Personal Finance

Surprises in a will can complicate estate plans

Published

6 months ago

September 22, 2024

Business Finance News

Steve Smith | Tetra Images | Getty Images

Handling the estate of a deceased parent can be an emotional process for children already dealing with grief.

Those emotions can become more complicated if the estate plan doesn’t unfold as expected — say, if there is an uneven split of assets among children or a previously unknown heir who comes forward to claim a share of the estate.

Feelings of pain and betrayal can be avoided by having discussions about your estate plan with your family before death; however, estate planning attorneys say these conversations are rare.

About two-thirds of Americans, 68%, say discussing end-of-life preparations with loved ones is important, but only 47% have done so, according to a 2022 Ethos survey of 1,000 adults. A 2024 report from online estate planning service Trust & Will found that 34% of millennials are unsure if their parents even have an estate plan. The site polled 1,000 adults.

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If a client refuses to disclose information about their estate to their heirs, it can put an estate planner or financial advisor in the difficult position of doing so after that client’s death.

“I think a lot of lawyers are hesitant to point out the ramifications of some of these things,” said New Jersey-based estate planning attorney Martin Shenkman.

Unexpected heirs and beneficiaries

One estate surprise may be assets given to a person, pet or entity, such as a charity or alma mater, the family wasn’t expecting as a beneficiary, experts say. It’s also possible that a previously unknown heir steps forward, such as a half sibling the deceased’s children weren’t aware of.

It’s unclear how common unexpected heirs are, but estate planning bombshells aren’t unusual. More than a third, 36%, of people with a will say there are surprises for their beneficiaries in that document, according to a 2023 LegalShield survey. The site polled 1,316 adults.

About 3% of wills in the U.S. are contested, according to a 2013 study published in the Nevada Law Journal.

Key steps you need to establish an estate plan

In the case of a previously unknown heir coming forward, experts say the first consideration is the will. If the will is vague or unclear — say, if it designates an asset to be split “among my children” rather than naming individuals — there could be disputes that could require court intervention, according to Mitch Mitchell, Trust & Will’s probate expert.

Probate laws vary by state, he said, but it’s rare for genetic testing to be required to prove that a previously unknown heir is related. Typically, half siblings don’t have to prove who they are more than any other child of the deceased.

“As for inheritance divided equally, while states may vary regarding how much of a share a half sibling is to receive, this variation generally only exists when a half sibling is inheriting through a sibling, not a common parent,” Mitchell said. “Generally, for inheritance through a common parent, half siblings receive the same inheritance in equal parts with all other siblings.”

When there is no will, a state’s intestacy laws will determine how the property is divided, experts say, typically favoring the closest relatives.

The kids ‘don’t always get along’

The inheritance process can be a messy one if someone is written out of the will or an inheritance is divided unequally — especially if the decedent doesn’t detail why they made such choices.

“There have been a zillion times when people have told me, ‘No, all the kids get along. They all understand what I’ve done,'” Shenkman said. “And they may believe that because the kids appear to get along. But as soon as the parents are gone, those emotions come out of the closet like a torrent, and no, they don’t always get along.”

The first step to avoiding these kinds of hardships is do everything from a compassionate perspective, not from anger.

Martin Shenkman

estate planning attorney

Shenkman said attorneys should have open and honest discussions with clients and ask questions about motivations during the will-writing process.

“When I’ve seen parents or family members disinherit somebody, it’s really a kick in the gut in most cases,” he said.

Shenkman also encourages clients to have discussions with their children that are age appropriate, even if they don’t disclose dollar amounts. This can help explain the decision-making behind how an inheritance is split up and avoid any feelings of betrayal after a parent’s passing, he said.

‘Don’t write a will from anger’

Other things that can complicate the estate planning process are non-traditional family situations such as same-sex couples, gender transitions, assisted reproduction or surrogacies. Anything that can create ambiguity in how wills or trusts are interpreted requires creative solutions, experts say.

Shenkman recommends involving an objective third party, such as a trust protector or friend, in the estate planning process to provide impartial perspectives for when it’s time to read the will.

Many people avoid writing a will or creating a trust at all due to procrastination or superstition surrounding death, experts say. But reframing the estate planning process as leaving a positive legacy, rather than just distributing assets after death, can help clients take on a more compassionate long-term view.

“The first step to avoiding these kinds of hardships is do everything from a compassionate perspective, not from anger,” Shenkman said. “Don’t write a will from anger. Don’t write an estate plan from anger.”

