Ghosts Carry Credit Cards

Halloween is over, but unfortunately, ghosts are still opening credit accounts and charging up frightening amounts. It's called "ghosting" and it's what happens when a thief sets out to use the credit of a recently deceased person. If that sounds spooky, you should know the fraud prevention firm of ID Analytics says 2.5 million deceased Americans are targeted every year. After all, the deceased can't monitor their own credit, and generally nobody else thinks of it.

Thieves glean much of the information they need by prowling through obituaries which inadvertently provide details, like birth date and birth place, date of death, mother's maiden name, military service, possibly the home address and workplace. They also get information from the hospital and the funeral home. Once they collect enough information they may be able to purchase the Social Security number on the Internet for about ten bucks.

With that done, they can file tax returns (the IRS says in 2011, ghosted tax returns amounted to $5.2 billion in bogus refunds), obtain credit, apply for benefits and driver licenses. It takes a good six months before the authorities and credit bureaus catch on, giving thieves a wide window of opportunity to steal. If this happens to your loved one, the family is not responsible for the debts, but the reputation of the deceased is trashed, compounding the grief of the family.

What Can You Do?

• Limit what details you provide in the obituary.
• Send copies of the death certificate, by certified mail, to all three credit bureaus, and to all lenders where the deceased had accounts, the banks, brokerage firms, insurance companies, anyplace that gave benefits like pension plans, the Social Security Administration.
• Wait a few weeks after the death and order copies of the credit reports for the deceased and watch for suspicious activity.

Banks Are Warning Seniors

Warnings have started to appear to recipients of Social Security of yet another new scam. The Social Security Administration (SSA) says they have seen an increase of cases where thieves register an account at the SSA online, using the personal information of a retiree. Once they do this, they can look at what you get and change your direct deposit information to divert your benefits to them. Usually they request the payments to be sent to them on prepaid debit cards.

What Can You Do?

My bank issues a warning saying this type of theft is possible when an SS recipient has not already registered an account. Therefore, to stay safe, go to the site and register your Social Security number. The SSA permits each recipient to have only one registered account. So once you do this, thieves will be barred from beating you to the punch. To register, visit www.ssa.gov/myaccount.

Don't Miss this Important Deadline: Required Distributions from Your Retirement

If you are at least 70-1/2 you must begin taking minimum distributions from traditional IRAs, or pay a substantial penalty. The first distribution must be taken by April 1st in the year after you turn 70-1/2. If you have a ROTH IRA you are not required to take distributions after 70-1/2. The penalty is 50% of the amount you should have taken.

Some retirement plans may require participants to begin receiving payments even if they are not yet retired. In general, however, the IRS states that participants must begin receiving payments by April 1 of the first year after the later of the following years:

• Calendar year in which the participant reaches age 70-1/2, or
• Calendar year in which the participant retires.

Did You Inherit the Ira?

An IRA that was inherited has different rules. If you have such an IRA you must begin taking distributions no later than December 31st of the year following the death of the account owner. The decisions you make about distributions can have important consequences, so talk to a trusted advisor before taking action.

What Should You Do?

Whether the IRA is inherited or not, taking your required minimum distribution has important consequences if you get it wrong. That's why you need to contact your trusted adviser to make sure you know how much to take and when.

Listen to the Estate Experts and Avoid This Mistake

Michael Jackson's estate mistake: Michael Jackson died an enormously wealthy man. But years later, his heirs are still waiting for their inheritance. It wasn't that he had no will. He had the wrong kind. Rocco Beatrice managing director of Estate Street Partners, said Jackson had what is known as a "pour over" will, and a revocable trust for each of his children and his mother. A pour-over will is one that pours the assets into one or more trusts after death.

What Should You Do?

According to Beatrice, Jackson would have been wiser to establish an irrevocable trust, which he described as a "completed gift." This type of trust puts assets outside of the person's estate and, therefore, they aren't subject to estate tax. It also protects assets from future lawsuits and pays money out over time, like when the beneficiaries reach age milestones. If Jackson had done this, Beatrice speculated, the family could be using their shares of the money now.

Whether you are fabulously wealthy like Michael Jackson or have a modest estate, don't assume you have all the bases covered without professional help. Don't rely on the advice of your brother-in-law, unless he is a professional in financial and estate planning. You worked hard for your money and want it to pass to your intended heirs.

If you want to protect your assets from the IRS and the courts, seek the help of a trained professional while there is time.

Social Security Benefits and Cost Changes for 2014

The Social Security Administration and Medicare.gov announced the following changes for 2014:

• Social Security recipients will get a cost of living increase of 1.5%, which on an average Social Security check will be about $19 per month.  
• Medicare Part B premiums will remain the same as 2013, which is $104.90 per month.
• The Medicare Part B deductible will also remain the same, at $147 per year.
• Part A hospital inpatient deductibles will rise to $1,216 (up from $1,184 in 2013).

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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