Death in the Family - A Guide to the First Steps to Take

Death is part of life - but for the surviving family it is a time of stress, both emotional coping with loss and knowing what to do to handle the paperwork and the practicalities of what happens when a family member dies.

For the emotional question many psychologists offer services to help you address grief.  Look to your health insurance plan for coverage questions.

For the practical questions, CBS Money Watch has created a very useful guide "Death in the Family: 12 Things to Do Now".  It can be printed out and kept with important family papers.  I have outlined the 12 steps below with some thoughts and comments.

General To-Do List

1 - Call a funeral director - These professional will help with the choices to be made.  Many people have a prepaid funeral or have created burial instructions - look for these to help celebrate the life of your loved one.  IN setting the date, keep in mind travel arrangements that close family may need to make.

2 - Contact close friends and family - Speak to key people who can contact others.  You may want to change your voice mail or set an email with answers to questions about the details of the memorial services, where a donation in lieu of flowers could be made.

3 - Make burial arrangements - The funeral director can help you with these, but note that you will want to again check to see if prior arrangements had been made by the person during their life (and if you have a plan for your memorial, write it down, don't leave it to guess work).

4 - Write an obituary - You should consider where it should be placed - local paper, papers where the person once lived, alumni publications, etc.

5 - Plan a reception - If you are having a gathering to celebrate a life, delegate to a friend or family member - they want to help you, and this are some details somebody else can run with.

6 - Find the original will - Our practice is to retain the original and give the client copies. Look at the copy and call the law firm on it.  Note only about 30% of the population has written a will - there may not be one to find, in which case the law of the state the person lived in when they died will determine who gets what property.

7 - Make like an accountant - You will need to gather all financial information.  First starting place - the mail and monthly statements - put each in a separate file so you are aware of the assets.  Next place, review the tax return - are the assets listed on there you don't get monthly statements for. Third - keep a record of all bills being paid.  At the very beginning you won't have access to the decedents funds, so one or more people may be making loans to the estate by paying expenses - these should be repaid as soon as the Executor of Administrator has access to the funds.

8 - Contact the person’s employer - Contact the employers human resources office to see if there are employer provided benefits.  If the person has retired and gets pension benefits, a former employer should be contacted as well.

9 - Watch the mail - After the initial monthly statements, other asset information may eventually arrive by mail.  For assets that only report once a year (life insurance for example), many give statements in early February for income tax return preparation, so you may find additional information then.

10 - Pay the bills - You can call and advise don't have access to the funds if bills will be delayed.  This will also usually get any interest charges waived.  Keep good copies of all bills paid as these will be reflected on the tax returns.

11 - File tax returns - At a minimum, a final income tax return (Form 1040) will need to be filed with the IRS and State.  Depending on the state you live in, the size of the estate, and who the beneficiaries are, you may also have to file one or more of a Federal Estate Tax Return (estate is in excess of $3.5 million), a State Estate Tax Return (estates over $675,000 in New Jersey, and varies by other states), and/or and Inheritance Tax Return (for beneficiaries other than spouse, parent, child, grandchild in New Jersey)>

12 - Consult an attorney - This is likely the first estate you have ever handled.  Estate attorneys are professionals in working through an estate.  Being an Executor is a temporary job - with all the responsibilities of a real job, but one for which you may have no training. When we partner with our clients we map out the estate administration process for them and assign responsibilities among us, as the estate attorney, an the Executor, as the Representative of the estate. The Executor can choose what actions they feel comfortable handling, and understand those we as professionals will address. This keeps costs down while allowing the Executor to be as involved as their schedule permits, while moving the estate along to conclusion.  The author of the CNN Money article puts the use of an attorney into good perspective

If you’re not comfortable handling an estate, you may want to bring in an estate attorney. At the very least, check in with one after you’ve completed what you can. (Financial planner Jonathan Pond, of Newton, Mass., also has published an excellent, exhaustive checklist for executors.) “I’d recommend just saying ‘Hey, this is what I’ve done, here’s where I’m at, am I missing anything?’” says Diane Park, a financial planner in Minneapolis. “That might take just an hour or two of an attorney’s time.”

This will always be a challenging time - it helps to remember you are not alone and that there are family, friends and professionals you can rely on.

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Comments (3) Read through and enter the discussion with the form at the end
Scott Costello - September 30, 2009 10:32 PM

How about items such as houses and other real property? Are they to be sold during the probate process or afterwords? I've done some research and found that you may be able to get permission to sell a house during the probate process in order to meet financial obligations such as taxes and liens. Is this possible even though a will my stipulate that the house be given to an heir?

Sorry for the load of questions.

Deirdre R. Wheatley-Liss, Esq. - October 22, 2009 3:14 PM

Houses and other real property can be sold during the probate process so long as a legal representative (Executor, Administrator, Personal Representative) is named.

The key question though is whether/when the estate has access to those proceeds. In New Jersey, if the estate is taxable (either because the total estate exceeds $6745,000, or people other than spouse/children are beneficiaries) then the state of New Jersey has a lien against all estate assets. The buyers title company might require the sale proceeds to be held in escrow until the lien is released (following the filing of an estate or inheritance tax return). So, there can be a situation where the property can be sold, but the proceeds are not immediately available.

Myrna Janzen - June 16, 2010 4:58 AM

I have opened a checking account for the estate, but there is less than 3000.00, in total monies, WHO has to be paid first. he had no real estate or vehicles. The bank information phamplet talked about class one bills being paid before class two bills etc. I don't know what all that means and he had a lot of bills, medical and taxes from years and years ago too. I am In Virginia

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