Law Office of Frank Bruno, Jr.

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  • What Is a Proprietary Lease?

    What Is a Proprietary Lease?

    A proprietary lease is a complex yet common agreement between the tenants or residents of a cooperative building (a co-op) and the cooperative corporation managing and running the building. Co-ops are highly common in New York City, but living in a co-op is different from living as a tenant, resident, or owner of your own condo or apartment. Co-op tenants are subject to the proprietary lease rules and the relevant by-laws of the property where they reside, and not all state tenant-landlord rules will apply. This can lead to serious conflicts of interest and legal and financial issues. Contact the Law Offices of Frank Bruno, Jr. for assistance with rent, residency, ownership, conflict, or any other challenges you may face as a resident of and a shareholder in a cooperative building.

    The Proprietary Lease and the Co-Op By-Laws

    In a traditional rental arrangement, when you rent an apartment, you are classified as a tenant. However, in a co-op, you are a shareholder in the building in which you reside and New York City rent regulations do not classify you as a tenant but as a shareholder and an indirect owner of the building. Therefore, the terms of your proprietary lease and New York State’s business laws that govern corporations that operate for shareholder profit will apply, not traditional landlord-tenant laws.

    The proprietary lease is much like a standard lease in that it outlines the relationship, responsibilities, and expectations between the building corporation and each shareholder, with shareholders then residing in and becoming a tenant of the building.

    There is another document, however, that is an important part of the co-op agreement. These are the by-laws, which are the rules of the co-op. They outline how the property is managed and organized, as well as who can run for a seat on the board and how elections are held. The by-laws may also contain a section called the house rules that contain rules specific to residents of the building.

    Since these are rules and functions that have important legal implications, speak with the experienced proprietary lease lawyers at the Law Offices of Frank Bruno, Jr. before drawing up a proprietary lease, entering into an agreement with a co-op, or for assistance with legal or financial issues pertaining to a co-op.

    Responsibilities of Different Parties Under the Proprietary Lease

    The proprietary lease will specifically mention how the co-op will manage building maintenance to maximize the benefit of all of the building’s shareholders. This includes specifics on, for example, monthly maintenance outlays and how compliance with applicable local, state, and federal laws will be ensured.

    The proprietary lease also details the responsibilities and expectations of each shareholder. Some of these responsibilities can include regular repairs and maintenance in the tenant’s apartment that must be performed by the tenant, and how renovations (and what kinds) can be performed.

    Proprietary Lease Legal Issues

    As mentioned above, the business cooperative owns the co-op building and the tenants are considered shareholders – not statutory tenants. The proprietary lease also governs the relationship between the tenants and the co-op. Co-ops can use these facts to their advantage and can work whatever rules and regulations they want into the proprietary lease. This can lead to serious legal issues for you.

    For example, proprietary leases are drawn up in such a way to indemnify the co-op of any sort of liability. This means the co-op will not be liable for damage or losses of any kind that result from a shareholder’s failure to comply with the lease document. This also applies to building guests and contractors.

    Furthermore, breaching the house rules and failing to comply with any of the rules of the proprietary lease can be interpreted as a default by the shareholder. The co-op can even alter, update, or amend the house rules, and tenants must comply with these new rules.

    The co-op always has a copy of the key to your unit and can always access it, although it will typically have to give you adequate notice before doing so. However, issues can arise here as well if the co-op is unfair or unreasonable in any way when it comes to apartment access and you are affected or even evicted for refusing access on reasonable grounds.

    Another serious issue with proprietary leases is the fact that the co-op can evict you and repossess your unit if the proprietary lease allows them to do so. It may seem strange that a building shareholder and tenant can be evicted in this way, but the proprietary lease gives the co-op the right to do exactly this if the tenant violates the proprietary lease in any way. Examples of how this can happen include if the shareholder or tenant becomes bankrupt, allows unauthorized subletting, defaults on a rental payment, is found guilty of offensive conduct, or is determined to have broken any of the proprietary lease’s rules in any way.

