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Tuesday, February 19, 2013

Death and Extra Taxes

Jack has recently learned that taxes are maybe even more certain than death.  He is serving as the executor of his mother’s estate after her death last year. 

Not only does his mother, through him, have to file a final IRS Form 1040 annual tax return, he will have to file an IRS Form 1041 annual tax return for her estate, if there is income from her assets after her death (from interest, dividends, sales, or rent, for examples).

There is also a totally different tax return that could be required – but only if his mother’s assets add up to over $5 million.  It is IRS Form 706, which is the estate tax return.  Illinois would start collecting at $3.5 million.

Her ‘taxable estate’ is the combined value of everything she owned when she died and all taxable gifts she gave while alive.  She ‘owned’ everything she could have decided to give to anyone at the time of her death.  That includes – contrary to common belief – life insurance benefits, joint accounts, IRAs and almost any other thing of value. 

Shockingly, estate tax laws have actually improved for the 99% in recent years.  Of course, the New Year’s Eve/Day fiscal cliff tax compromise was long overdue.  But it was better than expected in the estate tax area, as we will explain next week. 

For advice figuring out what the IRS insists on knowing after death, and planning options to reduce after-death taxes, call our office at (815) 436-1996 for an appointment.  © 2013 Gruber Law Office, Ltd.


Tuesday, February 12, 2013

Still Thinking About Taxes After Death

Jack is the personal representative who was appointed by the court for his mother’s estate after her death.  He’s worked hard to start the probate process properly. 

One of those early steps is to apply for an Employer Identification Number (EIN), which is a nine-digit number for IRS filing and reporting purposes, even though he will not be an employer.  It is sometimes called a TIN now (as in Taxpayer Identification Number), which refers generically to both EINs and social security numbers (SSNs).

His mother’s SSN must be used to file the tax return for the last partial year she was alive.  But as of the date of her death, any more income, such as interest, dividends or rent that her assets earn needs to be reported under the EIN Jack will obtain now.

Jack obtains it by completing an online IRS form, which has essentially replaced the old one-page IRS Form SS-4.  The questions on the form are customized to the earlier answers he gives online. 

It can be a bit of a maze, so it is useful to have the estate attorney or accountant actually type through the online form sitting right next to Jack.  So long as the IRS server is operating properly, the EIN is then created immediately, and the IRS letter ‘assigning’ the number can be printed out.

In theory, Jack could use the paper SS-4 form and apply by mail instead, and he would receive the number within about four to six weeks.

For legal and practical advice about simplifying required after-death procedures, call our office at (815) 436-1996 for an appointment.  © 2013 Gruber Law Office, Ltd.


Tuesday, February 5, 2013

New Bank Account

As the official executor of his mother's estate appointed by the probate court, Jack needs to open a new checking account for the estate. 

He should transfer all of his mother's cash funds he can find to the new estate account. So Jack will close all of his mother's bank accounts and consolidate them in the one estate account. 

Jack should be careful to wait to close the original accounts and transfer them to the new one only after all the outstanding checks have cleared and the automatic withdrawals and deposits are cleared up. 

He should quickly notify the utilities and Social Security, who were set up for automatic withdrawals and deposits, about his mother's death and asked them to make the necessary adjustments and cancellations. 

The new estate account will serve to keep all estate money separate from Jack's own funds as required by probate law.  Used properly, it will also simplify keeping track of all estate expenses and deposits by having all financial comings and goings happening in one account. 

For help following probate procedures in your situation or to plan your estate to minimize or even eliminate probate, call our office at (815) 436-1996 to schedule an appointment.  © 2013 Gruber Law Office, Ltd.


Tuesday, January 29, 2013

Mail Delivery

Jack has been sending notices to his mother’s creditors.  They inform the creditors of his mother’s death, that court probate proceedings have started, and that they should notify him and the court about any debt his mother owed to them. 

It could be helpful for Jack to also receive any bills that are sent to his mother by creditors he has not known to notify.  In fact, there is much that is sent to her that could be useful to him, including her utility bills, insurance premium notices, information about neighborhood homeowners meetings, and plenty of other things.

Since Jack does not live in his mother’s house, as a practical matter Jack should file a change of address with the post office.  He wants all mail to either held at the post office or sent to his own home. 

