|Helena S. Mock, Esq.|
Change is always difficult, but a death in the family can be especially traumatic. It may feel as though the world should stop to mourn your loss, but it doesn’t. The world keeps turning, the day still follows night, people around you continue to go about their normal routines as if nothing has happened. For those suffering, this can seem callus until you realize that your loss is not theirs.
When the loss of a family member occurs, whether sudden or expected, your world can feel as if it has been turned upside down. This loss is combined with the additional burdens of settling the decedent’s estate. Thus, it is helpful to have a “to do” list handy so that you do not overlook anything in the panic and grief of the moment. The following is a list of “action items” that will help guide you following the loved one’s passing:
- In the hours immediately following the death, make sure family members have friends or loved ones with them. Arrange care for any children or adults needing assistance.
- Call the funeral home and clergy to set up appointments to discuss final arrangements. Before the meeting, be sure to check and see if the decedent left behind any memorial or burial instructions.
- Obtain several copies of the death certificate, at least 5; you can always get more later.
- Let people know what has happened. Notify immediate family members and close friends. If the decedent was employed, notify his employer and any important business colleagues.
- In the days immediately following the death, gather the decedent’s important papers, including the Will or Trust, deeds, bank and brokerage statements, tax returns for 3 years prior to death, all life insurance and/or annuity contracts and retirement plan documents.
- Schedule an appointment with an experienced estate planning attorney – one who focuses her practice in estate planning. Working with someone who is knowledgeable about estate and tax issues will avoid potential problems. The person named as the executor (“Personal Representative”) or trustee should attend this conference. The employment of legal counsel is an expense of administration. Failing to retain competent counsel can result in the fiduciary being personally liable to the decedent’s estate.
- The Trustee and/or Personal Representative will then take over the decedent’s assets and finances and manage them throughout the administration period. Be mindful of the Prudent Investor Rule. Just because the decedent held a certain asset does not mean it is appropriate to maintain that asset in the estate; it might be time to restructure the investments.
- If the decedent was still working, contact his employee benefits department to begin processing any benefits that are due. They will likely need an original death certificate.
- Contact the local Social Security office. If the decedent was married, his spouse may be eligible for benefits. A disabled child of the decedent may also be eligible for benefits.
- If there was any life insurance, determine the beneficiaries. Only the beneficiaries can claim any death benefits (the insurance company will usually refuse to speak with anyone other than the beneficiary.) Each insurance company will require an original death certificate in order to process the claim.
- If the decedent was ever in the military, contact the Veterans Administration to see if surviving family members are eligible for any benefits due to the death.
- Keep a record of any expenses you or anyone else pays on behalf of the estate (funeral expenses, qualification fees, etc.) for purposes of reimbursement and possible deductions on the estate or trust tax returns. Do not pay any debts until you are sure the estate is solvent enough to be able to pay all debts.
- Inventory the decedent’s assets and note how each asset is titled (individually, joint with someone else, in trust, etc.).
- File the decedent’s final personal income tax return (IRS form 1040) and corresponding state income tax return, if any, by April 15th of the year following the year of death. A tax return for the estate and/or trust will also be due but may be filed on either a calendar or fiscal year. Consult with your attorney to determine which is best.
- Do not change the title to assets, claim any benefits, or roll-over any retirement accounts without consulting with your estate attorney. Changing a title can have unexpected income, estate, and property tax consequences.
The process of administration of a loved one’s trust or estate is complicated considerably by emotion. In addition, there can be difficult and complex family and financial issues that arise during this time. However, there are resources available to help you navigate through the rough waters. Most important, don’t delay. Although normally there is nothing that needs to be done immediately, delaying too long can cause problems which may be difficult or impossible to fix later.