Here’s what happens with your assets after you die:
“In this world, nothing can be said to be certain, except death and taxes,” Benjamin Franklin once in a letter.
Unfortunately, those words are just as true today as they were in the 1700s.
Worse, sometimes the two come as a package deal!
After all, when someone dies, their family members must go through a lengthy series of tax, financial, and legal steps in order to sort out the affairs of the deceased.
It will be necessary to determine whether or not there is a will in place.
If there’s a will, the executor will be named in the will. In lay-person English, their job is to administer the process by which assets are transferred, including paying the deceased’s debts, filing their income tax returns, and distributing any remaining assets according to the terms of the will.
If there’s no will, the remaining assets pass to the decedent’s heirs according to the law of the country in which assets are held. The executor is appointed by the court (referred to as the administrator.)
The executor or closest family member will need many copies of the death certificate.
It’s important to get multiple copies of the death certificate. They will be necessary when notifying financial institutions, government agencies, insurance agencies, and others about death. These normally require an original document.
Death certificates can be obtained from the Coroner in Hong Kong. It’s a good idea to obtain at least 10.
The deceased’s debts will — usually — not be passed on to family members.
The deceased’s estate is liable for debts, but the deceased’s family is usually not.
The exception to this is when debts are in joint names/cosigned, in which case the survivor party will be responsible for the debt.
Notably, although the family is not legally responsible for the debts, they could still feel the effects. Any money or assets must be used to pay off the deceased’s debts before anything is given out to the surviving parties.
Every group and company that the deceased was associated with will need to be contacted.
An executor will need to get in touch with banks, savings providers, mortgage providers, credit-card companies, and insurance companies to notify them of the death.
Additionally, they will need to get in touch with the “everyday things” that may not immediately come to mind, including utility companies; internet, phone, and TV companies; and even the deceased’s employer.
The executor will have to file a final income tax return and possibly deal with estate taxes.
“The executor will also have to file a final income tax return for the decedent. On the income-tax return, the executor will indicate the decedent is deceased.”
Also, for certain countries around the world, there are death taxes to be paid. For example, if an American has an estate worth US$5,430,000 or a UK Domicile has an estate above GBP325,000, the Executor is responsible for filing the relevant forms. Taxes will be levied on asset values over these amounts.
However “if an estate tax is due and a return is not filed, there are penalties for failure to file and file to pay and interest is assessed on any amounts due. If the executor distributes the assets without filing the return, the government may have recourse against the executor.”
If an heir wishes to live in a home with mortgage debt, then they are responsible for making the payments.
If a person who inherits a house with mortgage debt wishes to live in it, then they will be responsible for making the mortgage payments!
The person inheriting cannot sell the house until they own it so this may cause problems if the mortgage payments are not met. How long will the lender not let you pay before foreclosure is mentioned?
If the deceased rented, what happens to the lease agreement upon death.
The most important thing is for the Executor to find out if the property can be vacated or must continue with the current terms.
Technically, the deceased’s estate is responsible for the rental payments until the lease’s expiration. But the lease can sometimes be broken, and the executor will continue to pay the rent until new tenants move in.
Creditors will have a claim against the deceased’s estate.
Loans fall under the ‘estate planning’ category — meaning that the executor will handle them.
The executor will be in charge of paying off the deceased’s debts — including car loans, credit cards, tax-loans — from the proceeds of the estate.
But if the estate does not have enough money to pay off the debts — and provided the deceased was the only one who borrowed the loan — then the lender can repossess the object that was borrowed against or write off the loan itself (credit cards or tax loan.)
“When a person dies, that person’s creditors have a claim against his or her estate. The executor pays all of the decedent’s debts with his or her assets.” “If the decedent’s assets are insufficient to pay his or her debts, then those debts die with the decedent so long as somebody is not jointly liable on them.”
The executor of the deceased’s estate can reclaim any debts owed.
“A debt owed is an asset of the decedent’s estate. The executor of the decedent’s estate is in charge of collecting the debt. It is important to make sure that debt is papered so that the executor will have a way to learn about the debt.”
Someone will need to contact the local post office to stop or forward the incoming mail.
Sometimes it’s easy to forget the small, day-to-day things, but it is important that someone contacts the local post office to stop or forward any incoming mail.
Additionally, it would be a good idea to cancel any magazine subscriptions that the deceased may have had.
There’s also the question of what to do with emails and other online accounts.
In some cases, a person agrees that no one else will be entitled to their online account — in which case the company will delete the account and its contents after death.
But different companies have different rules.
Here are a few of the regular used:
- The deceased decides what to do with the account prior to death.
- A relevant party can submit a request regarding the deceased’s account in order to close it, obtain data, resolve a potential hijacking, or simply notify Google that the user has died.
- When you sign up to iCloud, you agree that your account is “non-transferable” and that any rights to your Apple ID/content in the account terminate after death. The account may be terminated and all the content within it deleted upon the receipt of a copy of the death certificate.
- The account can be “memorialized.” It will say “remembering” next to the name, and no one will be able to log in to it.
- A person can delete their account prior to death.
- A person authorized to act on behalf of the estate or a verified immediate family member can work with Twitter to deactivate the account, and possibly delete certain images.
In order for your to help your loved ones handle your “full” estate when you pass away, it is worth sitting down to create a list of everything you own. Bank account numbers, mortgage lender details, stockbroker account, life insurance, savings, Human Resources for the office, credit card numbers, membership information (clubs, subscriptions) and anything else you may receive mail on.
Your Executor/s can handle all of the required duties with the more information that is provided.
This should be done in coordination with your Will – this allows everyone, including the courts, to understand who you want your assets to go to. It saves excessive time – it takes long enough with instruction to give out your assets, without them can add years – and costs – it is not free to distribute your estate so the more information is given, the less your loved ones have to payout.