Estate Tax questions

[fairnymph]

My husband recently died and I have several questions concerning my resulting financial situation. I should state for the record that I am NOT us citizen, only a permanent resident, and both he and I reside(d) in Massachusetts.

He had life insurance (I believe in the amount of 100k), and named me the beneficiary. He also had stocks and a 401k, both over 5k, how much more I don't yet know.

He did not have a will.

He had private school loans cosigned by his father, which I believe will now fall to him. His one federal loan will be forgiven. He had around 10k in credit card debt -- credit cards solely in his name.

My questions:

1. Will I be taxed on the life insurance at all, considering I am not a citizen? I know there is a 2 million federal exemption but what about MA law? I could not find the info in the tax code.

2. What will happen with the stocks and 401k? If he did not have a will, do I need to do something with probate to get them transferred to me, and how do I go about that? In regards to the stock, is there any benefit to me disbursing them now or within a certain time frame to avoid paying tax?

3. Will the credit card debt be forgiven, or will it fall to me? My mother thinks that I should simply send back any bills that come with a death certificate, as the creditors may not even know that my husband was married. I am wary of this route if it later backfires and causes fees and legal issues.

 

[MahanAtma]

Julia,

First, I just want to say how sorry I am to hear about this. I only met you and Ryan a couple times, but I remember both of you well, and it's a huge shock just to hear about this; I can't imagine how you must feel.

As to your questions, I think you should definitely talk with a probate lawyer who is familiar with MA law. Here is the little that I know:

1) I don't know the answer to the tax question.

2) When there is no will, a person's assets go by "intestate succession", which means that there is a state law defining the order in which relatives have a claim on the assets. As the wife, you are first, so everything should go to you.

Mass. is not a community property state, so I believe everything has to go into probate. The probate court should set up an administrator, who will take care of making sure the assets are transferred to you. I don't know exactly what you need to do yourself though; you'll want to consult with an attorney familiar with MA probate law, as I mentioned above.

3) My understanding is that all debt held by your husband is now transferred to you, unfortunately. Perhaps the fact that you are not a citizen changes this, but I don't know the answer w/o doing research. In any case, you cannot simply send back the credit card bills with a death certificate; you will have to do more than that to resolve this problem, if that is possible at all.

If you don't already have a lead on a good attorney, you will want to use this lawyer-locator to find one near you:

http://www.martindale.com/

Pay attention to the peer review ratings:

http://www.martindale.com/xp/Martindale/Peer_Review_Ratings/ratings_explanation.xml

and search on probate as the area of expertise, or tax if necessary.

Whatever you do, do NOT simply pick an attorney out of the yellow pages.

Good luck, and let me know if there is anything else I can do for you.

 

[Banquo]

Mahan already seems to have hit on the things that would be helpful. A talk with an MA attorney would be the best thing. Only a few quick things I found:

(1) The MA estate tax floor appears to be $1 million.
http://www.ftwlaw.com/articles/mass_estate_tax.html

An MA estate tax return is due within nine months of death. If necessary, form and instructions here:
http://www.mass.gov/Ador/docs/dor/Forms/Est_Tax/PDFs/m_706.pdf

In Massachusetts, if a person dies without a will, the assets will be divided amongst the immediate family. If there is a spouse and parents or relatives, the first $200,000 of the deceased's estate plus one half of the remaining property will go to the spouse.
http://research.lawyers.com/Massachusetts/Estate-Planning-in-Massachusetts.html

(3) Assets and liabilities become part of the deceased's estate. Estate debts must be paid before assets can be distributed to the estate's beneficiaries.
http://www.abanet.org/publiced/practical/books/wills/chapter_7.pdf

=

I am truly sorry for your loss Julia. I've never met either of you but I've always admired your contributions here. Best wishes.

 

[DarthMom]

mahanatma and banquo have already adequately responded to your questions, but i wanted to say that i went through something similar in the state of georgia...regarding the probate court, i was appointed administrator of the estate....so i don't see why you shouldn't either. unless your citizenship is a problem. i too, was the only beneficiary of that estate.

 

[Mariposa]

FN -

Mahan has given you excellent advice, and I can probably get a reference from work for a probate attorney in your area. I would advise you against trying to administer the estate on your own, particularly in light of the fact that your husband died without a will. Most probate specialists are very knowledgeable about tax. Also, you can have the attorney do all of the life insurance paperwork.

You do want to locate the original insurance policy as soon as possible.

What I see happening is a summary probate administration (or whatever it's called in MA) because his estate is relatively small and you are the sole beneficiary.

1. My initial reaction is that it does not matter, and you can serve as personal representative of the estate even as a non-citizen. Whether and how much you'll get taxed is a bit out of my league.

2. I think it's reasonable for you to anticipate receiving the entire estate once all the bills are paid. See below.

3. All debts of the decedent have to be paid by the estate before any distributions can be made. Part of the administration of the estate is contacting any known or possible debtors, ascertaining the amount of any debt, and paying it so the estate can be closed.

There are many factors at work in your situation, and I am so sorry about what happened. There are ways to administer the estate so that you do not take a financial hit in addition to the life upheaval. It is best to see the lawyer within 30 days at most; do allow yourself time to grieve, but of course there are these responsibilities associated with putting the affairs in order. There will also be a lot of paperwork and a specialist in estate administration will be able to cut through a lot of the red tape.

Check your PMs shortly. In the meantime, miscellaneous info so you can familiarize yourself with the process:

Understanding Intestacy

General Info on Estate Administration

*hugs*