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Credit Card Debt

Does My Mom Have to Pay My Dad’s Credit Card Debt after He Dies?

Does My Mom Have to Pay My Dad’s Credit Card Debt after He Dies? When a family is grieving after the death of a loved one, the last thing any of them wants to deal with is unpaid debts and debt collectors.

nj.com’s recent article asks “Is mom liable for my dead father’s credit card debt?” The answer: generally, any unpaid debts are paid from the deceased person’s estate.

In many states, family members, including the surviving spouse, typically aren’t required to pay the debts from their own assets, unless they co-signed on the account or loan.

All the stuff that a person owns at the time of death, including everything from money in the bank to their possessions to debts they owe, is called an estate. When the deceased person has debt, the executor of the estate will go through the probate process.

During the probate process, all the deceased’s debts are paid off from the estate’s assets. Some assets—like retirement accounts, IRAs and life insurance proceeds—aren’t included in the probate process. As a result, these accounts may not be available to pay creditors. Other assets can be sold to pay off outstanding debts.

A relative or the estate executor will typically notify any lenders, like credit card companies, when that person passes away. The credit card company will then contact the executor about any balances due. Note: the creditor can’t add any additional fees, while the estate is being settled.

If there’s not enough money in the estate to cover credit card balances, the card issuer may have no recourse. The executor and the heirs aren’t responsible for these debts. Unlike some debts, like a mortgage or a car loan, most credit card debt isn’t secured. Therefore, the credit card company may need to write off that debt as a loss.

You should start learning about the probate process in your state to have the best defense for dealing with creditors and debt collectors.

So, Does My Mom Have to Pay My Dad’s Credit Card Debt after He Dies?

If you need help, talk to an experienced estate planning attorney.

Reference: nj.com (Jan. 15, 2020) “Is mom liable for my dead father’s credit card debt?”

Read more about this subject at:

Can I be responsible to pay off the debts of my deceased spouse?

What Happens to Credit Card Debt When You Die?

And read one of our Previous Blogs at:

Who Will Cover My Debt When I Die?


Understanding Guardianship

How is a Guardianship Determined?

How is a Guardianship Determined? Because the courts call guardianship “a massive curtailment of liberty,” it’s important that guardianship be used only when necessary.

The Pauls Valley Democrat’s recent article asks, “Guardianship – What is sufficient incapacity?” As the article explains, courts must be certain that an individual is truly “incapacitated.”

For example, Oklahoma law defines an incapacitated person as a person 18 years or older, who is impaired by reason of:

  1. Mental illness;
  2. Intellectual or developmental disability;
  3. Physical illness or disability; or
  4. Drug or alcohol dependency.

In addition, an incapacitated person’s ability to receive and evaluate information or to communicate decisions is impaired to such a level that the person (i) lacks capacity to maintain health and safety; or (ii) is unable to manage financial resources.

A person who is requesting to be appointed guardian by the court must show evidence to prove the person’s incapacity. This evidence is typically presented with the professional opinion of medical, psychological, or administrative bodies.

In some instances, a court may initiate its own investigation with known medical experts. In these cases, the type of professional chosen to provide an opinion should match the needs of the person (the “ward”), who will be subject to guardianship.

The court will receive this evidence and if it’s acceptable, in many cases, require that the experts provide a plan for the care and administration of the ward and his assets. This plan will become a control measure, as well as guidance for the guardian who’s appointed.

These controls will include regular monitoring and reports of performance back to the court. Which is how a Guardianship is Determined?

Reference: Pauls Valley Democrat (Jan. 23, 2020) “Guardianship – What is sufficient incapacity?”

Read More about this at: Guardianship Basics

Consumer Pamphlet: What Is Guardianship?

And Check out one of our previous Blogs at:  Will Florida’s New Legislation Help Seniors in Guardianship’s?