Personal Finance

Your last chance to claim an IRS stimulus check is approaching

Published

1 hour ago

April 4, 2025

Business Finance News

Douglas Sacha | Moment | Getty Images

If you still haven’t filed your 2021 tax return and never received a pandemic-era IRS stimulus check, the deadline is April 15 because there’s a three-year window to claim refunds, according to the agency.

Filers who never got the 2021 stimulus payment of up to $1,400 could claim the recovery rebate credit on that year’s return.

“If you didn’t get the stimulus, you’re running out of time,” said Syracuse University law professor Robert Nassau, director of the school’s low-income tax clinic.

The IRS in December announced plans to automatically send “special payments” of up to $1,400 to 1 million taxpayers who didn’t claim the 2021 recovery rebate credit on tax returns for that year.

The agency said most payments were expected to arrive via direct deposit or paper check by late January 2025, based on the taxpayer’s 2023 tax return information.

In order to see if the IRS issued a stimulus payment, you can create an online account and view “tax records” under the “records and status” toolbar.

“That’s the best place to look,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.

Your IRS online account also shows if you filed a 2021 return, Lucas said.

If you don’t submit your 2021 filing by April 15, you could also miss other tax breaks, such as the earned income tax credit, which can trigger a refund even without taxes owed, according to the IRS.

Currently, there are more than $1 billion in unclaimed refunds for tax year 2021, the IRS estimated in early March. That represents more than 1.1 million taxpayers and a median unpaid refund of $781. These figures don’t include applicable credits, including the recovery rebate credit.

Tax season is a prime time for scams: Here’s how to protect yourself

You need ‘proof’ of filing by the deadline

While there are several free options for tax returns this season, some may not offer electronic filing for 2021 returns, Nassau warned.

If you’re forced to mail your 2021 return, you should send the filing via certified mail for “proof” you sent it by the April 15 deadline, he said.

“I’ve had situations where the IRS gets something after the filing [due] date, and they just reflexively say it’s too late,” Nassau said. “Spend the $5 and send it certified.”

Personal Finance

Disability advocates sue Social Security and DOGE to stop service cuts

Published

20 hours ago

April 3, 2025

Business Finance News

A Social Security Administration (SSA) office in Washington, DC, March 26, 2025.

Saul Loeb | Afp | Getty Images

A group of disability advocates filed a federal lawsuit against the Social Security Administration and the so-called Department of Government Efficiency on Wednesday aimed at stopping cuts to the agency’s services.

Recent changes at the Social Security Administration under DOGE — including staff reductions, the elimination of certain offices and new requirements to seek in-person services — have made it more difficult for individuals with disabilities and older adults to access benefits, the lawsuit argues.

The complaint was filed in the U.S. District Court for the District of Columbia.

The plaintiffs include the National Federation of the Blind, the American Association of People with Disabilities, Deaf Equality, the National Committee to Preserve Social Security and Medicare, the Massachusetts Senior Action Council and individual beneficiaries.

“The defendants’ actions are an unprecedented and unconstitutional assault on Social Security benefits, concealed beneath the hollow pretense of bureaucratic ‘reform,'” the complaint states.

In nine weeks, the new administration has “upended” the agency with “sweeping and destabilizing policy changes,” the plaintiffs claim, that have shifted agency functions to local offices while slashing telephone services.

“The result is a systematic dismantling of SSA’s core functions, leaving millions of beneficiaries without the essential benefits they are legally entitled to,” the lawsuit complaint states.

The “mass restructuring” of the agency is unlawful and violates the Rehabilitation Act and the Administrative Procedure Act, the lawsuit argues. The changes also violate multiple constitutional provisions, including the First Amendment right to petition the government for redress of grievances, according to the plaintiffs.

With 1.1 million disability claims pending, the recent actions could also be life threatening to individuals who are dying or going bankrupt while waiting for decisions, they allege.

The Social Security Administration did not respond to CNBC’s request for comment.

“President Trump has made it clear he is committed to making the federal government more efficient,” White House spokesperson Liz Huston said in an email statement. “He has the authority to manage agency restructuring and workforce reductions, and the administration’s actions are fully compliant with the law.”

Lawsuit alleges reform is ‘administrative vandalism’

People hold signs during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025.

Nathan Layne | Reuters

The Social Security Administration sends monthly checks to around 73 million Social Security and Supplemental Security Income beneficiaries.

DOGE, which is not an official government entity, has been tasked with cutting “waste, fraud and abuse” within the federal government. President Donald Trump issued an executive order creating DOGE on Jan. 20, the same day he was inaugurated.

