Knowing what to do when a loved one dies can alleviate some uncertainty and anxiety. Death certificates will be needed for each asset owned, as well as for filing(s) with governmental agencies. If the decedent was collecting a pension or social security, the appropriate entities must be notified. One should also begin to locate important documents. These may be contained in the decedent’s safe deposit box.
Surviving spouses should not begin to collect life insurance proceeds or the decedent’s IRA or retirement funds, nor should the spouse begin to remove the decedent’s name from assets, until legal advice has been obtained. If an estate tax problem exists, a surviving spouse may want to “renounce” his or her interest in certain assets, thus allowing the assets to pass to children or into a credit shelter trust created under the decedent’s will. It is very important to not take any actions with respect to assets until one is certain that a renunciation is not beneficial. In order to be valid, a renunciation must be done with nine (9) months of death.
Certain debts should not be paid until it has been determined that the estate or the surviving spouse is legally obligated for the debt. Even if obligated to pay, credit card and medical debts need not be paid immediately, unless and until it is known that there is an easily accessible source of funds with which to pay them. In the case where there is no surviving spouse, ongoing expenses must be considered. For example, if the decedent owned a home, then real estate taxes, mortgage payments and necessary utilities, such as electricity and water, must be paid in order to protect the home. Since probate could take a few months, a source of funds will need to be found.
An attorney should also be consulted, so that the process of probating the will, or administering the decedent’s estate can begin. The attorney will not only handle the probate and administration of the estate, but he/she can also provide valuable and necessary advice with respect to tax planning and the collection of management of assets. The filing of estate tax returns and the payment of taxes owed must occur within nine (9) months. Even if a federal estate tax return may not be required, in the case of one spouse dying, it may be wise to have a return prepared and filed by your attorney, in order to preserve the unused estate tax exemption for the surviving spouse.
Knowing in advance what to do upon the death of a loved one should give some comfort and ease the burden on the family.