What to Do After A Loved One Passes Away

When a loved one passes away, there are a number of legal and financial matters that must be attended to. One of the first steps the family must take is to make funeral and burial arrangements. Consider whether the decedent had a life insurance policy specifically for funeral expenses or a prepaid funeral plan. Death certificates should be ordered, which many funeral homes will help with. Banks, mortgage holders, credit card issuers, employers, government agencies (such as the SSA), utility companies, and the decedent's advisors should be notified of the decedent's passing. Dealing with large estates is beyond the scope of this post, but in those instances, there are a number of critical tax deadlines that should be discussed with an attorney.

An estate is a separate taxable entity recognized by the IRS; accordingly, the personal representative should obtain an employer identification number from the IRS. The personal representative should also file IRS Form 56 in order to notify the IRS of the fiduciary relationship. The benefit of filing this form is that any correspondence the IRS attempts to send to the decedent at the decedent’s address will be instead sent to the fiduciary, which can avoid problems that arise due to missing IRS deadlines. Other mail for the decedent should also be forwarded.

The decedent's final debts should be paid; note that many debts, such as credit card debts, can be negotiated and satisfied for less than face value. Publishing a notice to creditors can provide assurance that no creditors will come forward after the time prescribed by statute.

The most time-consuming process will likely be to gain custody of all of the decedent's assets and arrange to distribute those assets to the beneficiaries. Some entities with custody of the decedent's assets, such as a bank, may grant custody of the asset to the decedent's representative pursuant to a small estate affidavit; otherwise, probate will likely be required. If the decedent established one or more trusts during their lifetime, a process of trust administration will likely be required. Many assets, such as life insurance policies, pass to heirs outside of any will or trust pursuant to beneficiary designation. The decedent's beneficiaries will need to submit claim forms to the financial institution issuing such policies. One oft-omitted step is to see if the decedent has any unclaimed property being held by the state.

Whatever property the decedent did own should be listed in a detailed inventory, together with their fair market values. Tangible assets should be safeguarded until distributed to the rightful recipients. Once all claims against the estate have been paid and provision made for any final taxes or professional fees, the beneficiaries of the estate should sign a "receipt and release" indicating that they agree with the final distribution. Once the estate has been distributed and final expenses paid, the estate can be closed.