Young widow seeks Social Security survivor benefits help

Dear Liz: My husband died at 30, making me a widow at 29. I did receive Social Security survivors benefits for our underage children but what if anything am I entitled to as his wife? At the time of his death we were living separately although we were still legally married.

Answer: The earliest a widow or widower can get survivors benefits is typically age 60, unless they are disabled, when survivor benefits can begin at 50. Starting benefits before their own full retirement age of 66 to 67 means accepting a reduced payment, but widows and widowers have the option of switching to their own retirement benefit later. (Retirement benefits begin at a reduced amount at age 62 and reach their maximum at age 70.)

Like other Social Security benefits, survivors benefits also are subject to the earnings test if you start them before full retirement age. The earnings test reduces your benefit by $1 for every $2 you earn over a certain amount, which in 2020 is $18,240.

You mentioned receiving survivor benefits for your children, but you likely also received benefits then. A spouse caring for the children of a deceased worker are entitled to survivor benefits until the youngest of those children turns 16. (The children’s survivor benefits can continue until they turn age 18, or age 19 if they’re still in high school, or indefinitely if they are disabled and the disability began before age 22.) Each family member can receive up to 75 percent of the deceased worker’s benefit, but there’s a maximum any household can receive based on one worker’s earnings record. The limit varies but is generally between 150 percent and 180 percent of the worker’s benefit.

If you had been divorced rather than separated when he died, you would still have been entitled to survivor benefits as the underaged children’s caretaker no matter how long the marriage lasted. You would only receive regular survivor benefits at 60, however, if your marriage had lasted at least 10 years.

Retirees and mobile home parks

Dear Liz: I’ve been following the discussion of the reader who was 70 and trying to decide between renting in a senior living facility versus buying a

second-floor condo with no elevator. There is a third choice for people who are older and cannot stay in their present residence. We moved to a senior citizen manufactured home park. It has a clubhouse and before the COVID epidemic the park had all kinds of activities. It is a great place for seniors.

Answer: That's a good suggestion, and actually just one of many choices people have to age safely. Many mobile home parks are “naturally occurring retirement communities,” a term for areas that weren't necessarily created for seniors but that nonetheless have a high concentration of older folks. At their best, these organic retirement communities provide services and activities that benefit seniors, including opportunities for socializing and the sense that their neighbors are looking out for them.

Re-titling a deed after marriage

Dear Liz: Our house was titled “joint tenant with right of survivorship” after my husband inherited the property in 1998. As a same sex couple, we were not married at the time. However we legally married in 2013. Will one of us get the step-up in tax basis when the other passes, or do we have to re-title the house some way? We also want to avoid probate. We live in California.

Answer: As you know, California is one of the community property states that allows both halves of a property to get a step-up in tax basis when one spouse dies. This double stepup can be a huge tax saver, since none of the appreciation that happened before the death is taxed. Other community property states include Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In Alaska, spouses can sign an agreement to make specific assets community property.

In other, common law states, only half of the property gets the step-up to a new tax basis when one spouse dies. The other half retains its original tax basis.

Although assets acquired during a marriage are generally considered community property regardless of how they're titled, in your case the property was acquired before marriage. The current title of joint tenants with right of survivorship would avoid probate but it would not achieve full step-up in basis when the first spouse dies, said Mark Luscombe, principal analyst for tax research firm Wolters Kluwer.

So you'd be smart to get the property retitled as “community property with right of survivorship,” which allows you to avoid probate and get the double step-up after the first death. California allows this “best of both worlds” option, as do Alaska, Arizona, Idaho, Nevada and Wisconsin, have this option. In other community property states, you'd have to choose between probate avoidance and getting the full step-up.

Weston is a certified financial planner. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com. Distributed by No More Red Inc.