After a Loved One Passes - FCCU

AFTER A LOVED ONE PASSES

A guide to help you through the process of settling your loved-one’s affairs.

Think First

®

During this difficult time, First Community Credit Union would like to provide this guide to assist you in settling your loved-one’s affairs. The following is intended only as an outline to help you generally understand the probate process. It is in no way offered as a substitute for proper legal advice which should always be sought from qualified legal counsel before proceeding with disposition of any property of a decedent’s estate.

Death Certificate You will need to obtain several copies of the death certificate for various businesses that will require them such as financial institutions, insurance companies, titling offices, social security, veteran’s benefits, and so on. The funeral home will help you order them or you may obtain copies at the Vital Statistics office for a small fee. In many cases businesses will reject a photocopy and request an original certified copy.

Other Legal Documents It is time to gather other documents you might need such as the title to the car or home, marriage certificates and birth certificates. This will make it easier to transfer assets formerly held by the decedent to their beneficiaries or family members. Other important documents to be on the lookout for are wills, life insurance policies, investment papers, securities, real estate documents, tax returns or W2 forms, social security cards, identification cards, military records, business agreements, bank records, trust documents, etc. Generally these are kept in a safe location such as a home safe, safe deposit box, file cabinet, desk or at a storage facility. Do not discard any papers while you are looking through documentation because they could be important even if you think they are old or expired. It is wise to have a trusted witness with you as you search through the belongings and sort through the paperwork.

Legal Assistance When processing the estate after someone has passed away, it is always a good idea to obtain the help of a lawyer if your loved one had assets that need to be probated. The lawyer will advise you on what records will be needed and how to proceed. Probating a will and handling their personal or business needs afterwards can be very complex. If you do not know of a lawyer, contact the local bar association or a law school to obtain a referral.

Friends and co-workers might also be a good source to find a lawyer. It is important that you bring with you all the documentation so they can help guide you in the process. Make copies beforehand in case you need to reference them.

Financial Assistance Obtaining sound financial advice is an important step in handling the affairs of your loved one. Seek out reputable professionals to assist you in making any financial decisions. First Community Credit Union offers an in-house investment advisor to give you such assistance. For a confidential, no cost review of the assets involved, you may contact our CUNA Brokerage Service, the First Investment and Retirement Planning Center, to make an appointment at 281.856.5625.

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Probate If you are named executor of an estate, one of the first things you should do is contact your local probate court. If you have hired an attorney, they will help you with this process. A clerk will inform you about the procedures. Probate is a procedure, established by law, for the orderly distribution of estates. It is designed to assure that all the property of the decedent is collected and protected; that all debts and taxes are paid; and that the person entitled to the property receives it. The probate courts have skilled and understanding personnel who are willing and able to assist you in completing necessary forms. Generally you will arrive at probate court within a week to 10 days after the date of death. Although dealing with probate matters at this time may be difficult, it is important that these transactions be made as quickly and as accurately as possible.

Attorneys advise having the following information available for probate: 1.

Decedent’s full name and the date of death (no documents are needed).

2.

If the decedent was your spouse, you will need the date and place of the

marriage. If there was a previous marriage for the decedent, you will need to

provide the dates of marriage and the date of death or divorce terminating the

former marriage(s).

3.

The names and addresses of all heirs, next of kin and beneficiaries.

4.

A will, if one exists.

5.

A summary of the decedent’s assets.

The form of proceedings will vary on whether or not the decedent died with a valid will. If there was a will and it can be admitted to probate and if it named an executor or executrix who is willing and able to serve, an order will be entered appointing that person to act as the personal representative of the estate. If the will provided for independent administration, Letters Testamentary will be issued by the clerk. A sufficient number of these should be ordered as they will be required for most of the executor’s transactions on behalf of the estate. If the will provided that no bond is to be required of the executor, then one is not necessary as long as the proper procedures are followed in a timely manner. However, if the testator ( the decedent who made the will) did not waive the bond requirement in the will, one will be required in an amount set by the court to cover the value of all liquid assets.

If the decedent died without a will, this is referred to as an intestate succession. If the heirs chose to have an independent administrator appointed, they must all agree on the person who is to serve. Prior to this, there must be an heirship proceeding to determine who the heirs of the estate are. An attorney ad litem will be appointed to represent the missing and unknown heirs and will insure no heir is omitted. An intestate succession is much more time consuming and expensive than an independent administration under a will. Avoiding it by means of a validly executed will is always wise. If the heirs disagree on the person to be appointed as administrator, any heir or creditor may file to be appointed. The court will generally consider the surviving spouse or closest next of kin to be the logical choice.

