How Will You Handle The Final Affairs Of A Loved One?

Losing a loved one is one of the most difficult experiences you will ever have, which is only compounded by having to handle their final affairs and their estate. There’s no doubt that dealing with a subject like the loss of a friend or family member is emotional, stressful, and a cause of great despair. When you get to be around my age, you have probably dealt with this kind of event far too often, and frankly no matter how many times you have, it is never a comfortable feeling.

Losing a loved one is tragic, but are you prepared to handle their final affairs and their estate? Here's a short primer on what you need to know.

There are many details that must be taken care of to make this kind of event orderly and to take care of all of the important details that the decedent wanted. This only adds an element of anxiety and pressure to an already stressful situation. Knowing what needs to be done can help to ease your mind.

You may have made some plans for a family member, and hopefully you have done all the proper steps to make that difficult time less burdensome. Things like a place for burial, making sure they have a written will, and who they would most like as an officiant when that time comes. Planning those things while people are alive and well is a lot easier for sure. I have experienced losing someone with a plan in place, and also the sudden loss of someone who didn’t have any plan, and I can testify that having a plan is always recommended.

But todays post is not just about how to plan for a loved one’s funeral. It is truly about what happens financially when a person dies, and what you may need to do to take care of the financial affairs of a decedent.

The Tax Situation

When a person dies, believe it or not, you must think about taxes. There are 3 things that must occur in regard to taxes:

  • A final tax return must be filed for the decedent
  • A value of the decedent’s assets should be tallied for estate tax purposes
  • From the moment of passing, any income that the decedent would have received had he/she not died, must be reported on the fiduciary tax return

If the decedent owns a business, the value is to be calculated as of the day prior to death for tax purposes.

Gathering Estate Information

One of the most time-consuming aspects of handling the financial affairs of someone who has passed away is the gathering of all the financial information and other documents. For a lot of families this is very difficult because so many of us do not keep good records and/or plan well. Many actually lack knowledge as to where these critical documents are located.

It sounds like something difficult to do, but getting a file or even a locked fireproof box together with all the important documents, like life insurance policies, deeds, and a copy of the will is a good way to make this kind of search much easier. That’s something you can prepare long in advance.

Certified Copies of the Death Certificate

You will need multiple certified copies of the death certificate. No financial institution like an insurance company or a bank will pay any benefits or assets without certifiable proof of the death. The cost of these documents is negligible at the time of death but may be more costly later on if needed. If you are using a funeral home for arrangements, they often will give you several copies of the death certificate, but you can and should obtain them at local courts where the decedent lived.

In order to handle the affairs of the decedent, you will need authorization to act on the decedent’s behalf. As long as you obtain documents known as Letters Testamentary or Letters of Administration from the courts, you can represent the rights of the decedent.

Probate

Probate is the legal process which proves the decedent’s will is valid and addresses the debts and assets of the deceased. A surrogate court will examine the will to determine if it is valid and who to appoint as an executor or executrix. When someone dies and has a will, he is said to have died testate. If he dies without a will, it is called died intestate and state law will determine the distribution of assets.

Is probate necessary? If there are no assets in the decedent’s name, for example if all their assets were in a revocable living trust, were jointly owned or had pay-on-death beneficiaries assigned, then there is no need for probate.  However, if the decedent had assets, the will needs to be probated regardless of the value of the assets. The executor or executrix will then have the authority to distribute all real and personal assets of the estate.

How to Probate a Will

The executor lists all the assets that are left in the will and divides them into categories like cash, investments, capital assets, and other assets like personal things. Prepare a list of beneficiary names and addresses (with ages if minors are involved) that are named in the will. If any named person in the will is deceased, locate the next of kin so that the estate can be settled.

The Executor and Their Duties

You become the executor of the estate when you are named in a will with that role. You do not have to accept that role, but do know that the deceased had the confidence in you to be the right person for this job.

If you accept the responsibility, you will be in charge of protecting the deceased person’s property until all taxes and debts have been paid. What is left will then be distributed to the people who are entitled to it.

