The Wiewel Law Firm

Social Security Can Be Complex So What Happens when Spouse Dies?

If you rely on benefits and your spouse dies, there are some key steps to follow.

A person is right to be concerned about Social Security, when their spouse passes away, according to the Tuscon.com in “Social Security and You: What to do when a loved one dies.”

The article concerns a woman who 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.

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 must file for widow’s benefits. It’s not too complicated, but you’ll need a copy of your marriage certificate.

Reference: Tuscon.com (March 13, 2019) “Social Security and You: What to do when a loved one dies”

Marriage Not Only Option in Protecting Loved Ones

An estate plan can protect a long-term partner.

There are rarely provisions to protect people who are not married but are in long-term relationships. Many couples prefer to not get married.  However, there still is a way to protect partners through an estate plan, according to the San Francisco Bay Times in "Want to Protect Your Partner? Marriage Isn't the Only Option."

The default rule of intestate succession in estate law is not the only option. Most of the benefits of marriage can be had by other couples, as long as they plan ahead. With an estate plan, you can direct that your property go to your partner after you pass away. There are even ways to make sure your partner is taken care of for life, but then afterwards someone else ultimately inherits any remaining property.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may, or may not, include a marriage.

Reference: San Francisco Bay Times (June 21, 2018) "Want to Protect Your Partner? Marriage Isn't the Only Option."

Lessons From the Golden Age of Hollywood

Lauren Bacall and Humphrey Bogart were once the glamour couple of Hollywood. They were the Angelina Jolie and Brad Pitt of their day. With Bacall's recent passing, we can now look back and see what the Bogart - Bacall marriage means for estate planning.

Humphrey Bogart was 25 years older than Lauren Bacall when the two got married. At the time he was already a Hollywood legend while she was still a younger actress just coming into her prime. One obvious implication of this marriage is that she was likely to outlive him, which she did by a half century. In an article titled "Bogie and Bacall: Iconic May-December romance", Market Watchdiscusses the estate planning issues that come up with marriages when one spouse is much older than the other.

The biggest issue is that the younger spouse is likely to live much longer than the other. This creates issues of the older spouse possibly needing to provide assets for the surviving spouse and preserve an inheritance for any children. This is especially true if the older spouse has children from a previous marriage. The article lists a couple of ways that this issue can be handled, such as a QTIP trust, which provides for the inheritance to be used by the surviving spouse as long as he or she lives with the remainder going to the children. The article also suggests incorporating life insurance into the estate plan as another possibility.

These are not the only two ways to deal with this particular problem in May-December marriages. Estate planning attorneys have many other tools at their disposal that might be more appropriate in a given family situation. In Bacall's case, it appears that it did not matter too much. She left behind a large estate of her own and was able to provide for her children, grandchildren, and even her dog.

Reference: Market Watch (August 27, 2014) "Bogie and Bacall: Iconic May-December romance"

Step by Step Estate Planning with a Prenup

The man had inherited his father's business when he was in his 30s and spent the next few years growing it into a $6 million company. When he later got engaged, he was concerned about keeping this increasingly valuable asset in the event of a divorce. So before tying the knot, the man asked his fiancée to sign a prenuptial agreement that kept all of his pre-existing assets--including his business and the related real estate--entirely separate from his wife. But now the man was in his 40s with two children, including one from his wife's previous marriage, so he had a more pressing concern: Providing for his family in the event of his death. Because the business represented the vast majority of his wealth, the prenup severely limited the assets that his wife would automatically receive upon his death.

The Wall Street Journal article "Creating an Estate Plan Around a Prenup" chronicles how an estate planning attorney worked with a client to ensure the needs of the client were addressed. After thoroughly understanding the estate planning goals of the client, the attorney created a plan that provided for the client’s family after he passed away. This plan preserved the terms of the prenuptial agreement that kept his wife from taking his assets and business in a divorce. The adviser suggested using family limited partnerships. This type of entity gave the client a way to provide for his wife with income from the business—without giving her control of the enterprise.

Under the family limited partnership structure, the client had 99% limited partner ownership in the two companies. When he died, his will would set out some of the limited partner interest to his wife. These shares would be given to a testamentary trust with the wife as trustee and beneficiary. As a result, the wife would receive income from the business through the trust; however, she would not get a controlling stake in the company.

The estate planning attorney created the partnerships and transferred ownership of the business assets into them. The WSJ reported that the client and his wife have been very happy with the results for more than 15 years now, with both a strong business and marriage.

Reference: Wall Street Journal (July 11, 2014) "Creating an Estate Plan Around a Prenup"

Post-DOMA: Same-Sex Prenuptial Agreements

What makes this wave of marriages quite different, however, in addition to the fact that it is boy-boy and girl-girl, is that these marriages will be predominantly of couples who are already established in life and carry with them substantial financial detritus, good and bad.

