“First of all, breathe, because nothing on this list is worth losing your peace of mind. Take time to grieve and be with your family. Decisions made when you’re dealing with a flood of emotions tend to be poor anyways, so when you’re ready, you can take these matters up”, Lalit Kundani
1. Order at least 10 Certified Death Certificates
These will generally be needed from a number of institutions when it comes time to later retitling assets, removing the decedent from properties, bank accounts, and other accounts. We generally recommend ordering 10-12 copies.
2. Contact Social Security Administration
If the decedent was receiving Social Security, contact the Social Security Administration’s office to report their passing. They will need the date of death and will immediately stop any payments that otherwise would be paid. If the decedent received any payments following the date of death, these funds may need to be repaid back to Social Security, so it is important not to spend this money. Additionally, surviving spouses may be entitled to survivor benefits, so this is another reason why Social Security should be contacted as soon as possible.
3. Contact Veteran’s Affairs
If the decedent served in the armed forces, they may be eligible for certain veteran’s death benefits. Thus, you should contact Veteran’s Affairs to see if any such death benefits apply.
4. Call your attorney
If you have an attorney, this should be one of your first calls. Your attorney in your state of residence will walk you through all the legal and financial considerations that can come up once a loved one has passed away.
If the decedent had any kind of trust or estate plan, you should contact the drafting attorney and they will assist you (or the successor trustee) in reviewing the trust documents and provide specific action items as to what needs to happen when you meet.
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5. Wind down financial affairs of decedent
If the decedent held any credit cards, utility bills, cell phones, loans, or liabilities in their individual name, it is important that one by one these get winded down and/or transferred into the name of the surviving spouse, for example. Mortgages can continue under the same terms and conditions if the home is to be inherited by immediate family members. Be sure not to prematurely cancel any bills (e.g., internet, cell phone), especially if these services may need to continue for some time following decedent’s passing or if people are still living in the home.
6. Inventory all assets
This is usually hard to do. The decedent likely owned, or was named on, various properties, bank accounts, brokerage accounts, safety deposit boxes, money market accounts, 529 accounts, automobiles, homeowner’s policies, etc. It will become absolutely critical to inventory all these assets. If a list was not created or retrieved that lists all the assets, family may need to assist by checking mail and/or email. The goal is to create a spreadsheet of all the various assets and accounts that the decedent owned, whether fully or even partially.
Once an inventory of all assets has been created, for each and every one of these, you will want to classify them into 1 of 4 categories:
- Was it owned jointly by the decedent and someone else?
- Was there a beneficiary listed on the account?
- Was it owned in the decedent’s name only (with no other owners/beneficiaries)?
- Was it owned by the decedent’s trust?
Based on the answers above, the following will occur for each asset:
a. Joint Accounts. If the decedent co-owned assets with another person and if the asset was held in “joint tenancy” or “community property with right of survivorship,” then the asset automatically belongs next to the other owner(s). If the asset was held as “tenants-in-common,” the decedent’s share will need to go through probate.
b. Beneficiaries. If the decedent listed beneficiaries on any life insurance or retirement accounts or pensions, then the beneficiary will receive the asset as long as they are an adult. You must contact these companies to coordinate any payouts to the named beneficiaries. Each institution will need a certified death certificate to initiate any payments and contact any beneficiaries. If the beneficiary is a minor child, a court proceeding must open.
c. Assets in Decedent’s Name Only. If there were no joint owners and no beneficiaries, and if the asset was held in the name only of the decedent, then the amount will matter. In California, in 2023, if the decedent had any assets exceeding $166,250 (in their name only), you will need to open a probate case. Often in these cases, the financial institution may insist that access to the account can only be granted to the requesting family member only upon issuance of “Letters Testamentary.” Unfortunately, this generally means that a formal probate must be initiated. Probate is the legal process by which the deceased’s assets are distributed to their heirs. You will need to file a petition with the probate court in the county where the deceased lived to initiate this process. Probate can take years in California, unfortunately and you will need to work with an attorney.
