As military officers approach or enter into their retirement, they are also often faced with the issue of a parent's passing. This is a difficult time for anyone. It is likely more challenging for military officers as we often live far from our parents.
When a parent passes away, the most immediate decisions involve how to arrange for services, the memorial, addressing visiting family, and dealing with grief. But then comes the much longer phase of settling the estate with all of its financial ramifications. Many times a child is named as the executor and becomes responsible for the financial affairs of the deceased parent. Thus begins at least a year of work unraveling the financial details of the deceased. Here are 10 steps how to go about the process, reducing your frustration along the way:
1. Avoid Emotions
Any time you make a decision emotionally, it will likely be a poor one for the situation. Instead, delay the decision until you can approach it objectively, weighing all the alternatives.
2. Get Help
A lot of what goes on settling an estate is extremely technical and legal. You will need assistance from someone who understands this process well. If you know a friend or relative who has already dealt with a death, get their advice. Hiring an attorney to handle the details can be well worth the money spent, especially if you are dealing with an estate in a different state than where you reside (which as mentioned above is likely for retired military officers).
3. Secure Death Certificate
The death certificate is the only thing agencies and entities recognize as legal authority that someone they dealt with is dead. Death certificates will be required to collect on life insurance policies, transfer accounts to beneficiaries, change joint accounts to solo and any other transaction that isn't controlled by the will or trust documents. A death certificate will also be required to register a will with the probate court or to install a successor trustee.
4. Notify Employers and Social Security
Previous employers need to be notified. This may trigger various benefits the employee paid for while alive. They can include a survivor’s death benefit or survivor's pension plus any life insurance bought through work. But only the employer can resolve these claims, so they need to know as soon as possible to approve the paperwork. Don’t forget, there’s also likely an employee retirement account as well.
You also need to notify Social Security as there are death benefits and if there is a surviving spouse, there may be on-going spousal benefits. Also, you want to make sure Social Security payments for the deceased individual stop.
If your deceased parent is also a veteran, make sure to contact the VA to check for available benefits and also to stop disability payments, if needed.
5. Confirm and Secure Any Kind of Will, Estate Plan or Trust
An estate plan document is essential for legally determining the distribution of property. If there is a will or no will, the property has to be legally settled in probate court. If a trust was established, the trustee (which may be a different person than the executor of the will) handles the property distribution because the trust became a legal entity on its own with all property it included. It is likely that in the case of a trust based plan a will will still exist, so make sure you look for it.
6. Track Costs in Detail
Settling an estate as an executor can be a long, costly process. Your costs as well as the estate’s costs have to be paid from somewhere, but you can only defend them if documented clearly and carefully. Record everything and be meticulous. This will be your solid defense if another family member tries to assert you hid property or when providing the probate court an accounting to close the estate.
7. Locate Critical Financial Documents
These documents include things such as:
- Final bank records
- Any investment statements
- All loan liabilities and mortgage accounts
- Insurance policies
- Retirement accounts
- Prior year tax returns
- Any recurring bill statements for account information (utilities, credit cards, services)
The executor prepares and files the final tax return for the deceased. This only works with all the information present.
The estate will likely need to file a tax return as well and if there is a trust involved it will have to file a return too. This could occur for several years until all assets are distributed.
9. Keep a Log
It’s a smart idea to get a journal and write down all critical issues and decision with a date on a them. This will help you remember what you did months later, and why. Just carry it with you during every meeting and situation, and write down a quick paragraph with a title. You’ll thank yourself later when trying to remember details for a response or secondary decision.
Lastly, use the experience resolving your parent’s estate for what you should do with your own estate. Wherever there is ambiguity, it will create a mess, and then a court might have to resolve it. Don’t put your family in that situation.
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This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.