    Finally, an important legal and financial issue with proprietary leases is that shareholders automatically lose money if someone files a mechanic’s lien against the building. For example, let’s suppose you call a plumber and they come over but do not do the work they were supposed to do but bill you anyway and you dispute the claim. The plumber can file a lien, but instead of falling on your unit, the claim will be against the entire building. The co-op may choose to automatically pay it to avoid court proceedings and an investigation but the co-op will then bill you the amount plus any relevant expenses. As a shareholder, you always lose in such disputes with a contractor and it can be very challenging to get your money back without a lawsuit.

    Contact the Law Offices of Frank Bruno, Jr. Today for Legal Assistance with a Proprietary Lease

    If you are evicted from your home because of a simple clause in your proprietary lease or face other serious issues or disputes with your co-op “landlord,” you will face life-altering and potentially long-term personal and financial consequences. It can be difficult to secure your rights as a private party and resident in a co-op, but the experienced proprietary lease attorney with the Law Offices of Frank Bruno, Jr. is just a call away. We can help protect you and will fight your case to secure your personal and financial well-being, so do not hesitate to call us today for a free, no-obligation case evaluation.

  • Surviving Spouse Needs An Estate Plan

    Surviving Spouse Needs An Estate Plan

    “If there ever comes a day when we can’t be together, keep me in your heart. I’ll stay there forever.” A.A. Milne

    “The boundaries which divide Life from Death are at best shadowy and vague. Who shall say where the one ends, and where the other begins?” Edgar Allan Poe

    When one spouse dies after meticulously titling assets to pass through joint tenancy to the surviving spouse, estate planning attorneys flinch. There are occasions when everything works smoothly, but they are the exception. As this article from the Santa Cruz Sentinel warns “After husband’s death, wife needs to create revocable trust.” Actually, she needs more than a revocable trust: she needs an estate plan.

    Most of the assets in the plan created by her husband, in this case, did pass to the wife outside of probate. However, there are a number of details that remain. She needs to obtain date-of-death values for any non-IRA securities the couple owned, and she should also have their home’s value determined, so that a new cost basis for the house will be established. She also needs an appointment with an estate planning attorney to create a will and an estate plan.

    If she dies without a will, her children will inherit the estate in equal shares by intestate succession. However, if any of her children pass before she does, the estate could be distributed to her grandchildren. If they are of legal age, there is no control over how the assets will be managed. Making matters worse, if a child or grandchild is disabled and receiving government benefits, an inheritance could make them ineligible for Social Security and Medicaid benefits, unless the inheritance is held within a Special Needs Trust.

    These are the basics of an estate plan. They protect loved ones from having to go to court to obtain the power to make decisions on your behalf, as well as protect your family from outsiders making claims on your estate.

    A revocable trust is one way to avoid probate. An estate planning attorney will be able to evaluate your own unique situation and determine what the best type of trust would be for your situation, or if you even need a trust.

    You may be thinking of putting your home, most families’ biggest asset, into joint tenancy with your children. What if one or more of your children have a divorce, lawsuit or bankruptcy? This will jeopardize your control of your home. A revocable trust will allow your assets to remain in your control.

    The last piece in this estate is the IRA. If you are the surviving spouse, you’ll want to roll over your spouse’s IRA into your own. Make sure to update the beneficiary designation. If you neglect this step and the IRA pays into your estate when you pass, then the IRA has to be cashed in within five years of your death. Your children will lose the opportunity to stretch IRA distributions over their lifetimes.

    An estate planning attorney can help guide you through this entire process, working through all the details. If your goal is to avoid probate, they can make that happen, while protecting you and your loved ones at the same time.

    Reference

  • Life Insurance for Elders?

    Life Insurance for Elders?

    Life Insurance for Elders? Should you continue to keep the policy, asks the Milford Beacon in the article “Should you keep your life insurance?”

    For term insurance, the answer is fairly straightforward. If the need for the death benefit is done, like paying off a mortgage or being able to pay for the kid’s college educations, then you don’t really need to have the policy. If your health is good and you expect to live well and long, then you could simply let the policy lapse. You won’t need to pay the premiums, but the death benefits will be over, as of the date that the policy lapses.

    An alternative is to convert the policy into one with cash accumulations. It isn’t the death benefit that you want, so much as the potential return of the cash value that could accumulate inside the policy. Some insurance companies may allow you to exchange your existing policy for a policy with hybrid features that include long-term care coverage and a death benefit. That may be useful, if you don’t otherwise have a long-term care insurance policy.