Medicare Mistakes

The High Cost of Medicare Mistakes

The High Cost of Medicare Mistakes can be daunting. A 68-year-old woman knew that she had to sign up at age 65 for Medicare Part A for hospital care and Part B for outpatient care, since she did not have employer provided health insurance from an employer with 20 or more employees. She knew also that if she did not have health insurance from an employer and didn’t sign up immediately, she’d face a penalty with higher Part B and Part D premiums for the rest of her life when eventually she did sign up, reports Forbes in the article “Beware Medicare’s Part B Premium Penalty And Surcharge Traps.”

Here’s where it got sticky: she thought that Medicare provided an eight-month special enrollment period after one job ended to apply penalty free. She is employed on a sporadic basis, so she thought she had a window of time. Between the ages of 65 and 68, she had several jobs with large employers, and was never out of work for more than eight months.

She was out of work for 25 months total between ages 65 and 68, when she was not enrolled in Medicare. She thought that since she was never out of work for more than eight months, she didn’t have to sign up until she officially stopped working and would then enroll penalty free in traditional Medicare Parts A, B, and D.

She had read information on the Medicare website and her interpretation of the information was wrong. It was a costly mistake.

In determining whether you need to permanently pay a Medicare Part B penalty, Medicare counts up all the months between age 65 and the month you first enroll in Part B, even if you have a job with a large employer with no gaps in employment for more than eight months.

She got hit with a 20% lifetime Medicare Part B premium penalty. For every 12 months that you’re not covered by Medicare B after reaching 65 and before you enroll, the penalty is an additional 10%. And making things worse, she was hit with a Medicare Part B penalty based on the cumulative (not consecutive, which is an important difference) 25 months that she went without credible prescription drug coverage.

This is the sort of problem that does not self-resolve or get better over time. In this case, another mistake in timing is going to hurt her. She sold some assets and realized a capital gain in 2018, which increased her Modified Adjusted Gross Income (MAGI). In 2020, she’s going to have to pay the Income Related Monthly Adjustment Amount (IRMAA). If your MAGI, two years before the current year, is less than $87,000, you are exempt from IRMAA in the current year. Her cost: $1,735.20 more this year. Had she instead realized those capital gains over the course of several years, her 2018 MAGI might not have crossed the $87,000 threshold. Most people are not aware of the IRMAA and take capital gains in larger amounts than they need.

This is a harsh lesson to learn, at a time in life when there’s not a lot of flexibility or time to catch up. Talking with an estate planning lawyer about Medicare and about tax planning, as well as having an estate plan created, would have spared this woman, and countless others, from the harsh consequences of her mistakes.

Reference: Forbes (Jan. 29, 2020) “Beware Medicare’s Part B Premium Penalty And Surcharge Traps”

Read More about this from CNBC at: Don’t make these common, costly Medicare mistakes

And from AARP:  How to Avoid Mistakes When enrolling in Medicare

Also check out our previous Blog:  New Medicare Rule Makes it Harder to Receive Home Care

Extra Social Security for Divorced People

Extra Social Security Benefits for Divorced People

There may be Extra Social Security Benefits for Divorced People. According to the Social Security Administration, as many as 21% of married couples depend upon their Social Security checks for at least 90% of their retirement income. The same is true for almost half of all single beneficiaries. Therefore, if you are expecting Social Security to make up the larger share of your income during retirement, don’t overlook any possible additional benefits, says the article “Divorced? You could Be Owed Extra Social Security Benefits” from The Motley Fool.

People who have been divorced may have more due them than they expect. That means extra Social Security Benefits for Divorced People.

A married person may be eligible to receive Social Security benefits based on their spouse’s work record, even if they themselves have never worked. However, divorced people are sometimes entitled to benefits based on their ex-spouse’s records, depending upon their situation.

There are a few eligibility requirements. For starters, the marriage must have lasted at least ten years. Second, you can’t have remarried—although if your ex has remarried, this won’t affect your ability to claim based on their record. Finally, the amount received in benefits based on your own work history must be less than the amount that you’d receive in divorce benefits, based on your spouse’s record.

