How to Determine All Death Benefits for a Decedent - dummies

How to Determine All Death Benefits for a Decedent

The executor of an estate should note any death benefits, other than employment and insurance benefits, found in the decedent’s records and contact the appropriate authorities. Ask the Social Security and Veteran’s (if applicable) administrations about possible benefits for the decedent and his or her survivors. Also, identify the decedent’s retirement accounts and pay special attention to how benefits from these accounts are paid out.

When looking for death benefits, be sure to check with any professional, retirement, and union organizations. The following are good places to start when determining what death benefits exist:

  • Social Security Administration: If the decedent has a surviving spouse or minor children who meet certain requirements, they may receive a one-time death benefit of $255 if the decedent worked long enough. To inquire about and collect the benefit, contact your local Social Security office or call their toll free number.

    The surviving spouse and any dependents or dependent parents may be entitled to monthly survivors’ benefits. Apply for these benefits as soon as possible because, in some circumstances, the benefits begin from date of application, not of death.

  • Veterans’ Administration: Eligible veterans, their spouses, and their children are entitled to burial in a national cemetery, a flag, and an inscribed grave marker. Other benefits may also be available. You can call the Department of Veterans’ Affairs using their toll-free number to determine whether any benefits apply.

  • Individual Retirement Accounts (IRAs): You need to know what retirement accounts the decedent had, their value on the date of death, and who the beneficiaries are. After you identify the accounts, a letter from you to the account’s trustee (the bank, brokerage, or mutual fund company that holds the assets), a copy of the death certificate, and your appointment as administrator, executor, or personal representative, should allow you to obtain the date-of-death value.

With traditional IRAs, carefully consider how the benefits will be paid out, because they may be fully taxable to the beneficiary for income tax purposes. Don’t inadvertently elect a lump-sum distribution. If the beneficiary is a qualifying individual, payments can be spread out over the life of the beneficiary. If the surviving spouse is the beneficiary, he or she can treat the inherited IRA as their own.

Contributions to Roth IRAs were taxed for income tax purposes at the time the decedent made the contributions, so provided that it was open for at least five years, all withdrawals from this account are income tax free. Be sure that you know which kind of IRA you’re dealing with, traditional or Roth. You should consult with a tax expert with regard to withdrawals to avoid unexpected complications.