    When the life insurance is a permanent or whole life insurance policy, things get a little complicated. First, the review should begin with what is called an “inforce illustration.” This is a forecast as to what can be expected to happen with the policy, if you keep it. The insurance company’s actuaries get to sharpen their pencils here. There are many different factors that go into the inforce illustration, including rate of return on cash value, the company’s dividend crediting rate, the number of years the premium has been paid and your expected mortality rate, among them.

    What the inforce illustration will not show you is something your financial planner or estate planning attorney will: your policy’s “Internal Rate of Return,” also known as the IRR. The IRR on cash value shows how well your cash accumulates and what it earns inside the policy. You can then compare the IRR to other investments or savings, to see if this makes sense to keep.

    Here’s a simplified explanation of the IRR. Let’s say you invest $10,000 per year and have a death benefit far larger than this. The IRR on death benefit will show you the return on your premium dollars that will be returned through the issuance of a death benefit check. If you die early in the life of the policy, the check will be large. If you have the policy for an extended period of time, the IRR declines and the numbers are more like those you’d expect from a fixed income investment.

    Life Insurance for Elders? Another angle to consider: how does the life insurance policy fit within your estate plan? Would you want to have the proceeds go to a grandchild, now that your children have children of your own? Does it belong inside a trust? An estate planning attorney should review all your life insurance policies to see if they align with your overall estate plan goals.

  • Are You Retiring? Here’s What You Need to Know

    Are You Retiring? Here’s What You Need to Know

    “The joy of retirement comes in those everyday pursuits that embrace the joy of life; to experience daily the freedom to invest one’s life-long knowledge for the betterment of others; and, to allocate time to pursuits that only received, in years of working, a fleeting moment.” Byron Pulsifer

    “Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.” Mark Twain

    There are more than few steps you’ll need to complete, before packing up your desk, cubicle or locker and saying good bye to your work family. Even if your 401(k) and IRA is in order, there are things you need to during the last few months of working, says Next Avenue in the article “Tips to Prepare for Retiring This Spring or Summer.”

    There’s detailed planning, organization of documents, and additional financial details that need attending. You may also want to start creating your “bucket list” — a list of things you’ve always wanted to do, but never had the time to do while you were working. Getting all of this in order, will speed your waiting time and prepare you better, when the last day of your working life does finally arrive.

    Are You Retiring? Here’s What You Need to Know. Whether you are three months or six months from retirement, here are some tips for your to-do list:

    • Social Security. Figure out when the best time for you to take Social Security benefits will be. Can you delay it until age 70? That’s when you’ll get the biggest payout. The earlier you start collecting benefits, the smaller your monthly check will be. Take it early, and you are locked in to this lower rate.
    • Health Care. Figuring out how to manage health care costs, is the single biggest worry of retirement for most Americans. An injury that puts you in a nursing care facility can make a huge dent in your retirement funds, even if it’s just for a short while. This is the time of your life, when focusing on your health is most important, even if you’ve been careless in earlier decades. Evaluate your health status and get check ups with your regular physician and your dentist.
    • Investments. Check with your HR department about when you’ll need to roll over your 401(k) plan. If you transfer the funds into a low-cost IRA, you may save in fees. Work with your financial advisor to determine what your withdrawal rate will be. You may need to reevaluate some of your retirement goals or consider working part time during retirement for a few years.
    • Medicare. If you’re almost 65, you can start enrolling in Medicare now. The government lets you start the process within three months of your 65th birthday. Start this process, so you are covered, once you are not on the company’s health care plan.
    • Expectations. The first six months to a year of retirement can be both wonderful and terrible. While enjoying freedom, many people find it hard to withdraw money from the same accounts they spent so many years building. What if they don’t have enough for a long life? Take a realistic look at your lifestyle, budget, and spending habits, before you retire to make sure you are financially ready to do so. If you think you might work part time, look into the positions that are available in your area and what they pay.
    • Lifestyle. Often, we are so busy planning for the financial side of retirement, that we forget to plan for the “soft” side: what will you do in retirement? Will you volunteer with an organization that has meaning for you? Write the novel you’ve started on a dozen times? Spend more time with your grandchildren? Travel? What will make you feel like your time is being well-spent, and what will make you fulfilled?
    • Don’t forget the legal plan. Retired or not, you need to have a will, power of attorney, and health care power of attorney to protect your family, whether you are preparing for retirement or in the middle of your career. Speak with an estate planning attorney to ensure that these important documents are in place.

