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Tax Rebate Check for the Recently Deceased

Written by Nickel - 12 Comments

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Yesterday afternoon, I received the following e-mail from a reader named Carol:

My son died suddenly on May 15, 2008. His (tax) rebate came in the mail today. What do I do with it? Are we, his parents, entitled to it? He is single with no children.

This is an interesting (and tragic) question, and I’m not entirely sure of the correct answer. I’m far from an expert on this topic, so I can only speculate. My best guess is that it’s her son’s money, so it rightfully belongs to his estate. As such, it would go to his heirs.

He was single with no kids, and I’m not sure if he had a will (I sure didn’t when I was at that stage of life). Assuming that he didn’t, then I would imagine that his estate would go to his closest living relatives, though this might vary by locale.

In writing this up, I found this tidbit of related information over on MSNBC:

Q: If a person passes away in Sept. of 2007 will they still get the extra check?

A: Technically, no. The IRS will not issue a check to someone who is deceased. The rebate will be paid to the estate of the person who died, to be distributed according to the terms of that person’s will.

Assuming this to be true, I guess the question is whether or not they can deal with the check as written, or if they have to get it re-issued to his estate. Of course, in any situation like this it’s best to consult with a bona fide expert such as an estate attorney, or even the IRS.

Does anyone have any further insight?

Published on May 22nd, 2008 - 12 Comments
Filed under: Planning,Taxes

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Comments (scroll down to add your own):

  1. No additional insight, just wanted to offer my condolences to Carol. My prayers are with your family.

    Comment by Anonymous — May 22nd 2008 @ 9:23 am
  2. http://www.jacksonhewitt.com/?FrequentlyAskedQuestionsaboutthe2008EconomicStimulusPlan#19

    Does a deceased taxpayer qualify for the stimulus payment?

    If the deceased taxpayer qualifies for the stimulus payment, their estate will receive the stimulus payment. If the final return was married filing jointly and there is no other appointed representative for the deceased taxpayer, the surviving spouse will receive the stimulus payment.

    ———————————————
    I don’t think they can deposit that check (even if they still have access to his account). Instead, they should write to the IRS and have a new check re-issued with the estate’s names (in this case, them).

    Comment by Anonymous — May 22nd 2008 @ 10:53 am
  3. what happens to his estate without a will will depend on the state. which state

    Comment by Anonymous — May 22nd 2008 @ 11:04 am
  4. There’s no need to reissue the check; the executor is legally authorized to handle it. As for the rest, has the estate been through probate yet? If the estate is signficantly large, you should hire a competent estate attorney. If not, the judge will probably talk the executor through it during probate. Worst case scenario is the executor has to open an account in the estate’s name, deposit the check, and then withdraw the funds that way. It’s a pain but a lot of banks have pretty strict rules about this sort of thing.

    Comment by Anonymous — May 22nd 2008 @ 11:33 am
  5. I’m a business attorney, but I think the answer here is pretty straightforward.
    1. Check.
    From IRS website:
    `Q. If an individual dies, what happens to his or her direct deposit or stimulus check?

    A. Stimulus payments will be issued in the name of the individual eligible for payment on a filed 2007 income tax return or to the account designated by the individual on that return. This includes situations where a person dies after filing a return or where the final 2007 income tax return was filed by a personal representative or surviving spouse. Any issues or concerns involving a decedent’s filed return or the related stimulus payment should be addressed by the legal representative of the decedent’s estate. See Publication 559 for more useful information for survivors and personal representatives. [Updated 3/17/08]
    http://www.irs.gov/newsroom/article/0,,id=179181,00.html

    2. Estate
    No will means intestate succession. This can and does vary by states, but most likely doesn’t in this case. The son was not married and had no kids. So his estate should belong to his parents. His estate will go through probate court, and as Kyle noted, if it is large you will want to hire a lawyer to assist, though this is basic stuff.

