In today’s day and age, identity theft is all too common a problem. In fact, the news is often filled with horror stories related to identity theft. Identity theft is a serious problem that can wreak havoc on your life, and it can also have a significant impact on your estate plan. The following information can help you start to understand the potential effects of identity theft on your estate plan.
Access to Private Information
Wills, powers of attorney, healthcare proxies, and other estate planning documents contain very personal information. Not only do some documents have your social security number, but they could also contain other sensitive financial information, too. It is extremely important to safeguard these documents to prevent such information from slipping into the wrong hands. For instance, if someone were to gain access to this type of personal information they could potentially open up credit cards in the name of the deceased individual or even file a final tax return in their name before heirs have a chance to do so.
Potential Probate Issues
Part of the probate process involves satisfying outstanding debts. If someone has been extended credit using the name and personal information of the deceased, the court could end up ruling that money from the estate must be paid to those creditors even if the debt did not belong to the deceased. In some cases, you may not even recognize unfamiliar creditors depending on the finances of the deceased individual. Inevitably, this will cost you extra time and money to sort through and, in some cases, it can be extremely difficult to prove identity theft and/or recoup lost money.
Tips to Avoid Identity Theft’s Impact on an Estate
No matter how well you protect your personal information or the personal information of a loved one, identity theft is still a real concern and potential problem. However, there are some actions you can take to help protect your loved one’s estate from the consequences of identity theft. These include:
- Contacting each of the three credit reporting bureaus and placing a “Deceased – Do Not Issue Credit” notice to protect their identities from being used to establish credit for another individual;
- Taking steps to make sure that personal information, such as the deceased’s social security number, does not appear on any document that could be made available to the general public, including files arising from probate or other transactions related to the death; and
- Working to continuously monitor credit and other financial assets to avoid identity theft.
Of course, it is important to have a thorough discussion about finances, estate planning, and other important topics with your loved ones so that you are better prepared to recognize the warning signs of identity theft. An experienced estate planning attorney can help you understand how such conversations can help you and what they might mean for your comprehensive estate planning strategy. The United States Internal Revenue Service also provides free fact sheets that offer tips and advice on how to successfully avoid identity theft.