Mom died, financial guidance welcome.

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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EdLaFave
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Mom died, financial guidance welcome.

Post by EdLaFave » Tue Sep 11, 2018 3:01 pm

I'm just digging into this topic so any guidance is welcome. I don't know what I don't know, so feel free to answer questions I don't even know to ask. I believe the following may represent the entire picture:

1. Small amount in an IRA (my sister was the beneficiary).
2. Life insurance policy from employer (details unclear, no beneficiary named).
3. Very small amount in savings/checking account.
4. Mortgage on home is probably more than the home can be sold for.
5. Loan on car might be more than the car can be sold for.
6. She was 58 years old, single, lived in Florida, and no will as far as I know.

I know nothing, what should I know about dealing with this process?

I'm under the impression that the IRA and life insurance policy will be protected from the debt, which the creditors will have to take a loss on. Is that right?
Last edited by EdLaFave on Wed Sep 12, 2018 8:18 am, edited 6 times in total.

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damjam
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Re: Mom died, financial guidance welcome.

Post by damjam » Tue Sep 11, 2018 3:06 pm

I'm very sorry for your loss.

Was there a will? In what state did she reside?

EdLaFave
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Re: Mom died, financial guidance welcome.

Post by EdLaFave » Tue Sep 11, 2018 3:08 pm

Thanks. I don't believe there was a will (details are unclear) and she lived in Florida.

Masterblaster
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Re: Mom died, financial guidance welcome.

Post by Masterblaster » Tue Sep 11, 2018 3:13 pm

IRAs, if they have a surviving beneficiary, pass outside the estate and hence are not subject to creditor claims. Life insurance may also be similar depending on your state laws.

Creditors and IRAs and 401(k)s After Death

When someone dies leaving an IRA or 401(k), must the money be used to pay their bills? If your loved one has recently died and they owned these types of retirement accounts, you'll benefit from understanding the rules. The quick and easy answer is that it depends on whether the account had a designated beneficiary, someone other than the decedent's estate, at the time of their death.

If at least one of these designated beneficiaries survives the decedent, the retirement account will pass directly to that person outside of probate. It avoids the reach of the decedent's creditors because part of the probate process involves using estate assets to satisfy the decedent's debts. If the IRA or 401(k) doesn't become part of the estate, it cannot be used to pay the decedent's final bills.
https://www.thebalance.com/does-an-ira- ... ls-3505413
Exactly how much of your life insurance benefits a creditor can take depends on individual state regulations. Some states protect life insurance policies from creditors, while others offer only limited protection. In Florida, all cash value life insurance policies are protected from creditors while the insured is alive. After death, however, the benefits are not protected and creditors can take money from the value of the policy before it's passed on to the beneficiaries. In Texas, by contrast, both the cash value and death benefit of life insurance policies are wholly protected from creditors, except for cases of fraud.
https://budgeting.thenest.com/can-credi ... 30677.html
Last edited by Masterblaster on Tue Sep 11, 2018 3:22 pm, edited 1 time in total.

psteinx
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Re: Mom died, financial guidance welcome.

Post by psteinx » Tue Sep 11, 2018 3:18 pm

Did she have a surviving spouse? If so, then much of the burden is presumably on him. But you'd probably have mentioned if she was married, so...

Are you close to her home? Is your sister? Are their other sibs/close relatives? Are relations between siblings good?

I'm not a lawyer nor an expert on this stuff by any stretch, but I assume first steps would include funeral arrangements and somebody visiting her house to see the status of her paperwork, any wills, accounts, etc. And of course, if there are pets, they should be addressed, and a very basic home cleanup (stuff that will rot in the pantry or fridge) may be advisable. But check to see if this is legal (it may be that only an executor or court-appointed type can legally do some or any of this stuff...) Probably more informed folks will be along shortly to provide better advice.

Rupert
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Re: Mom died, financial guidance welcome.

Post by Rupert » Tue Sep 11, 2018 3:43 pm

I'm sorry for your loss. Sometime in the next few weeks, someone needs to search through her things for any evidence of a will (e.g., correspondence with an attorney, evidence of a safe deposit box, etc.) and needs to take stock of her financial situation. Make a list of what she owes and to whom. Don't just assume she's underwater on her house and car. Call and ask. Her creditors as well as her banks, insurance companies, etc., need to be notified of her death anyway. Get lots of copies of her death certificate because some/all of these entities will need proof of death before they'll do anything. Some of them may also require some proof that you (or whoever is making the calls) have lawful authority to act on behalf of her estate. This will require some action on the part of the local probate court and may require hiring an attorney. Follow this link to see how one Florida county handles such matters: http://www.escambiaclerk.com/clerk/coc_probate.aspx

NotWhoYouThink
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Re: Mom died, financial guidance welcome.

Post by NotWhoYouThink » Tue Sep 11, 2018 3:48 pm

Are you the person who is going to be tasked with dealing with this, or is your sister?

If you don't intend just to walk away, then probably one of you will need to get appointed as the representative of the estate to deal with the bank and the auto dealer and anyone else.