    The seven bolded items are a good first step in your journey towards retirement.

    Reference: Next Avenue (March 6, 2019) “Tips to Prepare for Retiring This Spring or Summer”

    Are You Retiring? Here’s What You Need to Know is a checklist and memory jogger for the individual and family.

  • Why Do Even the Middle Class Need Estate Planning?

    Why Do Even the Middle Class Need Estate Planning?

    When it comes to estate planning, you may think that you don’t have the wealth that would require you to engage in extensive estate planning. If you have a will, you might think that’s good enough.

    Forbes’ recent article, “Why Estate Planners Aren’t Just for the Ultra-Rich,” says that nothing could be further from the truth.

    Although some estate plans are more complicated than others, just about everyone can benefit from having one. Let’s examine the main reasons why:

    Avoiding probate. This is a big reason why the importance of estate planning is for everyone. You don’t have to be part of the 1% to want to avoid putting your family through the stress and expense of probate. Creating a trust and strategically placing assets within its control, eliminates many headaches.

    Maintaining control from the grave. Even after death, you can still impact how your assets are distributed, as well as to whom and when.

    Protecting your legacy. When you consider leaving a legacy for the next generation, it may have lofty pursuits. However, those aren’t necessarily reasonable goals for everyone. Leaving a legacy can also mean making certain that heirs properly respect all the effort and sacrifice that it took to save and create a retirement fund—whatever its size.

    Creating a business succession plan. Among the countless small businesses in the U.S., most will continue to remain viable after the legacy owner dies. A business owner can plan for this within an estate plan, which details exactly what they want to happen, if they die unexpectedly. That could include outlining specific roles and responsibilities for surviving heirs or putting into place a buy-sell agreement with a business partner and directing the distribution the proceeds of the sale.

    Be sure to revisit your estate plan regularly, especially if your life includes big events, like a birth of a child, a divorce, or an irreconcilable difference with a loved one.

    It’s a myth that estate planning is something only wealthy people do. It’s for everyone.

    Reference:

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  • Is it Wise to Have Three Grown Children Named Co-Executors of Your Will?

    Is it Wise to Have Three Grown Children Named Co-Executors of Your Will?

    “It is not what you do for your children, but what you have taught them to do for themselves that will make them successful human beings.” Ann Landers

    “There are only two lasting bequests we hope to give our children. One of these is roots, the other, wings.” Johann Wolfgang von Goethe

    Is it a good idea to have your three grown children listed as co-executors of your will? This may get somewhat confusing when probating a will, if there are multiple executors.

    What are the pros and cons to choosing one child to act as your executor, instead of selecting all three of your children to act together?

    nj.com’s recent article asks “I’m planning my will. Is it bad to have more than one executor?”

    The article explains that the duty of the executor is to gather all the decedent’s assets, pay any outstanding debts and liabilities and then account for and distribute the remaining estate to the beneficiaries, according to the instructions in the decedent’s will.

    The executor is allowed to hire professionals and others to help with tasks, like completing a decedent’s final income tax return or preparing the home for sale.

    When you have multiple executors appointed, these tasks can be assigned to each person to lessen the burden of the many duties and responsibilities that an executor has.

    On the downside, if those appointed can’t work together easily and without strife, appointing multiple siblings can make the administration of an estate much more difficult due to arguments, conflicts of interest, one sibling taking the lead to the resentment of the others or one executor undermining another executor’s actions.

    The problem is, in situations where the siblings don’t get along, designating one of them as executor can cause hard feelings and conflict. It’s not uncommon for those siblings who aren’t named as executor, to complain about every decision made by the named executor or delay in the administration of the estate.

    If there are multiple executors, the majority rules. That can avoid deadlock. Simple math in this case says that you want to avoid naming an even number of executors or name a person who can act as the tiebreaker.

