DIVORCE, HEIRS & FINANCE

WILL YOU PAY INHERITANCE TAX ON YOUR OWN MONEY?

A Pennsylvania couple in their late 80s added their daughter's name to their bank accounts so she would have access in case of their sudden deaths. Unfortunately, the daughter died a few months later.

Then the couple received a Pennsylvania inheritance tax bill for thousands of dollars. It seems the state calculated that one-third of the money in the bank accounts was their daughter's and the rest was taxed as an inheritance to them. They had to pay a tax on their own money. After they paid the tax the bank told them it would have been better to give their daughter power of attorney but no one mentioned that to them before.

Six other states also tax such inheritances. They are Indiana, Iowa, Kentucky, Maryland, Nebraska and New Jersey.

WHAT HAPPENS WITH MY SOCIAL SECURITY IF I GET DIVORCED?

Many people are wondering what the Social Security consequences would be if they were divorced. Many questions need to be answered.

Experts at AARP and the Social Security Administration provide this information:

• If you are age 62 plus, were married 10 years or more, and are currently unmarried and not entitled to receive a higher benefit based on your own work, you can receive benefits based on your ex's earnings, even if he or she remarried.
  
  
  
• If you both worked, the lower earner may receive benefits based on the higher earner's work.
  
  
  
• If you never worked, you can collect benefits on your ex's work, and your ex is still eligible to collect what he or she has earned over the years.
  
  
  
• If your ex hasn't yet applied, but qualifies for benefits, you can still receive benefits if you have been divorced for two years.
  
  
  
• You can collect a divorced spouse's benefits without reducing the amount of your ex's benefit.
  
  
  
• The longer you wait to collect divorced spousal benefits up to your full retirement age, the higher your benefit will be.
  
  
  
• If there is a question that this information doesn't cover visit: JustAnswer.com/Social-Security.
  

HERE'S WHAT YOUR HEIRS WILL NEED TO KNOW

You can make life easier and less expensive for your heirs if you provide them with these basic lists, say financial planning experts.

• Bank and credit card accounts. List the name of each institution, type of account, the account number, telephone number and password for each. Tell where the account statements are.
  
  
  
• If you have an attorney or financial planner, provide the person's name and contact information.
  
  
  
• Make a list of recurring bills and loan payments. It's especially important if payments come directly out of a checking account. Tell heirs not to close accounts until arrangements have been handled.
  
  
  
• List your life insurance policies and contact information so heirs can collect what they are due and cancel policies that are no longer needed. In this case, ask for premium refunds which can amount to hundreds of dollars.
  
  
  
• List all email addresses you use and account passwords if any. This will help heirs find bills you have and notify acquaintances of your incapacity or death.
  
  
  
• Make a list of money that should come in during your life and/or after your death. Include pensions, Social Security benefits, veterans' benefits, payments on loans you made to others and life and disability benefits.
  
  
  
• If you are retired, make a list of minimum annual distributions you are required to take from retirement accounts.Your heirs could face penalties if they fail to take distributions in the year of your death or incapacity.
  
  
  
• List the locations of your important documents, including your will, estate planning documents, tax returns, deeds, titles to vehicles, insurance contracts, your birth certificate, military discharge papers, mortgage and loan documents, and marriage and divorce decrees.
  
  
  
• Tell the location of any safe deposit boxes and where to find the keys.
  

SOCIAL SECURITY STATEMENTS ARE NOW ONLINE

The Social Security Administration website has added a new feature. My Social Security now includes an online version of the statement that used to be mailed every year plus estimates of your future retirement benefits, lifetime earnings to date, and Social Security and Medicare taxes you've paid.

To open an account, go to: socialsecurity.gov/mystatement

Answer a series of questions to verify your identity and then create a user name and password

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