When a friend or relative dies, you will get lots of comfort and assurance from friends, relatives, perhaps a pastor or elder. What you will NOT get is practical help with the days ahead. Death itself can occur in seconds; the legal and financial process that results can take years, however. Nobody prepared me for this.
There ought to be a booklet handed out by the funeral home that explains these details, but there isn't. Feel free to print out this page. It's based on Indiana law and my own experiences. Your state's laws may vary considerably, but the general process should be roughly the same.
The first thing that needs to happen, is finding out if the decedent (the person who died) had a will, where it is, and get it in your hands.
The next thing that needs to happen is to select a funeral home to take the body. If the will makes no specific request, or if there is no will, you may be put on the spot to select a funeral home. The body must be sent somewhere within 24 hours or less, so you may have to make a decision in a hurry. If you are reading this page, get the names and numbers of any funeral homes in your area and be prepared should you be suddenly required to pick one.
Do you have power of attorney? If there are other relatives, they may have concerns in this area.
The funeral and/or cremation: If there is a will, you should abide by the terms of the will in selecting the product(s) and service(s) required. If there is no will, or it doesn't specify, you should likely select the least expensive "package", which will usually be a cremation with no viewing or service. Again, if there are other relatives, they may have desires in this area. If they want to have a viewing and/or service, make sure they contribute money to cover the cost immediately - put up, or shut up. You will be presented a bill in a day or two, and it could be alarmingly expensive. If you are the one paying for this service, get two copies of the death certificate. Do not let anyone "borrow" either of them, make copies if necessary.
Prevent any looting of the estate. Talk to the bank and find out what accounts the person has. Check the bank accounts for any POD clauses, but don't allow any money to be taken out. Get the keys to the decedent's home, and keep them close. Do not allow relatives to take anything from the home at all, or to take any money from the bank accounts. "My aunt Sarah always said I could have her oriental rug," one might say. These pleas should fall on deaf ears. Don't let them take anything. Distant relatives, or even claimed friends, may come from miles away to completely strip the decedent's home within hours of their death. Do whatever you can to prevent this from happening! Change the locks if necessary.
Now you may find yourself in a roomful of people, all of them looking at you. Are you going to be the administrator of the estate, also referred to as the executor of the will (if there is a will)? The rest of this document assumes you are. If you are not, you may wish to stay informed of the process of what is to follow, but for his or her sake, and for your own, do not interfere.
Hire a lawyer. Meet with him and sign a contract. Give him one of the death certificates, and hold onto the other. Do not let anyone else take the other one out of your hands. If they want a copy, you make the copy.
Get the will, if there is one. There may be multiple wills, or there may be none. It might be locked in a safe deposit box, in which case you will be unable to get it unless you are assigned as administrator. This can be a legal conundrum. Ask the lawyer if it is adequate and legally usable.
There will be a court filing to assign an administrator. You may have "supervised administration", in which the court has to approve everything you do, or "unsupervised administration", in which they only have to approve some of the things you do. Either way, you will be in court several times. The court will issue a letter of testament. This is another piece of paper which you will have to hold onto like glue. Don't allow anyone to carry it away.
The court may have to assign you administrator, and you may have to procure a bond. A bond is like an insurance policy. It costs money, and you have to pay for it.
You will have to apply for a Tax ID number (TIN) from the IRS for the estate. This can be done over the internet. Write down the number as soon as you see it. The official letter from the IRS won't come for about a month. When it comes, don't let it out of your sight either.
Now you will start the process of getting a list of all the assets and debts of the estate. This process will take a while. In fact, it will take at least 3 months. During this time, nobody can take anything or get paid anything. Tell anyone who asks they will just have to be patient. No, they cannot have a "loan". They cannot use the decedent's car to drive to the concert in Minneapolis. They cannot wear the decedent's ring to a wedding. You may have to look like a meanie. It's too bad - tell them this is the law.