However, if there is a struggle over the issue, the court may appoint a third-party, usually an attorney, to serve. This should be avoided whenever possible since the expense of this type of administration can be enormous. After his appointment, the administrator will take the oath of office and file the required bond, unless the court waives it.

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After taking the oath of office, the personal representative of the estate, whether an executor or an administrator, must within thirty days of his/her appointment publish a notice in the local newspapers notifying creditors that they have to present claims against the estate within the time allowed by law. (Claims are debts incurred before the person died).

The claims process varies with whether the administration is independent or dependent. An independent personal representative, like a dependent one, must file an inventory of the estate’s assets within ninety days of appointment. Thereafter, no action is taken by the probate court and any creditors are free to make demand on and sue the independent representative just as they could the decedent. The independent representative is free to deal with these claims as the estate’s finances may warrant.

In a dependent administration, letters can be sent to secured and unsecured creditors requiring them to present their claim to the representative within the time allowed by the probate code for that type of debt. If the claims are not duly presented in proper form, and authenticated, they are barred. Also, if the claims are not acted upon within a statutory time period they are considered rejected and a lawsuit to recover them must be filed in a timely manner against the estate. All claims in a dependent administration are presented to the probate judge and, if approved, are paid in the proper order of administration.

If you are not an independent representative, you cannot pay any claims against the estate unless ordered to do so by the court. If you are an independent representative, you must be sure that the estate is more than sufficient to pay all claims and all expenses of administration. If you are in doubt about the validity of a claim, consult an attorney before acting. Ordinarily the expenses of the last illness, the funeral, and local taxes can be paid at once because such bills take precedence over other claims.

Small Estates If the decedent had no will, and has assets valued at less than $50,000, excluding the value of the residential homestead, the foregoing procedures might be avoided by the filing and recording of a small estate affidavit. This form is available from the probate clerk’s office and, if properly complied with and approved by the probate court, can be used as an alternative to standard probate proceedings. Other types of heirship affidavits have very limited use and are used only to identify heirs where the decedent has been dead for over four years.

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Who are the Heirs?

In Texas, many people are under the mistaken belief that if they are the surviving spouse of the decedent, they are also the sole heir of the estate. This happens to be true only if there are no children or all children are those of the surviving spouse and the decedent, and if all the property is community property. If there are children from before the last marriage, the surviving spouse only receives his or her half of the community property and the decedent’s children share the rest. While there is a presumption that all property on hand at the time of death for a married decedent is community property, if the decedent had property from before the marriage which is segregated or had inherited property during the marriage, this is separate property. If there is a surviving spouse and children or their descendents, the spouse inherits one third of any personal property and has a life–estate in one-third of any real estate. The rest goes to the children or their descendents. If there is a surviving spouse and no children, the spouse receives all the personal property and one-half of the real estate and the remainder goes to the other heirs.

Any person who wishes to renounce an inheritance or any portion thereof must file a proper disclaimer with the probate court no later than nine months from the date of the decedent’s death for it to be effective.

Bank Accounts You will need to obtain a Tax ID number (EIN) in order to open a bank account for the Estate. This can be obtained at www.irs.gov, search for form SS-4, which can be applied for online. Upon completion of the form, you will receive your EIN immediately and can then proceed to open the Estate Account. Before opening the account, an Executor (Executrix) will be required to present a current Letter Testamentary. If there is no will then, an Administrator will be appointed by the court. He or she will present a Letter of Administration. These individuals are the only ones that can open an Estate account. Your lawyer will guide you in this process. An Estate account is needed in order to facilitate the accumulation and division of the assets. Life insurance proceeds not paid out to a beneficiary will often be payable to the Estate of ____ (the decedent) and will therefore need to be deposited in the Estate account. This is also true for funds in various banking accounts where the bank or credit union will close the account and send the proceeds to the Executor or Administrator at their request. It is important that accurate record keeping be done so that all funds can be accounted for.

Insurance Proceeds To establish proof of a life claim, most companies will need a statement of claim and proof of death. Contact each insurance company and ask them for their requirements.

Proof of death is generally the death certificate. In some cases an obituary notice or the attending physician’s statement can be used if they will accept them. Insurance companies do reserve the right to ask for further information or proof if deemed necessary.

The claimant’s certificate must be completed by the person legally entitled to receive the proceeds and must state in what capacity he or she makes the claim. He or she must be prepared to provide positive ID if necessary. If the beneficiary is a minor or is not capable of the task, a guardian should file the form. If there is not a beneficiary, then the Executor 4

or Administrator must complete the form and the funds will then be placed into the Estate account for disbursement. In the case of a deceased beneficiary, a death certificate for them will be needed by the insurance company.

In making a claim, a copy of the policy should be furnished with the claim papers. If a settlement agreement is involved, or if an optional plan is elected, the policy should be retained.