    Even with a “majority rules” agreement among the executors, there are some financial institutions and other entities that may require all the executors to sign documents and/or checks on behalf of the estate. This can become burdensome and inefficient, if there are multiple executors.

    Speak with your estate planning attorney about your family dynamics and get their opinion about what would be best in your personal situation.

    Reference:

  • Spare Your Family From a Feud: Make Sure You Have a Will

    Spare Your Family From a Feud: Make Sure You Have a Will

    “The problem with revenge is that it never gets what it wants; it never evens the score. Fairness never comes. The chain reaction set off by every act of vengeance always takes its unhindered course. It ties both the injured and the injurer to an escalator of pain…Why do family feuds go on and on?…the reason is simple: no two people, no two families, ever weigh pain on the same scale.” Lewis B. Smedes

    “The family feuds or the village feuds often had to do with an idea of honor. Perhaps it was a peasant idea; perhaps this idea of honor is especially important to a society without recourse to law or without confidence in law.” V. S. Naipaul

    If for no other reason than to avoid fracturing the family, as they squabble over who gets Aunt Rosie’s sideboard or Uncle Joe’s collection of baseball cards, everyone needs a will. It is true that having an estate plan created does require us to consider what we want to happen after we have died, which most of us would rather not think about.

    However, whether we want to think about it or not, having an estate plan in place, and that includes a will, is a gift of peace we give to our loved ones and ourselves. It’s peace of mind that our family is being told exactly what we want them to do after we pass, and peace of mind to ourselves that we’ve put our plan into place.

    A recent article from Fatherly, “How to Write a Will: 8 Tips Every Parent Needs to Know,” starts with the basic premise that a will prevents family squabbles. Families fight, when they don’t have clear direction of what the deceased wanted. That’s just one reason to have a last will and testament. However, there are other reasons.

    A will is one way to ensure that your property is eventually distributed as you wish. Without a will, your estate is administered as an “intestate estate,” which means the state’s laws will determine who receives your assets after you pass. In some states, that means your spouse gets half of your estate, with your parents getting the rest (if there are no children). If the parents have died and there are no children, the rest of the estate may go to your siblings.

    Most people—some studies say as many as 60% of Americans—don’t have a will. It’s hard to say why they don’t: maybe they don’t want to accept their own mortality, maybe they don’t understand what will happen when they die without a will, or perhaps they want to wreak havoc on their families. However, having a will is essential.

    Don’t delay. If you don’t have a will in place, stop putting it off. Creating a will gives you the opportunity to effectuate your wishes, not that of the state. What if you don’t want your long-lost brother showing up just to receive a portion of your estate? How about if your ex-wife remains the beneficiary of your IRA?  If you don’t want someone to receive any of your assets, you need to have a will. Otherwise, there’s no way to know how the distribution will play out.

    Be thoughtful about how you distribute your assets. If you have children and your will gives them your assets when they reach 18, will they be prepared to manage without blowing their inheritance in a month? A qualified estate planning attorney will be able to help you create a plan for distributing your wealth to children or other heirs in a sequence that will match their financial abilities. You may want to create a trust that will hold the assets, with a trustee who can ensure that assets are distributed in a wise and timely manner.

    Every family is different, and today’s families, which often include children from prior marriages, require special planning. If you have remarried and have not legally adopted your spouse’s children from a previous marriage, they are not your legal heirs. If you want to make sure they inherit money or a specific asset, you’ll need to state that clearly in your will. If you are not married to your partner, they will not have any rights to your estate, unless a will is created that directs the assets you want them to inherit.

    Parents of young children absolutely need a will. If you do not, and both parents pass away at the same time, their future will be determined by the court. They could end up in foster care, while awaiting a court decision. Battling grandparents may create a tumultuous situation. The court could also name a guardian who you would never have chosen. A will or trust lets you decide.

    Speak with an estate planning attorney to make sure you have a will that is properly prepared and follows the laws of your state. You also want to have a power of attorney and a health care agent named. Having these plans made before you need them, gives you the ability to express your wishes in a way that can be legally enforced.