You’ll also need to be at least 62 to start claiming benefits, and in most cases, your ex needs to have started taking benefits before you can receive monthly benefits. There is an exception: you have been divorced for at least 24 continuous months and your spouse is eligible to receive benefits, but just hasn’t started claiming them yet.

Note that you won’t receive the full benefit amount for regular Social Security benefits or those based on your ex’s work history until you claim at your full retirement age (FRA), which is 66, 66 plus a few months or 67, depending upon your birth year. Claim earlier than that, and benefit checks will be smaller, as they would be if you were claiming your own benefits before FRA.

If you are indeed eligible to collect divorce benefits, you may be able to collect additional benefits based on the ex-spouse’s record on top of your own benefits. You won’t get both. However, what you may get is your own benefits, plus a portion—up to 50%—of the amount your ex-spouse is eligible for, if you claim at his or her FRA.

Let’s say you’re receiving $800 a month based on your work record at your FRA. Your ex is eligible to receive $2,000 at her FRA. If you meet all the right requirements, you could collect 50% of her benefits in addition to yours. You could receive $1,000 a month: your $800 and an additional $200 in divorce benefits.

Bear in mind that Social Security is a big government organization, and likely will not make this type of adjustment on your behalf. You’ll have to advocate for yourself, filing for the benefits you believe you deserve and you may need to make more than a few phone calls. However, the additional income would be well worth it.

Reference: The Motley Fool (Jan. 30, 2020) “Divorced? You could Be Owed Extra Social Security Benefits,”

Read more about this subject from SSA at : Social Security Benefits Planner: Retirement: Divorce

And from AARP:  Divorce and Social Security Spousal Benefits

Also read one of our previous blogs: Should I change Beneficiary Designations if I get a Divorce?

This Husband Made Sure his Wife Would get Flowers on Valentine’s Day — Even Long After his Death

This Husband Made Sure his Wife Would get Flowers on Valentine’s Day- Even Long After his Death.

It’s not an uncommon thing to think of the future. Here are two stories where loving husbands made plans to let their brides know that love is eternal.

Richard and Tracey Cox of Georgetown, Kentucky wed in 1986 and had 4 children – 3 boys and a girl. In 2009, Richard was diagnosed with Stage 4 throat cancer. Before he passed away in 2012, the husband and wife renewed their vows. But Richard’s love and affection for his wife even extends beyond the grave.

Tracey’s birthday is February 13th and the nationally recognized day of love is the next day. So Richard made arrangements that she would receive flowers every year on that day with a personalized note from him, reading “Happy Birthday and Valentine’s Day. Love Rich.”

Their son Nicholas says that his father taught him about true love. “We need to continue to instill it in our young ones. My father did this, this is probably my greatest gift he taught me.”

See Melissa Ratliff, This Husband Made Sure his Wife Would get Flowers on Valentine’s Day — Even Long After his Death, Kgun9.com, February 14, 2020.

Richard was not the only man who thought of his wife and their 45 year love affair after his death. Debbie’s husband lost his battle with cancer, but he made sure she got one final Valentine’s Day gift. Read about their story here.

Randy Tenney died in December. But he left a surprise behind.

Avoiding Probate with a Trust

Avoiding Probate with a Trust. Privacy is just one of the benefits of having a trust created as part of an estate plan. That’s because assets that are placed in a trust are no longer in the person’s name, and as a result do not need to go through probate when the person dies. An article from The Daily Sentinel asks, “When is a trust worth the cost and effort?” The article explains why a trust can be so advantageous, even when the assets are not necessarily large.

Let’s say a person owns a piece of property. They can put the property in a trust, by signing a deed that will transfer the title to the trust. That property is now owned by the trust and can only be transferred when the trustee signs a deed. Because the trust is the owner of the property, there’s no need to involve probate or the court when the original owner dies.

Establishing a trust is even more useful for those who own property in more than one state. If you own property in a state, the property must go through probate to be distributed from your estate to another person’s ownership. Therefore, if you own property in three states, your executor will need to manage three probate processes.