All life insurance claims should include the following: 1.

Policy number(s) and face amount(s).

2.

Full name and address of decedent.

3.

The decedent’s occupation and date last worked.

4.

The decedent’s date and place of birth and source of birth information.

5.

Date, place, and cause of death.

6.

Claimant’s name, age, address, and Social Security number. Federal

legislation requires all taxpayers to furnish identifying numbers, usually the

Social Security number, to persons and companies making taxable

payment to them.

Other information that might be required: 1.

When did the health of the decedent first begin to be affected?

2.

If death resulted solely from bodily injuries, state whether such injuries and

death were due to accident, suicide, or homicide.

3.

Name and address of each physician who attended to the decedent during

the last five years prior to death.

4.

Who had possession of the policy?

5.

Is an Administrator or Executor to be appointed?

6.

List any other life insurance policies that the decedent may have had

(company, amounts, date).

Insurance Settlement Options After you receive the proceeds of the policy, you will have to decide what to do with them.

Unfortunately, this comes at a time when you may be least prepared or least able to make sound financial judgments. For this reason, keep in mind that the life insurance benefit can be paid out in several ways. If there is no immediate need for a lump-sum payment, consider the various settlement options available. These options define the ways in which money can be paid over various periods of time, in various amounts. The great advantage of delaying immediate payment of the entire amount is that it gives you time to evaluate your changed financial situation and to talk it over with your financial advisors if you wish.

Do not feel like you need to make a rush decision. In many cases you can take what you need now and delay the rest until such time as when you have been able to review all your options.

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The common settlement options fall into these general categories.

1.

Interest Only: The principal remains with the insurance company and interest is

paid periodically. Provisions can be made for the right to unlimited withdrawals

at any time.

2.

Life Income or Annuity: The Company guarantees to pay a stipulated benefit on

a set date for the lifetime of the beneficiary.

3.

Fixed Installments: Proceeds are paid according to the needs of the beneficiary in

agreed amounts over an agreed period of time. The beneficiary decides the amount

of each payment and the period of time involved.

For example: A widow or widower with school age children might choose a plan that together with Social Security would maintain the family’s standard of living until the children finish school. Because this might be a long time, the amount could be lowered as each child finishes school. Therefore, payments are highest when the need is greatest.

Social Security Benefits Among the many details you will have to handle, one of the most important is to notify the local Social Security office of the death. If the decedent was covered under Social Security, there is a lump-sum death benefit of $255 that may be available for a spouse or for the benefit of minor children. In almost every case, the funeral director will contact the local Social Security office. Remember that benefits are not automatic which is why it is important to visit your local office as soon as you can. Delay in applying can result in the loss of some benefits. To reach the Social Security office by phone, call 1.800.772.1213.

Bring the following: 1.

Proof of death (either from funeral home or death certificate); 2.

Your Social Security number, and the decedent’s number; 3.

Your birth certificate; 4.

Your marriage certificate if you are the widow or widower; 5.

Proof of U.S. citizenship or lawful alien status if you were born outside the

United States; 6.

Your divorce papers if you are applying as a surviving divorced spouse; 7.

Dependent children’s Social Security numbers and birth certificates, if available; 8.

Decedent’s most recent W-2 forms or federal self-employment tax return; 9.

The name of your financial institution and your account number so your benefits

can be directly deposited into your account.

Teacher Retirement System Benefits Being familiar with how to request TRS death benefits can greatly ease matters at a difficult time. The following checklist should assist with this process: 1.

When a TRS member or retiree dies, a family member, friend, or other

responsible party should notify TRS. The member’s employer or funeral home

may offer to assist in this process. TRS must be notified of the death even

if a monthly annuity will continue to be paid to a beneficiary under a retiree’s

optional form of annuity. Prompt notice allows TRS to make the necessary

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changes for tax purposes and to disburse valuable death and survivor benefits.

TRS will require the name, address, and telephone number of a family member,

friend, or other person who can act as a contact for TRS, as well as the TRS

participant’s date of death. At that time, TRS will request a copy of the death

certificate when it is available for verification purposes.

2.

After receiving notification of the death, TRS will mail out benefit information and

forms to the beneficiary. If the participant’s death occurs while employed by a

TRS-covered employer, then TRS must receive salary documentation from the

employer before information is sent out in order to determine the actual benefit

to be paid.

3.

The beneficiary should complete and file the claim form and related documents

before the first anniversary of the death of the participant or retiree to avoid

adverse tax consequences.

4.

When TRS receives all completed documents, the claim will be processed and the

death benefit will be paid.