In most cases, creditors have no claim on the death benefit of a life insurance policy, although the article linked above says that the cash value of whole/universal life policies may be available to creditors. But if the policy was through her employer then it is probably a term policy and creditors would not have claim on the benefit.

If the car and the house are both underwater the dealer might just repossess the car and the bank may take the house and not try to go after the IRA, but that's part of what the estate representative will have to find out. You also might want to check your mom's taxes and see if there are any other accounts out there. But I would be very careful about taking items from the house that might have some value if there are debts.

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LadyGeek
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Re: Mom died, financial guidance welcome.

Post by LadyGeek » Tue Sep 11, 2018 3:48 pm

Sorry for your loss.

The wiki can help. See: Estate planning and then read the threads under "Further reading".

Of note: Process for surviving spouse. - applies to anyone
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JoeRetire
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Re: Mom died, financial guidance welcome.

Post by JoeRetire » Tue Sep 11, 2018 4:12 pm

EdLaFave wrote:
Tue Sep 11, 2018 3:01 pm
I know nothing, what should I know about dealing with this process?
So sorry for your loss.

Are you the executor of your mom's estate?
If so, you should be working with an estate attorney.

Gill
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Re: Mom died, financial guidance welcome.

Post by Gill » Tue Sep 11, 2018 4:24 pm

It is important for you to determine how the real estate is held, and you can easily do that in Florida by going to the website of the county property appraiser where the property is located. If it was in her name alone you probably need to have a personal representative appointed to administer the estate. That will enable you to deal with the lender on the property and the creditor on the car loan. It may well be that you simply give them a deed in lieu of foreclosure and allow the lender on the car to repossess it. The IRA and the life insurance can be easily collected by the beneficiary with a death certificate. You'll probably need that cash to deal with the rest of the assets. Don't pay any bills at this point.
Gill

nesdog
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Re: Mom died, financial guidance welcome.

Post by nesdog » Tue Sep 11, 2018 10:16 pm

Sorry for your loss.

When my SIL passed away last year, without a will, my wife was appointed the administrator of the estate. SIL lived 400 miles away. Best thing we ever did was find a local estate lawyer to handle the details. It was worth every dollar we paid her.

ColoRetiredGirl
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Re: Mom died, financial guidance welcome.

Post by ColoRetiredGirl » Wed Sep 12, 2018 5:21 pm

Sorry for your loss. One thing you will want to have are several copies of the death certificate to provide to her creditors, bank, etc. Also, you may want to contact a neighbor to have them keep a watch on the house and car for security purposes.

BeneIRA
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Re: Mom died, financial guidance welcome.

Post by BeneIRA » Wed Sep 12, 2018 5:52 pm

EdLaFave wrote:
Tue Sep 11, 2018 3:01 pm
I'm just digging into this topic so any guidance is welcome. I don't know what I don't know, so feel free to answer questions I don't even know to ask. I believe the following may represent the entire picture:

1. Small amount in an IRA (my sister was the beneficiary).
2. Life insurance policy from employer (details unclear, no beneficiary named).
3. Very small amount in savings/checking account.
4. Mortgage on home is probably more than the home can be sold for.
5. Loan on car might be more than the car can be sold for.
6. She was 58 years old, single, lived in Florida, and no will as far as I know.

I know nothing, what should I know about dealing with this process?

I'm under the impression that the IRA and life insurance policy will be protected from the debt, which the creditors will have to take a loss on. Is that right?
Very sorry to hear about your loss, OP. My mom passed away as well and your post brings back memories.

Are you positive there was no beneficiary on the employer life insurance policy? If you just called in and spoke to a representative, they are not actually allowed to tell you until the process is completed. If you are sure there is no beneficiary, then you can get a copy of the Summary Plan Description and it will tell you the hierarchy of how it is paid out. You and your sibling will probably have to proof your identities and split it two ways, unless you have other siblings. This passes outside of an estate, but from the below, it looks like creditors may be eligible for a piece of it.

TwstdSista
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Re: Mom died, financial guidance welcome.

Post by TwstdSista » Wed Sep 12, 2018 5:55 pm

My understanding (in my state):

Life insurance with a beneficiary named passes outside the estate.

Life insurance with no beneficiary named gets paid to the estate and therefore passes through the estate.

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Earl Lemongrab
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Re: Mom died, financial guidance welcome.

Post by Earl Lemongrab » Thu Sep 13, 2018 12:43 pm

ColoRetiredGirl wrote:
Wed Sep 12, 2018 5:21 pm
Sorry for your loss. One thing you will want to have are several copies of the death certificate to provide to her creditors, bank, etc.
You will need them for any POD/TOD accounts. However, when we dealt with my mother's estate, none kept the original. Creditors never asked. When informed that she was deceased, most just said, "Sorry to hear that, don't worry about this."

The only ones we ended up paying were her apartment rent and one medical bill that the creditor filed with the probate court.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

EdLaFave
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Re: Mom died, financial guidance welcome.

Post by EdLaFave » Mon Sep 24, 2018 1:09 pm

Thanks for the responses so far. Unfortunately, I have very little information.