Privacy is often a problem when estates pass from one generation to the next. In most states, heirs and family members must be notified that you have died and that your estate is being probated. The probate process often requires the executor, or personal representative, to create a list of assets that are shared with certain family members. When the will is probated, that information is available to the public through the courts.

Family members who were not included in the will but were close enough kin to be notified of your death and your assets, may not respond well to being left out. This can create problems for the executor and heirs.

Having greater control over how and when assets are distributed is another benefit of using a trust rather than a will. Not all young adults are prepared or capable of managing large inheritances. With a trust, the inheritance can be distributed in portions: a third at age 28, a third at age 38, and a fourth at age 45, for instance. This kind of control is not always necessary, but when it is, a trust can provide the comfort of knowing that your children are less likely to be irresponsible about an inheritance.

There are other circumstances when a trust is necessary. If the family includes a member who has special needs and is receiving government benefits, an inheritance could make them ineligible for those benefits. In this circumstance, a special needs trust is created to serve their needs.

Another type of trust growing in popularity is the pet trust. Check with a local estate planning lawyer to learn if your state allows this type of trust. A pet trust allows you to set aside a certain amount of money that is only to be used for your pet’s care, by a person you name to be their caretaker. In many instances, any money left in the trust after the pet passes can be donated to a charitable organization, usually one that cares for animals.

Finally, trusts can be drafted that are permanent, or “irrevocable,” or that can be changed by the person who wants to create it, a “revocable” trust. Once an irrevocable trust is created, it cannot be changed. Trusts should be created with the help of an experienced trusts and estate planning attorney, who will know how to create the trust and what type of trust will best suit your needs. this will help avoiding probate without a trust.

Reference: The Daily Sentinel (Jan. 23, 2020) “When is a trust worth the cost and effort?”

For more information, go to:  Probate in Florida

  Probate- Florida Courts

And read one of our previous blogs at:  How does a Probate Proceeding Work?


Unmarried couple

Estate Planning for Unmarried Couples

Estate Planning for Unmarried Couples. For some couples, getting married just doesn’t feel necessary. However, they don’t enjoy the automatic legal rights and protections that legally wed spouses do, especially when it comes to death. There are many spousal rights that come with a marriage certificate, reports CNBC in the article “Here’s what happens to your partner if you’re not married and you die.” Without the benefit of marriage, extra planning is necessary to protect each other.

Taxes are a non-starter. There’s no federal or state income tax form that will permit a non-married couple to file jointly. If one of the couple’s employers is the source of health insurance for both, the amount that the company contributes is taxable to the employee. A spouse doesn’t have to pay taxes on health insurance.

More important, however, is what happens when one of the partners dies or becomes incapacitated. A number of documents need to be created, so should one become incapacitated, the other is able to act on their behalf. Preparations also need to be made, so the surviving partner is protected and can manage the deceased’s estate.

In order to be prepared, an estate plan is necessary. Creating a plan for what happens to you and your estate is critical for unmarried couples who want their commitment to each other to be protected at death. The general default for a married couple is that everything goes to the surviving spouse. However, for unmarried couples, the default may be a sibling, children, parents or other relatives. It won’t be the unmarried partner.

This is especially true, if a person dies with no will. The courts in the state of residence will decide who gets what, depending upon the law of that state. If there are multiple heirs who have conflicting interests, it could become nasty—and expensive.

However, a will isn’t all that is needed.

Most tax-advantaged accounts—Roth IRAs, traditional IRAs, 401(k) plans, etc.—have beneficiaries named. That person receives the assets upon death of the owner. The same is true for investment accounts, annuities, life insurance and any financial product that has a beneficiary named. The beneficiary receives the asset, regardless of what is in the will. Therefore, checking beneficiaries need to be part of the estate plan.

Checking, savings and investment accounts that are in both partner’s names will become the property of the surviving person, but accounts with only one person’s name on them will not. A Transfer on Death (TOD) or Payable on Death (POD) designation should be added to any single-name accounts.