When important member records are not kept up to date, a longer time period may be needed to process a claim. You may contact the Teachers Retirement System at the TRS web site at www.trs.state.tx.us or by calling TRS toll-free at 1.800.223.8778.

Veteran Benefits The U.S. Department of Veterans Affairs (DVA) will pay up to $300 in funeral benefits to qualified veterans or up to $2,000 when death was due to a service-related-cause. DVA will also provide an American flag for the casket and burial in any national cemetery other than the Arlington Cemetery in Virginia. If the decedent is eligible for burial in a national cemetery but you opt for another cemetery, a benefit of $150 is available. If the decedent died during active duty or within 120 days after discharge from a service connected cause, the branch of the military involved usually awards a lump-sum amount.

You and your children may be eligible for financial aid under the Dependents Educational Assistance Act. The period of entitlement for children is generally between the ages of 18 and 26. For spouses, it is generally for a period of 10 years from the date of death or date of eligibility, whichever comes first. In addition, survivors may be eligible for a 10-point preference when they apply for a civil service position. For further information and assistance in applying for Veteran benefits, call or visit your nearest DVA regional office. For more information, contact DVA at 1.800.827.1000 or www.cem.va.gov.

More Probate Matters It is important that all bills are gathered and businesses and employers are notified. Here is a list of items to consider: 1. The credit bureau will place an alert on the credit report so future advances will not be allowed on open credit lines. Call Equifax at 1.800.525.6285 and choose option 5.

Also, call Trans Union at 1.800.916.8800 and Experian at 1.888.397.3742 and remain on the line for assistance.

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2.

3.

4.

5.

6.

7.

Send letters to all creditors and various organizations the decedent may have been dealing with notifying them of the death.

Contact unions, service organizations, automobile clubs, or professional organizations to which the decedent belonged in order to find out whether he or she had any eligible benefits. Many such groups offer life insurance policies at attractive group rates and/or may return unused annual dues that have been paid.

The employer will help you determine if the decedent was covered by a life insurance policy and can proceed to guide you in filling out claim forms. Accrued vacation and sick pay may be available. Terminal pay allowances, gratuity payments (tips), service recognition awards, unpaid commissions, disability income and credit union balances may be available.

Pay special attention to the decedent’s health benefits to determine if dependents are still covered and for how long.

Banks and credit unions may freeze funds until they are notified by the joint account holder or Executor/Administrator as to what steps they need to take next. This is to help prevent fraudulent withdrawals from the various accounts. Contact a Branch Manager for further direction on any FCCU accounts.

It is important to keep detailed records of conversations. Make note of the representatives’ names, title, phone number, and the instructions given. Document everything in a binder and keep all the records together for easy referencing.

Taxes It is important to consult with a skilled tax advisor to help with State and Federal taxes. Inheritance taxes must also be reviewed. Rates and exemptions vary from state to state. For deaths occurring in 2011-2013, the exemption from estate taxes has been set at $5,000,000, but this limit is temporary and only applies for the next two years, after which, it will be subject to revision.

We trust this information has been helpful in your time of need. We have included some sample letters to assist you in contacting the various organizations. Please feel free to contact our Special Services department at 281.856.5300 or visit with your local Branch Manager for assistance with the financial affairs held at the Credit Union.

Free Pamphlets The Federal Trade Commission provides Funerals: A Consumer Guide. It is available by calling toll-free 1.877.382.4357 or http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro19.shtm

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Sample Letters To Life Insurance Companies To whom it may concern: This is to inform you that my (husband, wife, etc.), full name here, has passed away on date. His (her) policy number was . Please send me whatever documents you will require to make a claim on the proceeds of the policy. I wish to exercise my rights as beneficiary to elect settlement options. Please search your files for any other coverage that my (husband, wife, etc.) may have had as well.

Sincerely, Name Complete Address Phone Number

To organization(s) the decedent belonged to To whom it may concern: This is to advise you that my (husband, wife, etc.), full name here, has passed away on date. I understand that he (she) may have been covered by a life insurance plan through your organization. If reimbursement of dues is forthcoming, please also notify me of that. Please send me a list of whatever documents you will require and whatever information you will need from me as his (her) beneficiary.

Sincerely, Name Complete Address Phone Number

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To creditors To whom it may concern: This is to inform you that my (husband, wife, etc.), full name here, died on date. I understand that his (her) loan may have been covered by a life insurance plan or a disability plan through your company. If so, please inform me of whatever documents or steps will be required to proceed with a claim.

Sincerely, Name Address Phone Number

Please accept our most heartfelt sympathies for your loss.

Our thoughts are with you and your family during this difficult time.

Death leaves a heartache no one can heal; Love leaves memories no one can steal.

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Making a FIRST-RATE financial difference in our members’ lives!

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