If you are not yet married to your same-sex partner, but intend to do so, then one of the most important things to plan for is that gay marriage is still wholly new. Then again, the next most important thing to plan for is that the problems of late-in-life marriage will affect you irrespective of the gender of the partners.

A recent Forbes article titled “Before Marriage, Same Sex Couples Need Prenups,” provided some pithy advice.

The term “late-in-life marriage,” while perhaps not soft on the ego, is a term designed to acknowledge that you are not blushing eighteen-year-olds, with no assets, careers, or names in the world. In fact, most same-sex partners, couples, and married persons will have fully established and separate financial and legal lives, sometimes by design and often by strict necessity. Regardless, marriage in this new, post-DOMA world will mean a collapse of those borders.

Whether heterosexual or homosexual, couples that are comprised of well-established individuals have so much to consider, including retirement accounts and even accrued liabilities. Consequently, marriage may require planning what should be joined and what should remain separate.

The original article illustrates how prenuptial agreements are being deployed today as more and more persons marry “late-in-life” and that same-sex marriages are (now) no exception in this regard.

Either way, “marriage” is and always has been a very legally loaded term. We are still learning what same-sex marriage will mean, and to some extent we are still learning what marriage in this day and age will mean. Regardless, a solid prenuptial agreement is an important consideration. 

Reference: Forbes (June 27, 2013) “Before Marriage, Same Sex Couples Need Prenups”

Same-Sex Marriage And The Supreme Court

Gay couples have long had second-tier status when it came to their finances… Now that the Supreme Court has struck down the Defense of Marriage Act, some of these issues will be wiped away. The ruling makes clear that married gay couples living in states that recognize their unions will immediately gain access to more than 1,000 federal benefits, like Social Security and family leave rights. Less certain is how couples living in the remaining 37 states will fare.

It’s been something of a fairly eventful Supreme Court season this year. With many important decisions covering many important topics, few issues have been so radically altered as that of same-sex marriage.

The Supreme Court, in its last actions of this term, rendered two important decisions on the topic of same-sex marriage. Now it’s time to figure out what these rulings mean moving forward. A recent article in The New York Times, titled “How the Court’s Ruling Will Affect Same-Sex Spouses,” provides a good start.

For those planning for their estates, the important decision was rendered in US v. Windsor, a case many have been following quite intently and for good reason. The case centered on a common conundrum of many in same-sex marriages: married by state law, but strangers by federal law. And of course, the Federal law in issue was The Defense of Marriage Act, or DOMA, as signed into law by President Clinton. DOMA changed the definition of marriage to literally require different gender partners, but this has been struck down.

Consequently, all of the federal benefits ascribed to the term “marriage” will extend to same-sex marriages as well. These include, but are not limited to, social security, estate and gift tax law, and common law spousal provisions. In short, it’s a groundswell and the ground won’t stop moving until we figure out all of the ramifications.

Read the original article for more specifics, but many questions remain. For example, will estate planning be just the same for same-sex marriage now?

Reference: The New York Times (June 26, 2013) “How the Court’s Ruling Will Affect Same-Sex Spouses”

International Love Has Its (Legal) Challenges

Love has no borders, of course, which may help explain why it's not just the economy that's gone global. To hear estate and tax planners talk, cross-border marriages are skyrocketing—along with a host of international estate and tax-planning headaches.

If you have an international family, then you know things can get complicated in a hurry. You are not alone. As the world becomes ever smaller, it logically follows that people of different nationalities will meet and tie the knot. That is when things can get knotty.

International marriage can trigger a taxation and estate planning headache.

In fact a recent article in The Wall Street Journal reported the following: “All told, nearly five million Americans in 2010 were married to someone who was born in another country, twice as many as in 1960, according to the Minnesota Population Center. Other countries have had similar jumps.”

The article, titled “A Global Love Affair,” observed that these global affairs bridge the invisible lines on the globes between nations and unite loving couples from Russia, the U.S., France, Germany, and places more exotic – then tie the laws of those same countries into knots.

If you and a loved one are separated by an incidental national barrier, then be wary of how the respective laws of your respective nation may conflict and potentially confound. There are almost as many sad legal stories as there are happy love stories.

Reference: The Wall Street Journal (May 21, 2013) “A Global Love Affair”

How To Collect Social Security Benefits … From Your Ex-Spouse

It is a little-known fact: If you're divorced, it's possible to claim Social Security spousal and survivor benefits from your ex. It is a strategy that can dramatically boost your benefits - and it will be important for more retirees in the years ahead.

Today’s retiring generations face new challenges simply not seen much by past generations. The wax and wane of Congress for one, and the dramatic rise of healthcare costs for another. An additional challenge hits a little closer to home for other retirees – those who are divorced.