After probate and receipt of the Letters of Testamentary or Administration you will have the following duties:

  • Notify all relevant parties involved within 60 days of probate
  • Locate the deceased’s assets and manage them until they are distributed to the beneficiaries
  • Apply for any benefits due to survivors
  • Pay all final bills and guard against any financial fraud
  • Distribute any personal property according to the wishes of the decedent (if not specifically named, do so fairly)
  • Set up an estate bank account
  • Verify that insurance is in place on any properties in the estate
  • File all tax returns (income, estate, and gift) when due
  • Pay the taxes – a final return must be filed covering the period of the beginning of the tax year to the date of death, both state and federal returns may be required (check your state rules), a fiduciary tax return may have to be filed even if there is no income generated by the estate

There are severe penalties for failure to file any tax returns unless there are reasonable causes.

Executor Liability Insurance

Finally, I’d recommend considering liability insurance also known as error and omissions insurance (E&O). The executor has a lot of responsibility and they can be personally sued by any heir that feels that they may have been shortchanged in the process of the distribution.


While this isn’t the most pleasant subject to think about or discuss with your loved ones, I can honestly say that it is a necessary discussion for everyone at some point in life. If you are a young person, you probably don’t think about the day that may come when you have to deal with your parent’s estate and funeral. That is even truer when it comes to a parent and the occurrence of a child’s death.

Reviewing the plan way ahead of its need is a smart thing to do. Planning the procedures for a funeral under pressure is so very difficult that doing it when you can discuss the options with all parties just makes so much sense.

Having your will in place and all of your documents in order is the best thing to do to help your loved ones make sure your wishes are all truly carried out.

Have you thought about you responsibilities of being an executor? Are you prepared for taking such responsibilities on? Have you planned your own will and organized your documents so that everything can go as you wish when you pass on?

About Gary Weiner @ Super Saving Tips

Over the last 45 years I’ve worked in retail (department stores and supermarkets) and financial planning. In addition, I am a shopper, born and bred, who enjoys the challenges of finding the best items for the best prices. When I’m not busy saving money or writing here at Super Saving Tips, I enjoy baseball, music, and classic movies. I am retired and live in New Jersey with my wife.

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16 Comments

  1. I don’t have a will yet, but it’s something I want to prepare so that it will be hassle-free and family members wouldn’t have to deal with it, Gary. It is a sign that you really care about your loved ones.

  2. I believe one of the best things you can do is discuss these plans ahead of time when everyone is of sound body and mind. It’s not a fun conversation, but at least you understand wishes, cost, etc. This way when an event occurs you can focus on the grieving and healing, and not have to worry to much about plans or cost.
    Brian recently posted…Financial Personalities of My ChildrenMy Profile

  3. I have never had to deal with anyone’s estate, but I have seen what some people have had to go through – usually when their parents pass away. Some people have incredible amounts of work to do – all while grieving. Others have a much smoother time of it. I’d say if you love your loved ones, don’t leave them with a mess to sort out. Have it all in order for everyone’s peace of mind.
    Fruclassity (Ruth) recently posted…Don’t Let Your Experiences Determine Your DestinyMy Profile

  4. We have a will all set and ready to go, but we did it when our daughter was under 18. Now that she’s 21 we should redo it. The last time we met with the attorney though they recommended a trust at the tune of about $4k for them to set it up (and help with all the asset transfers). My frugal side rose when I heard the rate. I was expecting more like $2k. I’d love to hear from others who set up a trust and what it cost them.
    Brad – MaximizeYourMoney.com recently posted…What is the S&P 500?My Profile

    • In some cases, it makes a lot of sense to go to an attorney for legal advice on your will planning and asset transfers. It may cost you some money that you weren’t counting on, but it may provide you with savings for your heirs in the long term. It’s also a good idea to revise a will as your life progresses, for numerous reasons. It sounds like you’re doing what needs to be done to make sure your family is protected.

    • My late father had a revocable trust. I don’t know how much the lawyer charged him to set it up but he did all the asset transfers himself. Bank accounts, brokerage accounts, mutual fund accounts, etc. are easy because financial institutions have a lot of experience with trusts. I would a) ask the lawyer how much it would cost just to set up the trust and b) shop around for another lawyer who is cheaper.

      Houses and cars were more time-consuming. I recommend not bothering with the car. No one likes to deal with the DMV. I was with my father when he went to DMV to re-title. It took a few hours because the DMV clerk didn’t know what he was doing. A car is an asset that will depreciate so even if it is a new car and you keep it registered under your name, it will likely be under the small estate limit for probate. Even if it is not under the limit because you bought an expensive car or the small estate limit is low ($25,000 for non-spouses in NV), your car will depreciate to under the limit eventually.