Unmarried couples who own a home together need to check how the deed is titled, regardless who is on the mortgage. The legal owner is the person whose name is on the deed. If the house is only in one person’s name, it won’t become part of the estate. Change the deed so both names are on the deed with rights of survivorship, so both are entitled to assume full ownership upon the death of the other.

To prepare for incapacity, an estate planning attorney can help create a durable power of attorney for health care, so partners will be able to make medical decisions on each other’s behalf. A living will should also be created for both people, which states wishes for end of life decisions. For financial matters, a durable power of attorney will allow each partner to have control over each other’s financial affairs.

It takes a little extra planning for unmarried couples, but the peace of mind that comes from knowing that you have prepared to care for each other, until death do you part, is priceless.

Reference: CNBC (Dec. 16, 2019) “Here’s what happens to your partner if you’re not married and you die”

Read more about this here: 

4 estate planning tips for unmarried couples

11 Financial Documents Unmarried Couples Should Know About

Also read our previous Blog:

How Should Couples Begin the Estate Planning Process?


Estate Planning Mistakes

Fixing an Estate Plan Mistake

Fixing an Estate Plan Mistake. When an issue arises, you need to seek the assistance of a qualified and experienced estate planning attorney, who knows to fix the problems or find the strategy moving forward.

For example, an irrevocable trust can’t be revoked. However, in some circumstances it can be modified. The trust may have been drafted to allow its trustees and beneficiaries the authority to make certain changes in specific circumstances, like a change in the tax law.

Those kinds of changes usually require the signatures from all trustees and beneficiaries, explains The Wilmington Business Journal’s recent article entitled “Repairing Estate Planning Mistakes: There Are Ways To Clean Up A Mess.”

Another change to an irrevocable trust may be contemplated, if the trust’s purpose may have become outdated or its administration is too expensive. An estate planning attorney can petition a judge to modify the trust in these circumstances when the trust’s purposes can’t be achieved without the requested change. Remember that trusts are complex, and you really need the advice of an experienced trust attorney.

Another option is to create the trust to allow for a “trust protector.” This is a third party who’s appointed by the trustees, the beneficiaries, or a judge. The trust protector can decide if the proposed change to the trust is warranted. However, this is only available if the original trust was written to specify the trust protector.

A term can also be added to the trust to provide “power of appointment” to trustees or beneficiaries. This makes it easier to change the trust for the benefit of current or future beneficiaries.

There’s also decanting, in which the assets of an existing trust are “poured” into a new trust with different terms. This can include extending the trust’s life, changing trustees, fixing errors or ambiguities in the original language, and changing the legal jurisdiction. State trust laws vary, and some allow much more flexibility in how trusts are structured and administered.

The most drastic option is to end the trust. The assets would be distributed to the beneficiaries, and the trust would be dissolved. Approval must be obtained from all trustees and all beneficiaries. A frequent reason for “premature termination” is that a trust’s assets have diminished in value to the extent that administering it isn’t feasible or economical.

Again, be sure your estate plan is in solid shape from the start. Anticipating problems with the help of your lawyer, instead of trying to solve issues later is the best plan. There’s always time for Fixing an Estate Plan Mistake

Reference: Wilmington Business Journal (Jan. 3, 2020) “Repairing Estate Planning Mistakes: There Are Ways To Clean Up A Mess”

For more on this topic, read:

Avoiding 7 Deadly Estate Planning Mistakes

Top 10 Estate Planning Mistakes & How to Avoid Making Them

And check out one of our previous Blogs at: 

How Can I Goof Up My Estate Plan?

Bull Market

How Does a Bull Market Affect My Estate Plan?

How Does a Bull Market Affect My Estate Plan? A great year in the stock market was so impressive that it should raise estate planning concerns, especially among married couples. In 2010, the federal estate tax exemption was increased to $5 million and is adjusted for inflation. When President Trump was elected in 2016, the stock market was at about the same spot it was 1999, and no one had any notion that it would grow so much.

