court to get authority to make decisions.
Many people assume incorrectly that their spouses can just take over. In reality, without a durable power of attorney a spouse may not have the legal authority to transactions involving real estate, investments and other assets, even if they’re jointly held. If the spouse is also incapacitated or dies first, getting anything done—down to paying the light bill—can become impossible.
Your father’s living trust may have language that allows the successor trustee (the person who would manage his assets after his death) to make decisions regarding the assets in case of your father’s incapacity. But he still needed a durable power of attorney for finances so that someone else had legal authority to make decisions about assets held outside the trust and to pay bills.
Father’s living trust is missing
Dear Liz: My 82-year-old father, who is in a nursing home in California after multiple strokes, had always told me that he set up a revocable living trust for himself and my mom. I’ve been going through his papers and can find only unsigned copies of his trust.
My dad now suffers from some dementia, and my mom knows nothing about where he might have put a copy of the trust. I do not think a lawyer was involved.
I am worried about what will happen when my dad dies. Are revocable living trusts recorded somewhere? If so, how do I find his? Can my mom set up a new trust? They don’t have a lot of assets — just a house and car — so am I worrying needlessly?
Answer: Your dad can’t sign the copies or have a new trust created if he’s not mentally competent — and with the strokes and the dementia, he’s probably not, although you’ll probably want to consult a lawyer. Without a durable power of attorney, no one else can have estate documents created for him, either.
You can check with the county assessor to see if their home was transferred into the trust and with his bank to see if accounts are in the name of the trust.
But living trusts aren’t recorded anywhere. If you can’t find a copy of it and if assets, such as the house, weren’t transferred into the name of the trust, you can’t use the unsigned copies to avoid probate, said Burton Mitchell, a Los Angeles estate planning attorney with Jeffer, Mangels, Butler & Marmaro.
“This is like the tree falling in the forest” with no one to hear it, Mitchell said. “If no one can find a living trust, I guess it doesn’t exist.”
You may want to expand your search. Check your dad’s papers for any bank he may have done business with, and find out whether he had a safe deposit box there. If he didn’t trust a bank with the document, it may be hidden somewhere in the house. Estate appraiser Julie Hall, author of “The Boomer Burden: Dealing With Your Parents’ Lifetime Accumulation of Stuff,” said heirs have found documents hidden in freezers, taped to attic rafters, tucked under mattresses and slipped behind the mats of framed pictures, among other places.
Review your dad’s checkbook around the period when the documents were created, if possible. If a check was made out to an attorney during that time, the signed document may have been filed with him or her.
It’s worth putting some effort into this search. A house in California can be a considerable asset. Unfortunately, probate in California is expensive and slow. That’s why many people with even modest assets opt for a living trust: to bypass probate and save their heirs money.
The house may be able to avoid probate if it’s titled in joint tenancy, Mitchell said. In that case, if your father dies first, your mom will inherit it and then could create a living trust of her own.
Social Security benefits don’t last forever
Dear Liz: Can you clear up something for me regarding Social Security survivors benefits? The yearly summaries I get tell me my family will receive payments if I die. But it’s not clear to me how long these last and if they expire when my children are no longer minors. Do payments continue to be made to my surviving spouse as well, and if so for how long?
Answer: Your unmarried children can receive Social Security survivors benefits until they turn 18, or 19 if they are still attending high school full time. Your kids can get benefits at any age if they were disabled before age 22 and remain disabled.
Your spouse can get benefits as long as he or she takes care of a child receiving your survivor benefits. Your spouse also can receive widow or widowers benefits as early as age 60 (or 50 if disabled).
The amount of the benefit depends on your average lifetime earnings and is estimated on the annual Social Security statement you get. The more money you make before you die, the greater the benefit.
For more information, SSA Publication No. 05-10084 is available on the Social Security Administration website at www.ssa.gov or by calling (800) 772-1213.