Since then, the Social Security Administration has cut 7,000 employee positions and closed the Office of Civil Rights and Equal Opportunity and the Office of Transformation. The Office of Civil Rights and Equal Opportunity handled the agency’s equal employment opportunity and civil rights programs. The Office of Transformation was responsible for coordinating customer service-related initiatives like adding the ability to use digital signatures and electronic documents.

The Social Security Administration has also changed its identity proofing policies for claiming benefits and changing direct deposit information that is expected to require more individuals to visit the agency’s offices in person.

The agency has updated its policy, allowing individuals applying for Social Security Disability Insurance, Medicare, or Supplemental Security Income who cannot use a personal my Social Security account to complete their claim entirely over the telephone, starting April 14.

The reforms amount to the dismantling of “core functions of SSA, abandoning millions of Americans to poverty and indignity,” according to the plaintiffs’ complaint.

“What the defendants frame as ‘reform’ is, in truth, administrative vandalism,” the lawsuit states.

Beneficiaries face long waits, overpayment issues

The plaintiffs include seven individuals whose experiences, including long customer service waits and, in some cases, demands to repay large sums to the Social Security Administration, are detailed in the complaint.

One plaintiff, Treva Olivero, who has been legally blind since birth, was informed in March 2024 that she had been overpaid Social Security disability insurance benefits for five or six years, prompting the agency to demand she repay more than $100,000, according to the complaint.

Olivero’s Medicaid coverage was also terminated soon after, which left her without income and health coverage. She has since been in an “ongoing struggle” to have her disability benefits reinstated, while also facing almost $80,000 in medical debt, according to the complaint.

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Another plaintiff, Merry Schoch, who received Social Security disability insurance for many years, returned to work to help pay for large medical bills after she was hit by a waste management truck in 2022. She reported her income to the Social Security Administration, and the agency made no changes to her benefit payments, according to the complaint.

Two years later, Schoch stopped working and reported her unemployment to the Social Security Administration. In August 2024, the agency then terminated her benefits and informed Schoch that she owed $30,000 for the disability benefit payments she received while working full time, according to the complaint.

Last September, Schoch was informed she could reapply for benefits. However, she has since struggled to get in touch with the agency over the phone, online and in person.

Both Olivero and Schoch are members of the National Federation of the Blind, which is also a plaintiff.

The plaintiffs want the court to reverse the Social Security Administration’s recent reforms, including staff reductions, closures of certain offices and policies requiring in-person appointments.

Personal Finance

Amid trade turmoil, ‘you do not want to time the market’

Published

24 hours ago

April 3, 2025

Business Finance News

Pres. Trump unveils sweeping tariffs: Here's what to know

As President Donald Trump rolls out sweeping new tariffs on goods imported into the United States, Americans are growing increasingly pessimistic about their financial fate.

Consumers worry that the duties will cause inflation to flare up again, while investors fear that higher prices will mean lower profits and more pain for the battered stock market.

As of Thursday morning, futures tied to the Dow Jones Industrial Average were down 1,200 points, or 2.8%. S&P 500 futures sank 3.4%, and Nasdaq-100 futures lost 4%.

But sharp drops — or sudden spikes — in the market are to be expected, according to Jean Chatzky, CEO of HerMoney.com and host of the podcast HerMoney with Jean Chatzky.

“With these volatile markets, you do not want to time the market,” she said of the old adage. “Timing the market doesn’t work — it’s time in the market.”

Trade tensions, inflation and concerns about a possible recession have undermined consumer confidence across the board, several studies show.

Still, it’s normal for most Americans to feel unnerved during heightened volatility, Chatzky said.

“There’s very little doubt that consumers are feeling nervous, maybe more nervous than we’ve felt in quite some time,” she said.

Committing to setting money aside in a high-yield savings account, whether by scaling back on dining out or rideshare expenses, will help regain some financial control, Chatzky said.

Top-yielding online savings accounts currently pay 4.4%, on average, well beyond the savings account rates at some of the largest retail banks, which average just 0.41%.

“Taking action is the best way to feel more resilient,” she said.

It’s understandable why some may be hesitant to continue investing, however, when you are investing for the long term, a down market is an opportunity for dollar-cost averaging, which helps smooth out price fluctuations in the market, Chatzky said.

This is also a good time to check your investments to make sure you are still allocated properly and rebalance as needed, so you are not taking on more risk that you are comfortable with, she added.

Timing the market is a losing bet

Talk yourself down from making any sudden financial moves, Chatzky advised.

Trying to time the market is almost always a bad idea, other financial experts also say. That’s because it’s impossible to know when good and bad days will happen.

For example, the 10 best trading days by percentage gain for the S&P 500 over the past three decades all occurred during recessions, often in close proximity to the worst days, according to a Wells Fargo analysis published last year.