What To Do When You Lose A Loved One

Consult with your attorney, tax preparer and/or financial advisor to discuss all of the “ins and outs” of estate administration, taxation, and other issues that could occur with the upcoming distributions.

There are some things that have to be done quickly. You may have already taken care of these items by the time you read this. The funeral director and others will assist you in this process.

Notifications

Notify any employers, loved ones, or church family.

Plan the Funeral

Verify if your loved one had any prearranged plans.

Obituary

Write the obituary and include where flowers or memorials can be sent. If you list a charity to receive memorials, include the charity’s address and inform said charity that they have been named.

Funeral Expenses

Remember there will be some expenses associated with the burial even if there was a prepaid funeral plan. Generally, these can be paid out of pocket or can be paid out of the estate.

Hopefully, the funeral home won’t insist upon immediate payments which can be fairly expensive. There will still be some expenses including the casket spray, opening and closing the grave, and other such items that may not have been covered in the pre-payment. It may be that the funds to pay this bill are “locked up” until you can start the probate process, or receive life insurance proceeds after submitting a claim.

Death Certificates

• The one thing that is a little difficult at the time is deciding how many death certificates will be needed in the future. You can obtain more later, but they will be a little mroe expensive. It is good to order what is needed with the funeral director. Order more death certificates than you think you need. A good rule of thumb is to order as many death certificates as there are accounts or assets and add five to that number.
• You will need a certified copy of each of the following:
  • • probate court (if required)
    • financial accounts at banks and brokerage firms
    • insurance and annuity policies
    • retirement accounts
    • business ownership interests
• A few of these may accept a copy of the death certificate. Always ask if they require a certified copy or if a photo copy of the certified copy will suffice.

Personal Property

• It would be helpful to take pictures or make a video of all assets owned by your loved one
• Make an inventory of everything your loved one OWNED (jewelry, guns, furniture, etc.), list each asset and how it was titled. Some of these assets may require a qualified appraisal. Total up the values and contact your tax preparer or financial advisor to see if you will be required to file the Form 706 estate tax return

Business Leadership

• If your loved one was operating a business or in a profession where others are depending on certain tasks being accomplished, you may have to act quickly to ensure the business remains open as needed or that someone else knows to accomplish the tasks. You could be facing major issues like meeting a payroll deadline or closing a transaction. Hopefully, you will have family or trusted advisors to help you if this is the case.

Employer Benefits

• Contact your loved one’s employer and/or former employers to inquire about any benefits such as accrued salary, bonuses, commissions, sick leave, vacation, deferred compensation, life insurance benefits, defined contribution or defined benefit retirement plans, continued health insurance for surviving dependents, etc.

Military Benefits

• If your loved one served in the military and you are the surviving spouse, you may be entitled to benefits, including a military pension, a bronze footstone, a flag for the casket, a death benefit, and/or funeral/burial assistance
• Contact the U.S. Department of Veteran Affairs to get benefits statements in writing. If your spouse was retired from the military, contact the Defense Finance and Accounting Service Casualty Assistance Line to report the death and check for any survivor annuity. The funeral home will assist you with any part of this process

DFA Casualty Assistance:

1-800-321-1080

Social Security Administration

• Contact Social Security Administration (SSA). The funeral home may have already alerted them, but you need to call them
• If you are a surviving spouse, you can usually elect to receive your spouse’s SSA payments or your payments (depending on your age and previous income levels)-whichever is greater
• If you are the surviving spouse and have unmarried children under the age 19, you may also be entitled to dependent benefits
• You may also receive a small one-time death benefit if you were married to the decedent and qualify
• As soon as the SSA is aware of the death, they will stop the monthly distributions to the decedent (usually by electronic transfer). If your loved one died toward the end of the month, the SSA payment for the next month will be deposited before the process can be stopped. In that case, the SSA will withdraw that money or ask for a refund as soon as they are notified

SSA:

Call 1-800-722-1213

Visit www.ssa.gov/benefits/survivors

Individual Ownership

• If an account was owned solely by the decedent, then use the Letters Testamentary obtained from the probate court to transfer the account(s) into a new account in the name of “Estate of John Doe” with a new tax identification number which you will have to obtain from the IRS. Your tax preparer or your attorney can obtain this number for you. Be careful to use this account only for legitimate deposits and debts of the estate and maintain careful accounting of all transactions.
• This will go through probate court unless…
  • • There was a POD or TOD (payable on death or transfer on death) designation made to a living person or charity. If the account has a POD/TOD designation to someone else, then inform the beneficiaries they will need to collect the assets for themselves
    • There was a named living beneficiary or charity – most life insurance policies and retirement accounts will have named beneficiaries

Joint Ownership

• If you are the joint owner or the account is in a joint revocable trust, the decedent’s name will need to be removed and your social security number will need to be used as the tax identification number for the account (if not already). However, if you are the surviving spouse, you may want to keep both names on the acount until you are sure all assets and distributions from the decedent’s estate have been distributed and/or deposited
• Jointly owned with rights of survivorship – this will pass to the survivors assuming they are still alive
• Joint Tenancy in common – this will go through probate court

Trust Ownership

• If assets are owned by a trust, the administration of the trust may require several steps to satisfy the requirements of the trust language and the Arkansas Trust Code. If you have a revocable trust where everything simply passes to the survivor at the first death, then your situation may be fairly easy. You should consult with your tax preparer, attorney, and/or financial advisor to ensure everything is done properly.

