First it’s important that you and your family take time to grieve the loss of your loved one. Financial matters can wait a couple of weeks without any repercussions, so wait until you are ready. Also, don’t try and handle everything all on your own if you don’t have to. Other family members, friends and your legal and financial counsel can be a great source of support and guidance in this difficult time. Whether it’s your spouse, parents or a loved one, it can be unclear where to start in handling their estate when a family member passes away.
These are the main steps in handling the estate and legalities after a loved one’s passing:
- Locate estate planning documents. These documents not only include wills and trusts but also the following where applicable:
- funeral and burial plans/contracts
- safe deposit rental agreement and keys
- nuptial agreements/marriage licenses/prenuptial agreements/divorce papers
- life insurance policies or statements
- pension, IRA, retirement statements
- income tax returns for the past three years
- gift tax returns
- birth and death certificates
- military records and discharge papers
- budgets/bookkeeping records
- bank statements, checkbooks, check registers, certificates of deposits
- deeds, deeds of trust, mortgages and mortgage releases, title policies, leases
- motor vehicle titles
- stock and bond certificates and account statements
- unpaid bills, notes
- health/accident and sickness policies
- bankruptcy papers: filings and releases
- Be appointed Executor. File the will and petition to be appointed executor (also called a Personal Representative) in probate in the county where the decedent lived.
- Collect the assets. Find and secure everything the deceased owned and file a list of inventory with the court.
- Notify the Guardian/Agent. If there is a guardianship, a power of attorney or a durable power of attorney for healthcare, those persons need to be notified what their responsibilities are at an end.
- Notify Employer and Social Security. Notify the employer of the deceased as well as your local Social Security office. Social Security will need to know immediately since any benefits received after the date of death will need to be returned to Social Security. The surviving family member or estate is entitled to a one-time $255 death benefit from Social Security. Pensions, annuities and other income sources will have different rules.
- Pay the bills and taxes. If an estate tax return is due, it must be filed within nine months of the date of death. The income taxes of the Decedent for the year of death need to be filed, and any tax due must be paid. If there is a surviving spouse, the surviving spouse and Decedent can file a joint return for the year of death. Letters should be written to the creditors informing of their death and make arrangements to pay off remaining balances.
- Distribute property to the heirs. This can be an emotional and heart wrenching part of the process. Try and keep only a few mementos as sometimes these things can be a painful reminder of your loss.
No items should be moved, sold, given away or otherwise disposed of if they have been identified in the person’s Will as items to be distributed as a part of the estate. Only the legal beneficiary of those items is entitled to make the decision as to their disposal. Generally, executors do not pay out all of the estate assets until the period for creditors to make claims runs out which can be as long as a year.
- File an account with the court. This lists any income to the estate since the date of death and all expenses and estate distributions.
While some of these steps can be avoided through trusts or joint ownership arrangements, whoever is left in charge still has to pay all debts, file tax returns and distribute the property to the rightful heirs.