That will make his job as executor of his mother’s will a little easier and help prevent delays that could complicate possible issues.  Plus, her mail will be less likely to pile up, get lost, misplaced, or even misused by thieves or opportunists who might find a way to profit from her death.

The job of the personal representative, or executor, in an estate involves both legal and practical problems, some complicated and others simple. 

For assistance resolving the various problems involved in probate or to plan your estate to minimize or even eliminate probate or parts of probate, call our office at (815) 436-1996 for an appointment.  © 2013 Gruber Law Office, Ltd.


Tuesday, January 22, 2013

Showing Diligence and Preventing Scams

As executor of his mom’s probate estate, Jack must send notices to his mom’s creditors.  Last week, he ordered his mom’s credit reports to make sure he knew about all her accounts. 

Plus, it allowed him to check whether any new accounts were opened in her name since her death.  Unfortunately, identity theft is no longer uncommon even after death.  Some thieves check the obituaries in hopes of finding easier targets.

Jack initially asked for the credit reports by doing what we recommend families do anyway.  He sent letters to each of the three credit bureaus that informed them of his mom’s death and enclosed her death certificate.  The bureaus are then required to flag her file, which should make it so that no more credit would be extended in her name.  Plus, any bureau that verifies such a death is supposed to also notify the other two bureaus.

Having copies of his mom’s credit report will also make it easier to confirm for the court that Jack made a suitably diligent search to find all of his mom’s actual creditors when the time comes to close the probate case.

Some probate requirements are obvious from reading Illinois’ probate statutes.  Sometimes, there is more to it than meets the eye.  For help taking care of matters after a loved one’s death or to minimize complications for your family after your own death, call our office at (815) 436-1996 for an appointment.  © 2013 Gruber Law Office, Ltd.


Tuesday, January 15, 2013

Borrowing While Buried

As executor of his mom’s probate estate, Jack must send notices to his mom’s creditors asking whether she still owed money to them.  To investigate who else she might owe, Jack ordered his mom’s credit reports to make sure he knew about all her accounts, including the right names and addresses. 

Her credit reports could also reveal whether any new accounts were opened in her name since her death.  Sadly, a person may become an identity theft victim even after death. 

For example, one Illinois man received a message on his home answering machine from U-Haul in Ohio demanding he return the hitch they said he had rented from them three days after his death.  Soon after, a few new account opening confirmations arrived at his mailbox. 

When all was said and done, his identity thieves got away with about $7,000 spent with credit cards, plus the hitch they never returned.  Fortunately, his family heard the message and told creditors about the problems within a few weeks of his death, which ended the scam for the thieves, allowed the probate estate to close, and reduced the losses for other potential loan companies. 

For help taking care of financial and legal matters after a loved one’s death or to plan your own estate to minimize complications for your family after your death, call our office at (815) 436-1996 for an appointment.  © 2013 Gruber Law Office, Ltd.


Tuesday, January 8, 2013

Searching Diligently

As Jack learned last week, publishing notice to creditors warning them to file claims for any debts his mother owed them is only a start in probate.  He must also mail or deliver a written notice to each creditor whose name and address is known to or is reasonably ascertainable by Jack.

As with many legal issues, it is not so easy to say what exactly it takes to show a proper, diligent search for creditors.  But the U.S. Supreme Court says it would include many tasks, such as:  a timely search of Jack’s mother’s home, office, and safe deposit box; an investigation of the books and records uncovered by the search, including tax returns; and asking her relatives, acquaintances, business associates and professional sources who may be good sources of information.  

Another information source is to order his mother’s credit report, which is also useful for other reasons that we will talk about in a future column. 

The job of the personal representative, or executor, in a probate estate is not perfectly defined, and it is not always easy.  But every step is necessary to have a truly final, recognized end of matters to allow distribution to heirs. 

For help to successfully follow probate procedures in your situation or to plan your estate to minimize or even eliminate probate, call our office at (815) 436-1996 for an appointment.  © 2013 Gruber Law Office, Ltd.


Wednesday, January 2, 2013

That Would Be Too Easy!

Jack is publishing a legal notice about opening the probate of his mother’s estate in a local newspaper.  That publication starts a six-month clock ticking for creditors to make any claims they have for money his mother may have owed them. 

If they don’t make any claim within the six months, then they are forever barred from trying to collect the money from his mother’s estate or her heirs. 