    Reference: Fatherly (Feb. 6, 2019) “How to Write a Will: 8 Tips Every Parent Needs to Know”

  • Using Trusts to Maintain Control of Inheritances

    Using Trusts to Maintain Control of Inheritances

    “The spendthrift robs his heirs the miser robs himself.” Jean De La Bruyere

    “If the Nation is living within its income, its credit is good. If, in some crises, it lives beyond its income for a year or two, it can usually borrow temporarily at reasonable rates. But if, like a spendthrift, it throws discretion to the winds, and is willing to make no sacrifice at all in spending; if it extends its taxing to the limit of the peoples power to pay and continues to pile up deficits, then it is on the road to bankruptcy.” Franklin D. Roosevelt

    Trusts, like estate plans, are not just for the wealthy. They are used to provide control, in how assets of any size are passed to another person. Leaving an inheritance to a beneficiary in a trust, according to the article from Times Herald-Record titled “Leaving inheritances to trusts puts you in control,” can protect the inheritance and the asset from being mishandled. Protection can be the main intention for creating a trust.

    For many parents, the inheritance equation is simple. They leave their estate to their children “per stirpes,” which in Latin translates to “by roots.” In other words, the assets are left to children according to the roots of the family tree. The assets go to the children, but if they predecease you, the assets go to their children. The assets remain in the family. If the child dies after the parent, they leave the inheritance to their spouse.

    An alternative is to create inheritance trusts for children. They may spend the money as they wish, but any remaining assets goes to their children (your grandchildren) and not to the surviving spouse of your child. The grandchildren won’t gain access to the money, until you so provide. However, someone older, a trustee, may spend the money on them for their health, education and general welfare. The inheritance trust also protects the assets from any divorces, lawsuits or creditors.

    This is also a good way for parents, who are concerned about the impact of their wealth on their children, to maintain some degree of control. One strategy is a graduated payment plan. A certain amount of money is given to the child at certain ages, often 20% when they reach 35, half of the remainder at age 40 and the balance at age 45. Until distributions are made to the heirs, a trustee may use the money for the person’s benefit at the trustee’s discretion.

    The main concern is that money not be wasted by spendthrift heirs. In that situation, a spendthrift trust restricts payments to or for the beneficiary and may only be used at the trustee’s discretion. A lavish lifestyle won’t be funded by the trust.

    If money is being left to a disabled individual who receives government benefits, like Medicaid or Supplemental Security Income (SSI), you may need a Special Needs Trust. The trustee can pay for services or items for the beneficiary directly, without affecting government benefits. The beneficiary may not receive any money directly.

    If an older person is a beneficiary, you also have the option to leave them an “income only trust.” They have no right to receive any of the trust’s principal. If the beneficiary requires nursing home care and must apply for Medicaid, the principal is protected from nursing home costs.

    An estate planning attorney will be able to review your family’s situation and determine which type of trust would be best for your family because using trusts to maintain control of inheritances works best.

    Reference: Times Herald-Record (Feb. 16, 2019) “Leaving inheritances to trusts puts you in control”

    Using Trusts to Maintain Control of Inheritances.

  • What are the “Must Have” Estate Planning Documents?

    What are the “Must Have” Estate Planning Documents?

    What are the “Must Have” Estate Planning Documents?

    “Leave nothing for tomorrow which can be done today” Abraham Lincoln

    “There is nothing like the death of a moneyed member of the family to show persons as they really are, virtuous or conniving, generous or grasping. Many a family has been torn apart by a botched-up will. Each case is a drama in human relationships — and the lawyer, as counselor, draftsman, or advocate, is an important figure in the dramatis personae. This is one reason the estates practitioner enjoys his work, and why we enjoy ours.” Jesse Dukeminier and Stanley M. Johanson, introduction to 1972 edition of Family Wealth Transactions: Wills, Trust, Future Interests, and Estate Planning.

    What do Aretha Franklin, Kurt Cobain, and Prince have in common? Aside from being famous and talented, each of these stars passed away without a will. All three had the money and attorneys to draft a proper estate plan, but for whatever reason, they didn’t draft one. It’s a good lesson to not neglect your estate plan.

    Motley Fool reports in the article, “3 Must-Have Estate Planning Documents To Get Done This Year,” that dying without a will creates numerous problems for your family. If there are no legal instructions in place, probate law dictates the distribution of your assets and selection of guardians for your minor children, which can cause problems. Regardless of your personal situation, you should think about creating these three important estate planning documents.