Wealth Advisor’s recent article entitled “The Market Is Up 60 Percent Over The Last Four Years. How Does That Affect Estate Plans?” says that because of this $5 million federal estate tax exemption, many estate planning attorneys moved from a two-trust estate plan to joint plans. Those plans saw better income tax results for heirs and often produced asset protection benefits for those living in “tenancy by the entirety” states.

This all sounds well and good for many. However, for all those with estate plans and more than $3 million and less than $5 million before 2016, the question was how did those significant market gains affect their estate planning?

A quick answer is that the federal tax exemption is now a little more than $11.5 million, so those couple’s plans should be solid. However, things aren’t that easy because the federal estate tax exemption is set to drop to $6 million in 2026. We also don’t know if another change will appear in the interim.

The real issue is that when you begin to think about the sad possibility of what could occur if one spouse were to die. If that became the case, then, when we get to 2026, any dollar over that $6 million threshold may be taxed at a 40% federal estate tax rate. It only gets worse if the surviving spouse lives in a state that imposes its own estate tax.

Since the market has done so well over the past several years under President Trump, some married couples who executed or updated their estate plans over the last decade and are now using a joint plan, may need to have their plans reviewed.

Talk to a qualified estate planning attorney to see if there are any costly federal and/or state estate or inheritance tax consequences that might be a surprise for the surviving spouse or loved one’s downline.

Reference: Wealth Advisor (Jan. 22, 2020) “The Market Is Up 60 Percent Over The Last Four Years. How Does That Affect Estate Plans?”

Read More about this topic at :   What Is a Bull Market?

 The biggest bull market ever — yet disaster looms for millions of retirees

And read our previous blog at :   What’s the Best Thing to Do with an Inherited Investment?

Dr. and Dementia Patint

Will New Tool Help Dementia Patients and Their Doctors?

Will New Tool Help Dementia Patients and Their Doctors? Researchers think that a new tool for dementia patients could help these individuals, as well as their care providers better communicate about the disease and risk of death and develop future care plans as it progresses.

Dementia is a non-specific clinical syndrome that involves cognitive impairments with the level of severity to interfere with social or occupational functioning.

The disease involves at least two areas of affected cognition – memory, language, reasoning, attention, perception, or problem solving.

Memory loss by itself isn’t necessarily dementia, because there can be many causes of memory loss. Some of the most common types of dementia are Alzheimer’s disease, Lewy body dementia, frontotemporal dementia and vascular dementia.

McKnight’s Long-Term Care News’ recent article entitled “New tool predicts life expectancy of dementia patients” reports that almost half (48%) of residents in nursing homes have a diagnosis of Alzheimer’s disease or other dementias, according to data from the Centers for Disease Control and Prevention.

“In those cases, a tool like this can be an incentive to start such a conversation, which should be held before there are too many cognitive obstacles.” said Sara Garcia-Ptacek, a researcher at the Karolinska Institutet in Sweden.

She went on to note that this discussion could be about where someone would prefer to live, at home or in other accommodation, or anything else that needs planning.

The tool uses four characteristics to predict life expectancy: sex, age, cognitive ability and comorbidity factors.

In the intensive research, investigators tested the tool using data from more than 50,000 patients who were diagnosed with dementia between 2007 and 2015.

These researchers found that that the tool was able to predict three-year survival following a dementia diagnoses with “good accuracy.”

The new tool also found that patients who were older, male and had lower cognitive function at diagnoses were more likely to die during that time period.

Reference: McKnight’s Long-Term Care News (Jan. 26, 2020) “New tool predicts life expectancy of dementia patients”

Read More about this topic at :

Advance directives as a tool to respect patients’ values and preferences: discussion on the case of Alzheimer’s disease

Simple new tool could help doctors spot dementia

And read our previous blog at :

Why is an Advance Directive so Important with Dementia?


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