If you have been divorced, it is critical that you understand how Social Security benefits take divorce into account. Demographically speaking, this is even more essential for retiring women.

The role of Social Security benefits in the retired life of a divorcee can be crucial, as discussed in a recent Reuters article titled “Column: Knowing Social Security rules can help divorced spouses.”

Basically, Social Security payments are related to your paid work during your working years. As a result, many ex-spouses simply have not built up sufficient “numbers” because of how household incomes were split back in the day. Interestingly, you may be eligible for many of the same benefits as if you had remained married to your ex.

But it is not automatic. Here are some threshold requirements:

• You must be currently single,
• You must have been married to your ex for at least 10 years,
• Your divorce must be “final” for at least two years,
• You must have reached the minimum Social Security eligibility age (62), and
• You must not be currently collecting a benefit amount greater than that of your ex.

Note: Your eligibility is completely independent of the benefits collected by your ex, but you will lose the benefits if you remarry. I recommend reading the original article for additional tips and traps.

Call or visit your local Social Security office regarding the folder of paperwork you will need to gather for qualification.

Reference: Reuters (May 9, 2013) “Column: Knowing Social Security rules can help divorced spouses”

Separate Marital Estate Planning Goals, Separate Attorneys?

In 1990, in Lawrence Brody’s estate planning seminar in the LL.M. program at Washington University in St. Louis School of Law, Professor Brody mentioned a husband and wife retaining separate estate planning counsel.  At the time separate estate planning counsel for spouses struck me as a bit much.  I have since come to realize that separate estate planning counsel can indeed be advisable for spouses.

Marriage is a partnership. Any partnership requires working together and, perhaps, compromise. But what if there is disagreement, especially when it comes to your estate planning?

Marriage counselors stay in business because of marital disharmony. Commonly, they represent both spouses and seek to find common ground in a team approach. When it comes to estate planning, however, attorneys face a potential ethical dilemma. For example, estate planning attorneys cannot favor one spouse over the other, nor can they keep the secrets of one spouse from the other spouse in the course of “dual representation.”

While there’s no sense starting trouble where there is none, nor in approaching anything in an overly legal or litigious way, sometimes spouses really do have different estate planning interests. It’s an ethical problem for the spouses and their estate planning attorney alike, as pointed out in a recent Forbes article titled “Ethics in Estate Planning for a Married Couple.” This certainly is an issue for attorneys (and their malpractice carriers) to fret about, but also for their clients to understand and appreciate. 

Indeed, at certain junctures it might be necessary for spouses to even engage separate counsel to wrangle their way through an estate planning impasse. This happens many times with prenuptial and postnuptial agreements, but in other instances as well.

Do you not need separate counsel? Great! Still, take a moment to read the Forbes article about potential hazards.  Above all, if you choose “dual representation,” make sure you both truly are represented – and included in all attorney-client communications.

Reference: Forbes (April 26, 2013) “Ethics in Estate Planning for a Married Couple”

Planning Prenuptial Priorities Properly

Long ago, having a prenuptial agreement was considered stodgy or even insulting, but these days, “prenups” are becoming increasingly common for high net worth couples. Simply put, a prenup formalizes the understanding between spouses-to-be as to which of their assets will become marital property.

The air is still heavy from another tax season. However, if you lift your ears to the gentle spring breezes, you may hear distant bells announcing this year’s wedding season. With many of these weddings will come financial complications that require attention, well before the vows are exchanged.

Marriage is not just “tying the knot,” so to speak. No, marriage by its legal nature includes tying together all of your financial resources and interests. Unfortunately, these days marriage also has a dark side too: divorce.

For those couples with important financial resources and interests in the marital mix, they may elect to use a prenuptial agreement as sort of an “insurance” policy in the event the marriage doesn’t work out as planned.

Prenuptial agreements are nowhere as exotic as they are portrayed in the popular imagination. They can be, nevertheless, useful and important documents when produced through a spirit of full disclosure, careful deliberation, and independent legal representation. Otherwise, as pointed out in numerous articles these days, no prenuptial agreement is ironclad unless it is done correctly and, essentially, treated like the contractual understanding that it is.

Recently, Forbes provides some guidance to evaluate the effectiveness of your prenuptial agreement in an article titled “Five Reasons Your Prenup Might Be Invalid.” In addition, The Wall Street Journal offers some specific guidance to get your prenuptial agreement ship-shape in an article titled “Shoring Up Your Prenup.”

Used correctly, a prenuptial agreement, or even a post-nuptial agreement as the case may be, can help a couple frame their financial resources and interests in the context of their life together come what may.

That can provide great peace of mind, especially when blending families and the children from those families.

Reference: Forbes (April 2, 2013) “Five Reasons Your Prenup Might Be Invalid”

The Wall Street Journal (March 29, 2013) “Shoring Up Your Prenup”