    Comment by Anonymous — May 22nd 2008 @ 2:53 pm
  6. I believe Kyle is mostly right. The Executor, often times these days called a Personal Representative, will have the authority to deposit the check. In almost all states this would require having an Estate Account opened with a bank, which would require a copy of the death certificate and document granting PR power.

    Given that we don’t know the child’s age, nor the state of residence, this is a bit of a crap shoot for advice. If they were a minor, the Estate most likely goes in its entirety to the parents. If not a minor (or adult ward of the parents depending on mental capacity), in some states the Estate would become property of the state. Then it’s up to state rules how this is handled.

    LOTS of variables in the situation.

    If you are an adult, get a will. Name your wife or a relative the beneficiary of ALL your financial accounts (bank, 401k, etc).

    Comment by Anonymous — May 22nd 2008 @ 3:52 pm
  7. The issue is addressed in the IRS’s FAQ:
    http://www.irs.gov/newsroom/article/0,,id=179181,00.html

    Q. If an individual dies, what happens to his or her direct deposit or stimulus check?

    A. Stimulus payments will be issued in the name of the individual eligible for payment on a filed 2007 income tax return or to the account designated by the individual on that return. This includes situations where a person dies after filing a return or where the final 2007 income tax return was filed by a personal representative or surviving spouse. Any issues or concerns involving a decedent’s filed return or the related stimulus payment should be addressed by the legal representative of the decedent’s estate. See Publication 559 for more useful information for survivors and personal representatives. [Updated 3/17/08]

    Jim

    Comment by Anonymous — May 22nd 2008 @ 3:58 pm
  8. If one of the parents is the estate’s executor, then she or he should be able to deposit the check to the estate’s account. The IRS isn’t likely to notice, and it seems like the simplest way to handle it–if the son paid his taxes, presumably he or his estate is entitled to the rebate.

    State laws vary so widely that it would be wise to get a lawyer’s advice on fuzzy issues like this. Of course, that might cost more than the amount of the rebate. Ain’t Big Brother grand? 😉

    Comment by Anonymous — May 23rd 2008 @ 11:35 am
  9. If a parent is the executor, there’s no further need for a lawyer to get involved, and they may not need a separate bank account for the estate. I was executor and sole beneficiary for my father’s estate. Once I had the court order in hand, I gave a copy of it to my bank and they allowed me to just sign and deposit checks that were made out to him personally.

    Comment by Anonymous — May 24th 2008 @ 9:04 pm
  10. Mid-time reader, first time poster:

    I don’t believe there is any restriction on depositing the check into his account, since it was made out to him. Anyone can take a check made out to him with the account number and make a deposit into his account. I believe all you have to do is endorse the check with “For Deposit Only” in the usual endorsement line and it should be fine. I am not sure of how a death is even communicated to the bank. [With all the complaints of closed bank accounts being reactivated when a “standing debit” is issued (such as autopay set up for a recurring bill), the banks don’t seem to mind at all. :/ ]

    That way it enter automatically into his estate, by going into his bank account.

    This method is how I prevented a past roommate from just cashing my check for half the rent and confirmed that he didn’t even have a checking account!

    My condolences also on their loss.

    Comment by Anonymous — May 26th 2008 @ 8:55 am
  11. my friends son also died 05/30/08, single, no
    kids, his stimulious check is being issued on
    a credit card, which the pin his is ss#, & there was no life insurance, so my questions is
    can she keep it to help put towards the bill of the funeral

    Comment by Anonymous — Jun 2nd 2008 @ 11:00 am
  12. My husband and I filed a joint return for 2007 on or about April 14,2008. He subsequently passed away on April 16, 2008. He was retired and I was the only one with taxable income. The stimulus check, as one would expect, came made to both of us. The bank will not accept for deposit since there is no longer an “account in both our names”. What can I do with this $1200 check???

    Comment by Anonymous — Nov 23rd 2008 @ 2:22 pm

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