It sure would be easy for Jack if publishing notice was all that was needed to bar any late claims.

But this is probate, and there is more required to protect creditors’ rights to be paid for valid bills than publishing.  Otherwise, all creditors would need to scan all legal notices in every newspaper all of the time to be sure they didn’t miss someone’s death and so get stuck not being paid what they earned.  That would be burdensome and impractical. 

So, Illinois law provides that as executor, Jack must also mail or deliver a written notice to each creditor he can reasonably find out about.  So what would be a reasonable search for creditors?  We’ll discuss what the courts have decided about that in our next column.

In an effort to be balanced and orderly, probate laws have protections for heirs and for creditors.  For help following probate procedures in your situation or to plan your estate to minimize probate, call our office at (815) 436-1996 for an appointment.  © 2012 Gruber Law Office, Ltd.


Wednesday, December 26, 2012

Important Publication

Jack has now been appointed executor of his mother’s will by the court, and so the probate of her estate has officially begun.  One of the first things he must do is to become a published author of sorts by writing and publishing a legal notice in a newspaper once a week for three weeks in a row. 

The notice starts a very important clock ticking.  Each of his mother’s creditors must file any claim they want to have paid from her assets within six months of the publication of the notice.  Under Illinois probate law, if creditors do not file their claims within the six months, they must forever hold their peace.

But publishing notice in the newspaper merely starts that timer.  There is more work that Jack must do to notify creditors of when and where to file their claims.

Probate has some time limits to make it possible to finally and completely settle the financial affairs of deceased persons.  In order to protect everyone’s rights, probate laws have very specific rules that must be followed to the letter. 

For help with probate or with planning ahead to simplify or avoid probate for your own loved ones, call our office at (815) 436-1996 for an appointment.  © 2012 Gruber Law Office, Ltd.


Tuesday, December 18, 2012

Jack Was Good Enough?

Jack had a close call with Charley, the ‘elf on the shelf’ at his mother’s house.  Charley does unexpected things and reports to Santa when those discovering his mischief behave badly. 

Charley sometimes hides things just to see if someone will slip up and give him something interesting to report to Santa. 

Jack hadn’t even noticed that Charley was already out at his mom’s house until he’d already found two copies of her Will right where he expected them, but still could not find the original. 

Not finding the original would be a problem because when no original Will is found and filed with the probate court after a death, the court presumes that the deceased person destroyed the Will in order to revoke it, unless it is proven otherwise. 

When Jack happened to spot Charley sitting in his favorite place on the clock over the fireplace mantel, he realized he simply had to behave properly long enough to stumble on the original Will.  Charley usually does not make his hiding places very tough. 

So once Jack realized the Will could be anywhere, not just where his mom would normally put it, Jack found the Will in the top drawer of his mom’s dresser rather than in the top drawer of her desk where she’d always kept it. 

Good thing Jack realized he should watch his manners and be patient – because Charley could have hidden it again in a better place and still reported on Jack to Santa. 

Here’s hoping that your own elves only hide what you are glad to lose and that your holidays are filled with love and fun for the whole family.  ©2012 Gruber Law Office, Ltd.


Tuesday, December 11, 2012

Another Probate Requirement

Jack already prepared a Petition asking to become the executor of his mother’s will and signed an executor’s oath and individual bond as required.  Now if he files those documents with the required attachments, the probate court will decide whether proof of the will is satisfactory.

If the proof of the will is satisfactory, the court will admit his mother’s will to probate, appoint Jack executor, and order that the clerk issue “letters testamentary” to Jack.  Then Jack must begin issuing the various notices required by probate.

Heirs (certain relatives defined by law) and legatees (people named to receive things in the will) must be given notice of the court’s order within 14 days.  For example, Jack’s sister Tammy must be given this notice, which tells her of certain legal rights to challenge the will or the court’s order. 

There is a way around the extra work caused by having to give formal notice.  Jack could have asked Tammy and the others who would need to receive the notice to sign a Waiver of Notice.  If all signed, Jack could simply have filed those along with his petition, sent the notices via regular mail and skipped having to later file proof in court that he sent the notices.

Advance estate planning can often minimize the burdens of probate or even avoid it.  For estate planning advice, call our office at 436-1996 for an appointment.  ©2012 Gruber Law Office


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