      On the back end (i.e. when my father died & I had to dissolve the trust), I hired an attorney for a $4,500 retainer in Las Vegas. That is a legitimate estate expense. She handled the paper work to avoid probate, she published death notices in case someone had a claim against my father’s estate, she handled the transfer of ownership of the house, she set up a temporary irrevocable trust as a temporary holding account for the revocable trusts assets (except the house and car) and maybe she did some more. I’m still unclear why the revocable trusts accounts were re-titled to the new trust (and a new TIN). I couldn’t understand why I couldn’t just transfer the funds from the trust’s accounts to my accounts (I was the sole remaining trustee & beneficiary) but I just went with it.

      She wouldn’t touch transferring the car title to me without more money so I had to do that myself. I never re-titled the car. I kept it about 18 months after my father died. I renewed the registration twice under the trust’s name and then sold it to a third party which I had the authority to do since I was a trustee.

      I think $4,500 was too expensive but it was the same attorney who drew up the trust papers so she had some familiarity with it which may have made things go smoother.

      Anytime there is a major life event, you need to potentially revise the trust and/or will. My father expected to predecease my mother so much of the trust dealt with my responsibilities upon his death. He didn’t think my mother could handle the responsibilities and wanted me to take charge. My mother ended up predeceasing my father so a lot of the trust language was useless. He ended up revising the trust after my mother passed which kicked off a new round of asset re-titling.

      • Thank you very much, Dan, for sharing those details about your experience. The information you’re sharing can help others in their preparation. Of course in every state, the laws may be slightly different. But wherever there’s the complexity like a trust, it may make sense to enlist the aid of an attorney. You also make an excellent point about revising the details of the trust as your life experiences change. An awful lot of people think that kind of preparation is one time only. But as you have clearly shown, adjustments are necessary for many people.

  5. This is a great overview and detailed explanation. My great aunt recently passed away and my father is taking care of her estate and all the finalization of her tax situation and finishing up with probate court. Even with a will it’s been taking awhile to finalize her estate. I guess things just take time.
    Mustard Seed Money recently posted…Top Reasons To Have A WillMy Profile

  6. Even though my mom did a lot of great preparation before she died, I found being executrix daunting. Jon really wanted me to do it all myself, but I think that hiring help would have been a better use of my resources.

    But again, it really helped that my mom was organized. She’d already given me a list of where all her accounts were, as well as making sure I knew where her will, financial records and essential documents were. She’d planned the funeral and some other steps as well. And her husband took some of the load since they had joint assets and bills. Doing some prep work makes things a lot easier on your loved ones.

    • I think that the way your mom prepared everything and her decision to have you be the one to handle her affairs was a wise decision. While it is true that you can get professional help, you now have the knowledge that you’ve carried out your mother’s wishes and that should give you some satisfaction. Thanks for sharing your story, Emily.

  7. We have done a lot of this planning already – we designated two executors for our estate, a guardian for our child, backup decision makers for each of us in case we are both incapacitated and can’t decide for each other, and created a will and living trust. I documented much of this here: http://agaishanlife.com/2015/03/estate-planning-series-kickoff/

    A big thing that jumps out to me is the idea that someone might be named an executor (or guardian, or backup health decisionmakers) without their knowledge. I know it’s possible, but it’s a really bad idea to spring something so big on people without having properly prepared them for what they’ll have to do and what you want.

    Make sure they know and agree to take on the job, make sure they know what your goals are and what you’re wanting them to do. It’s a huge job.

    This is one of the only reasons I’m grateful that I’ve been supporting my parents so long. I know our estate would be complex to administrate but my parents had / have no assets, so when Mom passed, I only had to take care of her funeral.

    Thanks for the tip about the E&O liability insurance, I wasn’t aware that that was available. I’ll have to look into it.

    • Revanche, it sounds as if you’ve done quite a bit of preparation and planning and I commend you for that. In most cases, when an executor is going to be named, there would have been a discussion about that choice between both parties. You are correct when you say that would be an unfair surprise to spring on someone especially if the estate is a complex one. Thanks so much for your comments.

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