d. Assets in Trust. If the asset was titled in the name of the trust, the trust document will govern the disposition of the asset. The trustee of the trust should contact the lawyer who drafted the trust or another local attorney who can assist the trustee with the local rules in that jurisdiction. Essentially, the trustee and attorney will work together to complete any steps that need to be taken. For example, trust administration can include the following: applying for a tax identification number, filing an Affidavit of Death of Trustee for any property owned in any counties by the decedent, filing new Homeowner’s Exemptions, filing any applicable Parent-Child Exclusions, preparing and recording a new Certificate of Trust, sending out 120-day letters to any beneficiaries or heirs, contacting the various financial institutions and filing the death certificate with them, selling assets, creating bank accounts, distributing assets to the trust beneficiaries, filing final tax returns, and closing the trust.
7. Notify their current and former employers
If the decedent held any benefits through their current or former employer, such as retirement benefits, life insurance, annuities, or pension plans, the HR department of their employer’s office may assist you in tracking down these accounts so that you can help coordinate the transfer of these accounts to the named beneficiaries. If medical benefits were being provided by the employer, inquire as to whether, and to what extent if any, there is survivor coverage. The surviving spouse’s own insurance benefits can be changed following the death of a spouse, since it constitutes a “changed life event.”
8. File final tax returns
The CPA or tax preparer will need to file appropriate tax documents following the death of the decedent. The 1040 is a tax form that reports any income earned from January 1st through the date of death in a calendar year. The 1041 is a tax form that reports any income earned following the date of death through the end of the calendar year.
Moreover, a tax or estate planning attorney can explain the benefit of filing a Form 706. In short, it is a form filed historically to report any estate taxes due at death. Yet even if there are none due, if the decedent was survived by a surviving spouse, then the Form 706 offers the surviving spouse the ability to port the deceased spouse’s unused exemption (DSUE) so that it belongs to the surviving spouse and represents a guaranteed minimum amount the survivor can pass tax-free to the children at their own passing (note that the DSUE can be added to the survivor’s own lifetime exemption, but if a 706 is not timely filed for, the DSUE is waived by the survivor!). Finally, the Form 706 can be used to make certain tax elections (e.g., QTIP election for certain assets).
9. Call your financial advisor
If the decedent left any retirement accounts to the surviving spouse, for example, the surviving spouse must determine whether to “roll over” the account to their own IRA or take a portion of the account as an inherited IRA. In any case, a non-spouse beneficiary inheriting a retirement account may need to withdraw certain annual amounts moving forward depending on at least two factors: (1) whether the decedent was taking required minimum distributions; and (2) what the beneficiary’s own tax bracket happens to be in at the time (i.e., a beneficiary now generally has only up to 10 years before all applicable taxes are due). A financial advisor will assist in this analysis in order to determine the best overall tax treatment under current law.
10. Contact major credit card bureaus
You should request a copy of the decedent’s credit reports so that you are aware of all debts and liabilities that remain open against them. Because credit card fraud is known to occur, it is recommended that each major credit bureau (Equifax, Experian and TransUnion) be notified to place “Deceased – do not issue credit” on the account.
11. Consider appraising all assets for date of death values
Another tax benefit that a survivor should take advantage of is to appraise all the assets for date of death values. This adjusts the basis in stock and property, establishing a step-up in basis for future assets to be sold, and resets depreciation to a new schedule for the beneficiary, thus eliminating any potential recaptured depreciation costs. It is important to use a qualified appraiser in these cases. Cutting corners will only hurt you in the long run, especially if there is an audit.
12. Turn off social media accounts and digital assets
This may not be as easy as it sounds even if passwords are accessible, but ultimately, the decedent’s digital assets (social media accounts, online photos, media libraries, cryptocurrency wallets) should be winded down and/or archived. It may be necessary to contact each digital company for their protocol on accessing these accounts, if the decedent did not make arrangements for the transfer of these accounts during their lifetime.
Bridge Law LLP routinely assists families in these trying times. Please reach out to us if we can assist you or your family members, at 714-525-2400.