Probate

• Go back and clarify exactly how each asset on the inventory was titled in order to determine whether a probate process is required. It may very well be that you do not need to go through the probate court to transfer assets. However, if you do, then you will need to contact an attorney to help you in that process

• Locate insurance policies and call each company for a copy of their claim form so you can make a claim when you receive the death certificates. These forms may be available online
• File the appropriate paperwork for each insurance policy. Each claim will require at least a copy or certified copy of the death certificate along with their required forms
• Contact all of your insurance companies (auto, home, life, health, etc.) and ask them to remove your spouse/loved one’s name from any policies

If your loved one was over 73, then you may have to take the required minimum distribution for the year of death if that money has not been taken out already.

Non-spouse

For a non-spouse inheriting an IRA, the general rule is the non-spousal beneficiary has ten (10) years to withdraw all assets from the inherited IRA. However, certain eligible beneficiaries may withdraw the Required Minimum Distributions based on their life expectancy so check with your IRA custodian. Of course, charities can cash their portion out without taxation.

401(k), 403(b), and other accounts

For 401(k), 403(b), and other such accounts, you may be able to roll these accounts over into your own account or into an IRA. You must check with the plan administrator to see what your options will be. In most cases, you will want to make a direct transfer from custodian to custodian to avoid any required tax withholdings.

Inventory

Make an inventory of everything your spouse/loved one OWED including mortgage lenders, credit card companies, auto lenders, etc. Clarify which debts are actually owed by the estate of your spouse/loved one.

401(k), 403(b), and other accounts

For 401(k), 403(b), and other such accounts, you may be able to roll these accounts over into your own account or into an IRA. You must check with the plan administrator to see what your options will be. In most cases, you will want to make a direct transfer from custodian to custodian to avoid any required tax withholdings.

Expenses

• You will want to contact creditors (like credit card companies) and close out any credit cards or remove their name as an authorized user
• You should have received or will start receiving over the next weeks and months the final bills owed. Depending on how you are paying the bills (as executor, trustee, or surviving spouse), you will want to keep good records. Be sure that medical insurance has been properly filed and has been paid before you make the final medical payments.
• By now it is time to begin to put together your budget. How much income will you have now? What will your fixed and flexible expenses be? Your financial advisor can help you with establishing a reasonable budget.
• For most surviving spouses, it is good to consolidate and simplify. If accounts can be combined, that is often a good thing. You might want to have as many bills as possible drafted from your checking account, as well as having income automatically deposited.

File Tax Returns

• You will want to make sure the tax return for the deceased loved one has been filed. Work with your tax preparer to ensure this is done correctly and on time.
• Assuming you are the executor and/or trustee, you may have several tax returns to file in future months. The below is a non-exhaustive list of possible tax returns that will be required and you should discuss this with your tax preparer:
  • • The Final Form 1040 for the year of death due by April 15th of the year following death.
    • A Form 1041 and a state fiduciary return for each year that you have the “estate” open.
    • A Form 706 estate tax return if the decedent is required to file such.

Pre-arrange your funeral

It is easier for you to choose a casket and make other important decisions than for your family members to do so after your death.

Write your own obituary

Who would know the details of your life better than you? You might save a great deal of stress on your family members by having this basic information written down. Some funeral homes will help you with this as you pre-arrange your funeral.

Make an inventory

Make a list of all important information for your family and/or executor. This would include accounts and where they are located, policies and where they are kept, names of trusted advisors (attorney, financial advisor, tax preparer, etc.) specific matters of information only you might know, etc. Since you have just gone through the loss of a loved one, what information would you wish your loved one had written down for you?

Sign a living will

This is your right to give instructions to your doctors in the event of a terminal illness or permanent unconsciousness. This can relieve some of the pressure off of your family members in making tough decisions. Contact your attorney for more information on living wills.

Estate plan

• Make sure your estate planning documents are in order. The Foundation will be happy to help you think through various issues involved. Your attorney can help you with any changes that you need to make.
• Check your Will and/or Trust – Since your loved one has died, do you need to update your documents? Do you need to add a new backup executor? Do you need to update your beneficiaries?
• If you have a trust, the same issues may apply. Also, it is a good time to verify all of your assets except retirement accounts and potentially life insurance that have been titled to the trust name. Your financial advisor or attorney can help you with this.
• Does your durable power of attorney include the appropriate agents? Do you need to name a new backup agent?
• Beneficiary statements – It is important to review each of the beneficiaries listed on your insurance policies, bank accounts, brokerage accounts, and retirement accounts. Do you have the correct beneficiaries listed as well as alternate beneficiaries?

The Foundation exists to serve, advise, and encourage Arkansas Baptists and we hope this guide will serve as a resource for you as you administer your loved one’s estate. As a reminder, the information is this guide is just general information and may not be applicable to your specific situation. You should seek your own legal, tax, and financial advice to ensure your situation is handled properly.