My sister dug through mail at my moms house. It appears that after the financial collapse my mom did some kind of refinancing/restructuring of her debt, perhaps through a government program of some kind. My sister believes she has found information from one lender that is associated with the loan on the house. However, my sister also believes there is a high probability of a second mortgage of some kind. The paperwork situation was a mess, so we just don't know.

How do we discover all of the debt tied to my mom? If there is a second mortgage it is probably the difference between the estate being in debt or not...and therefore the difference between us doing all of the work or walking away.

Thanks!

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arcticpineapplecorp.
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Re: Mom died, financial guidance welcome.

Post by arcticpineapplecorp. » Mon Sep 24, 2018 2:29 pm

EdLaFave wrote:
Mon Sep 24, 2018 1:09 pm
Thanks for the responses so far. Unfortunately, I have very little information.

My sister dug through mail at my moms house. It appears that after the financial collapse my mom did some kind of refinancing/restructuring of her debt, perhaps through a government program of some kind. My sister believes she has found information from one lender that is associated with the loan on the house. However, my sister also believes there is a high probability of a second mortgage of some kind. The paperwork situation was a mess, so we just don't know.

How do we discover all of the debt tied to my mom? If there is a second mortgage it is probably the difference between the estate being in debt or not...and therefore the difference between us doing all of the work or walking away.

Thanks!
sorry about your loss. If there are debts, I would assume there would be bills being sent to your mother's house. That will steer you in some direction to know who to contact regarding the debts. See what bills come in over the course of the month and that will give you a starting point.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

delamer
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Re: Mom died, financial guidance welcome.

Post by delamer » Mon Sep 24, 2018 2:35 pm

EdLaFave wrote:
Mon Sep 24, 2018 1:09 pm
Thanks for the responses so far. Unfortunately, I have very little information.

My sister dug through mail at my moms house. It appears that after the financial collapse my mom did some kind of refinancing/restructuring of her debt, perhaps through a government program of some kind. My sister believes she has found information from one lender that is associated with the loan on the house. However, my sister also believes there is a high probability of a second mortgage of some kind. The paperwork situation was a mess, so we just don't know.

How do we discover all of the debt tied to my mom? If there is a second mortgage it is probably the difference between the estate being in debt or not...and therefore the difference between us doing all of the work or walking away.

Thanks!
I don’t know if it is possible to pull a credit report for someone who is deceased, but it would list all of her debts.

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Earl Lemongrab
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Re: Mom died, financial guidance welcome.

Post by Earl Lemongrab » Tue Sep 25, 2018 1:29 pm

delamer wrote:
Mon Sep 24, 2018 2:35 pm
I don’t know if it is possible to pull a credit report for someone who is deceased, but it would list all of her debts.
The loans would most likely be on there, and it would let them know what the active credit cards accounts are, and possibly current balances, but that's about it. Regular debts would not be unless they've gone to collection.
Last edited by Earl Lemongrab on Tue Sep 25, 2018 1:37 pm, edited 1 time in total.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

delamer
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Re: Mom died, financial guidance welcome.

Post by delamer » Tue Sep 25, 2018 1:36 pm

Earl Lemongrab wrote:
Tue Sep 25, 2018 1:29 pm
delamer wrote:
Mon Sep 24, 2018 2:35 pm
I don’t know if it is possible to pull a credit report for someone who is deceased, but it would list all of her debts.
No. The loans would most likely be on there, and it would let them know what the active credit cards accounts are, but that's about it.
Wouldn’t credit cards plus other loans be her debt?

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Earl Lemongrab
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Re: Mom died, financial guidance welcome.

Post by Earl Lemongrab » Tue Sep 25, 2018 1:39 pm

delamer wrote:
Tue Sep 25, 2018 1:36 pm
Earl Lemongrab wrote:
Tue Sep 25, 2018 1:29 pm
delamer wrote:
Mon Sep 24, 2018 2:35 pm
I don’t know if it is possible to pull a credit report for someone who is deceased, but it would list all of her debts.
No. The loans would most likely be on there, and it would let them know what the active credit cards accounts are, but that's about it.
Wouldn’t credit cards plus other loans be her debt?
Utilities. Any bill that hasn't been paid, especially medical debt.

I updated my post a bit because the reports do show balances for some things. I should have looked FIRST at a saved report.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

delamer
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Re: Mom died, financial guidance welcome.

Post by delamer » Tue Sep 25, 2018 1:48 pm

Earl Lemongrab wrote:
Tue Sep 25, 2018 1:39 pm
delamer wrote:
Tue Sep 25, 2018 1:36 pm
Earl Lemongrab wrote:
Tue Sep 25, 2018 1:29 pm
delamer wrote:
Mon Sep 24, 2018 2:35 pm
I don’t know if it is possible to pull a credit report for someone who is deceased, but it would list all of her debts.
No. The loans would most likely be on there, and it would let them know what the active credit cards accounts are, but that's about it.
Wouldn’t credit cards plus other loans be her debt?
Utilities. Any bill that hasn't been paid, especially medical debt.

I updated my post a bit because the reports do show balances for some things. I should have looked FIRST at a saved report.
Fair enough.

I was thinking that a credit report might clarify what had or had not been paid.

Anyway, it is a source if it can be pulled.

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