TRICKY TOPICS Q&As

My mom wasn’t specific about her jewelry – just that her ‘issue’ [us 5 kids] get her ‘tangible personal property, share and share alike’.  So as Executor, can’t I just make the ‘executive decision’ and dole all this out? We’re trying to keep expenses down.

If you’re the Executor and have access to and control of your mom’s stuff, then mechanically you could do that and lead beneficiaries to believe that what you say goes, end of story. That doesn’t usually end without a lot of infighting.   

Properly though, what you should do is have the jewelry appraised by someone who is professionally trained and write up a report so that everyone is sure to receive something close in value. Consider a local auction company. 

Another option – if you think it’s worth something but not auction-level stuff – go to your local jeweler and divide things into categories, like: under $500, over $1000, etc.  They probably won. 

I heard that if someone dies with credit card debt, it can just be written off? True or False?

First, if an estate has been opened and there is money to pay debts, there is an obligation to pay.  That being said, you should wait on paying unsecured debt like credit cards or medical bills until secured debts and certain other expenses are paid.  

Second, it’s important to understand who or what is actually doing the ‘writing off’ of the debt.

It’s not the estate or the trust as debtor, but the creditor / credit card company.  If there’s little or no money to pay the debt, anything over $500 may get you a 1099-C – tantamount to income the estate or trust has to report on its income tax returns.

Third, you can potentially negotiate with a credit card company to pay less, but usually they’ll ask you to show the assets and debts of the estate to prove insolvency.

Income tax returns?  I thought once someone died, there was no more need to file income tax returns?

Well, not exactly.  There are a few income tax returns (both federal and state, depending upon where the decedent lived when they died) you may need to file (and pay taxes for):

1) Decedent’s prior income tax returns (if they died late March 2024, confirm whether they filed/paid income taxes for 2023 and, for that matter, any other prior years!);

2) Decedent’s year of death final income tax returns (if they died in March 2024, you’ll need to file returns for any income earned Jan – Mar 2024):

3) Estate income tax returns (if they died late March 2024, for period March – Dec 2024 calendar year or March 2024 – Feb 2025 fiscal year.