A loved one has died, at home or in a hospital or other facility. The pronouncement of death has been made, the body transported away. You know there are things you need to do, people to talk to, details to take care of. Where do you begin?
Notify These People
- Assuming the doctor was not present or involved, let the physician know of the death. If there was no physician, Consumer Reports says to let the county coroner know.
- Naturally you’ll want to let close family and friends know. You may be able to call a few key people and ask them to call others for you.
- If the person was still working, let his or her employer know.
- Also if the person was an active member of groups like a lodge, a senior center, a club, notify someone of the passing.
The Funeral and Obituary
Assuming you were close to the deceased, you may be well aware of arrangements he or she may have made, such as a prepaid plan for burial or cremation. Was the person a member of the military, a religious group, or a fraternal organization? If so, they may have burial benefits or conduct funeral services.
You may need to prepare an obituary if it hasn’t been done. This is basically just a notice of the death, but you may like to mention the surviving family members and churches or organizations the deceased belonged to. Also if the deceased had a special fondness for a charitable cause, like an animal shelter, you could mention this in the obituary for people who would rather send a donation than flowers. You can find more help at Obituaryguide.com.
Death Certificates and the Will
Consumer Reports says within 10 days of the death, ask the funeral home for multiple copies of the death certificate. Then you will need to contact several people and institutions:
- The bank.
- The life insurance carrier.
- Social Security and other agencies and pension services that pay benefits to the deceased. They will need to stop benefits paid to him or her, but also this is the time to ask if there are survivor benefits.
- The investment advisor.
- Utility companies and the post office to stop service or forward mail.
- A trust or estate attorney who will advise you about transferring assets and help you with probate.
If there is a will, take it to the appropriate county or city office to begin probate.
Executor of an Estate? Me?
If you are the executor of the decedent’s will, there are tasks to be done. Let’s say the deceased is your elderly widowed father. You may need to rifle through his bills and other paperwork to see what is owed to keep from incurring late fees and interest charges. You’ll need to find the assets he owned, like checking and savings accounts and use his money to pay his debts.
If there is not enough money and other assets to pay what is owed, chances are the debts will be written off. However, if there are assets to be inherited, like a paid off house or car, they need to be sold to pay other debts. Consult an attorney before you do anything.
For large debts, like a mortgage, there may be insurance to pay it off, such as a life insurance policy.
Before any remaining funds can be distributed to heirs, the executor will need to see to it that income tax returns and estate tax returns – if necessary – are filed, and the taxes due paid. If you, the executor, do not ensure this gets done, the IRS can hold you personally liable for taxes that were owed, including penalties and interest. If you find yourself in this position, get advice from your attorney.
More About Taxes
Even after death, the IRS wants to hear from the decedent. A final tax return covering the period from January 1 through the date of death needs to be filed. As always, it is due on April 15th the year following the death. If the person was married, the husband or wife will file as a “surviving spouse,” and the filing is not much different than if there had been no death. The tax preparer will simply need the decedent’s income and deductions up to the date of death, and of course all the usual information for the surviving spouse for the whole year.
If the person was unmarried, the return will be filed as usual, up to the date of death. If the tax return includes large medical expenses which will not be covered by insurance, the accountant needs to know this, along with other medical expenses incurred during the year. This is true even if the expenses have not yet been paid.
Is an Estate Tax Return Needed?
This is a question to ask your accountant to be certain, however, in general, in 2013 an individual’s estate has to be worth more than $5.25 million before estate tax would be due. Most individuals with net worth of that magnitude have done significant planning and generally have a raft of advisors for tax, financial planning, and legal issues. It you are the executor of a sizeable estate, even if you believe no estate tax is due, talk it over with an attorney to be sure legalities are covered.
Who Qualifies as an Executor?
If you think you are not qualified to be an executor, think again. It does vary by state, but with few exceptions, you can be an executor if you are:
- A U.S. citizen.
- Age 18 or over.
- And not a convicted felon.
In some states, however, you must also be a resident of the state where the decedent lived.
With that said, unless an estate is small, it’s a good idea to have a trusted advisor – an accountant, an attorney, a financial consultant – be the executor, because their expertise will be important. If an estate is small, a spouse, an adult child or other relative or a trusted friend should have no trouble fulfilling the duties of executor.
Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.