What happens if your single life partner dies without a will? | ET REALITY

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Dear Liz: A close friend recently lost her partner of many decades. The partner did not leave a will or trust or anything in writing. The partner owned a lot of property and had a huge IRA and a lot of money in the bank, but all in the partner’s name only. My friend asked a real estate attorney and the attorney said that she had no legal right to anything, not even the house she had lived in for many years. Can something be done?

Answer: The lawyer is probably right. Without estate documents, beneficiary designations or some type of written agreement, unmarried couples typically cannot inherit, he said. Jennifer Sawday an estate planning attorney in Long Beach.

But your friend should consider talking to a family law attorney to see if she has any recourse, Sawday said.

In California, for example, you may be able to make a “Marvin” claim against heritage. (Marvin’s claims arise from a 1976 California Supreme Court case between Michelle and Lee Marvin, which established that unmarried partners could sue each other for property divisions after a relationship ended.)

Tax Consequences of Annuity Conversion

Dear Liz: Several years ago, my wife inherited an IRA when her mother died. Her banker suggested converting the IRA to an annuity with an insurance company. That company is difficult to deal with and is not forthcoming about how the annuity is invested. You want to convert the IRA to a certificate of deposit so that it is FDIC insured. What are the tax consequences of doing that?

Answer: There are many different types of annuities. If his wife purchased an immediate annuity, which offers a stream of payments in exchange for a lump sum, then she probably won’t be able to change her mind since those transactions are effectively irreversible.

However, if you purchased a deferred annuity, you have more options. Deferred annuities allow people to defer the flow of payments until later, often years or even decades in the future. Meanwhile, the annuity can pay a fixed rate, a variable rate based on the performance of the underlying investments, or an indexed rate based on a market benchmark.

Your wife will not have to pay taxes if she switches from a deferred annuity to a CD, since switching investments within an IRA is not considered a taxable event. However, the annuity itself may have surrender charges. Because annuities often pay advisors substantial commissions, surrender charges help deter investors from withdrawing money before insurers can recover those fees.

These fees and high expenses in general make deferred annuities unsuitable for many investors, and many financial planners don’t particularly like to see them in IRAs. The main advantage of a deferred annuity is the tax deferral, which an IRA already offers.

If your wife feels that she was misled about this investment, you can file a complaint with her. state insurance regulator.

Social Security Survivor Benefits

Dear Liz: I am 70 years old, I have been collecting Social Security since I was 62 and I still work. My ex-wife passed away a few years ago at 67 years old. We were married 25 years. I read that you could collect your Social Security survivor benefits, but Social Security said no. What didn’t I understand about this?

Answer: Many people don’t understand how survivor benefits work. You do not receive the deceased person’s check in addition to your current benefit. If the survivor benefit is more than what you currently receive, you will receive that payment. When Social Security said no, the agency was confirming that his benefit is more than he could receive based on his ex-wife’s earnings history.

Understanding how survivor benefits work is also of great importance for currently married couples. Many are unprepared for the sharp drop in income that occurs when the first spouse dies and the survivor is left with a single check. Having the higher earner delay Social Security as long as possible can help ensure that the survivor has more to live on.

Liz Weston, a certified financial planner, is a personal finance columnist for NerdWallet. Questions can be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at Asklizweston.com.

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