    Will. A will is used to distribute your estate, according to your instructions. A will can say how much and what type of asset each heir will receive, to minimize family fighting after your death. If you have young children, you can designate guardians in your will to be in charge of their care. If you die without a will, the probate judge will order who becomes their guardian.

    You also need a will to make charitable bequests, to expedite the probate court process and to reduce or eliminate estate taxes. When you draft your will, you’ll appoint trusted people to serve as the executor and the trustee.

    Living will. A living will can take effect while you are still alive. This is a legal document that sets out your instructions for medical treatment, if you become unable to communicate, such as whether or not you want to be placed on life support. A living will can relieve the emotional burden from your family of having to make difficult decisions.

    Power of attorney. This legal document helps in the event you’re incapacitated or in the hospital in an unresponsive state. A power of attorney gives the individual you designate the authority to transact financial and legal matters on your behalf. Set up a power of attorney, before you need it. If you don’t and you’re unable to make decisions, your family may have to petition the court to get those powers, which costs time and money.

    Estate planning is a huge favor that you’re doing for your family. Get these three legal documents in place.

    Reference: Motley Fool (February 18, 2019) “3 Must-Have Estate Planning Documents To Get Done This Year”

    This post answered the question What are the “Must Have” Estate Planning Documents?

  • What Happens to Social Security when Your Spouse Dies?

    What Happens to Social Security when Your Spouse Dies?

    The United States Social Security Administration is an independent agency of the U.S. federal government that administers Social Security, a social insurance program consisting of retirement, disability, and survivors’ benefits. Wikipedia.

    If a movie is really working, you forget for two hours your Social Security number and where your car is parked. You are having a vicarious experience. You are identifying, in one way or another, with the people on the screen. Roger Ebert.

    Millie is right to be concerned. She is worried about what will happen with their Social Security checks, who she needs to notify at their bank, how to obtain death certificates and how complicated it will be for her to obtain widow’s benefits. Many answers are provided in the article “Social Security and You: What to do when a loved one dies” from Tuscon.com.

    First, what happens to the Social Security monthly benefits? Social Security benefits are always one month behind. The check you receive in March, for example, is the benefit payment for February.

    Second, Social Security benefits are not prorated. If you took benefits at age 66, and then turned 66 on September 28, you would get a check for the whole month of September, even though you were only 66 for three days of the month.

    If your spouse dies on January 28, you would not be due the proceeds of that January Social Security check, even though he or she was alive for 28 days of the month.

    Therefore, when a spouse dies, the monies for that month might have to be returned. The computer-matching systems linking the government agencies and banks may make this unnecessary, if the benefits are not issued. Or, if the benefits were issued, the Treasury Department may simply interrupt the payment and return it to the government, before it reaches a bank account.

    There may be a twist, depending upon the date of the decedent’s passing. Let’s say that Henry dies on April 3. Because he lived throughout the entire month of March, that means the benefits for March are due, and that is paid in April. Once again, it depends upon the date and it is likely that even if the check is not issued or sent back, it will eventually be reissued. More on that later.

    Obtaining death certificates is usually handled by the funeral director, or the city, county or state bureaus of vital statistics. You will need more than one original death certificate for use with banks, investments, etc. The Social Security office may or may not need one, as they may receive proof of death from other sources, including the funeral home.

    A claim for widow’s or widower’s benefits must be made in person. You can call the Social Security Administrator’s 800 number or contact your local Social Security office to make an appointment. What you need to do, will depend upon the kind of benefits you had received before your spouse died.

    If you had only received a spousal benefit as a non-working spouse and you are over full retirement age, then you receive whatever your spouse was receiving at the time of his or her death. If you were getting your own retirement benefits, then you have to file for widow’s benefits. It’s not too complicated, but you’ll need a copy of your marriage certificate.

    What Happens to Social Security when Your Spouse Dies? Widow’s benefits will begin effective on the month of your spouse’s death. If your spouse dies on June 28, then you will be due widow’s benefits for the entire month of June, even if you were only a widow for three days of the month. Following the example above, where the proceeds of a check were withdrawn, those proceeds will be sent to your account. Finally, no matter what type of claim you file, you will also receive a one-time $255 death benefit.

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