Does anyone have joint accounts with the decedent? If so, find out if these accounts are part of the estate. Did the decedent pay any money into them? If not, take the death certificate and the letter of testament to the bank and ask them to remove his/her name from the account.
Whatever money the decedent has left into the bank will need to be moved to an estate bank account, which is a non-interest-bearing checking account. Keep it as simple and plain as possible. You will need the TIN for this.
Find out if the decedent had life insurance. If so, file a claim. You will need to give them copies of the death certificate and letter of testament. Do NOT give them originals. They will take a surprisingly long time to issue a check. Meanwhile, move on with other steps.
Does anyone else owe money to the decedent? Find out, and try to collect on behalf of the estate. Is there an ex-husband who owes alimony or child support? If so, try to collect. Don't be surprised if they tell you they don't owe any more, since the person died. Unless the court papers say that, they still do. If it's a lot, hire a collection agency.
Next, you have to publish a newspaper advertisement for all claimants - people who are owed money by the decedent - to come forth, and send letters to any known possible claimants. If the person was on Medicaid, you will have a claim from the government. Look up their address on their website and send them a letter. Others may be doctors, a nursing home, hospitals, ambulance services, credit cards and so on, who may be owed money. Each should get a letter, drawn up by the lawyer.
The newspaper should give you a notice of publication, showing the date on which the notice was published, along with their bill for the advertisement, which you will pay from the estate's account. This starts a 90-day clock in which the claimants can respond.
If the decedent owned real estate or vehicles, they may have insurance on the property and/or vehicles. You will need to contact the insurance agent and have the beneficiary changed to the estate. You'll need copies of the death certificate and letter of testament. The property and/or vehicles will need to be maintained for a year or more. You may wish to "winterize" them to minimize utility bills, but don't abandon them to the vagaries of cruel nature; you don't want them to decline in value.
At this point, you need to determine what that value is. There is "real property", that is, real estate, and "personal property", that is, anything else. Contact an auctioneer and a real estate appraiser (not just an agent). You need a "full form" property value appraisal, not one based on "comps" (comparable sales), for the real estate. For the personal property, the auctioneer should come and look at the items and give you a statement listing all the items and the value of each. The property appraisals may have to be filed with the court.
Once you have the appraisals, it may be possible for the relatives of the decedent to buy items from the personal property list for the value specified. You might suggest to them that they can go to the auction(s) later and get the items for less. Again, ignore any claims of the form "Aunt Clara always said I could have the Tiffany lamp." If the items are explicitly named in the will, they will get them later. If not, they won't.
After the 90-day wait for claimants is complete, you may still get claims. This is not for things like 'Aunt Irma said I could have her red sweater', though. It's mainly for bills from doctors. If Aunt Irma was in the hospital, any doctor might have stopped by her room and looked at her chart, and now want to charge her hundreds of dollars for his courtesy. Unfortunately, you will likely have to accept any claims of this type, since the court isn't likely to consider you a valid assesser of the value of their services.
As to the beneficiaries in the will, they can take items from the personal property list. However, the assessed amounts will be deducted from their final settlement. Set those items aside, and have the auctioneer pick up the items to be auctioned.
You may need to have a court hearing to get approval for the auction of the personal property and/or real estate. This will allow other possible claimants to voice objections. It is here that Cousin Marylou can ask for the red sweater. This is her time to speak up. If the judge agrees, let her have it.
If there is real estate, at this point, vacate it, and schedule any cleaning and painting. You can sell the real estate at public auction, or list it with an agent. If you auction it, you can save a lot of time and effort, but you will make considerably less money. If you list it with a real estate agent, it will sell for more money, but it will need to be painted realty-white, carpets replaced, outlets repaired, appliances replaced, and any number of repairs that the real estate agents and/or buyers may want - and it will take considerably longer, possibly a year or more.
In my case, I went with the auction approach. I met with the auctioneer, signed auction contracts, made copies of the contracts for the lawyer. They picked up the stuff, ran both auctions, and presented me with checks. Anything that didn't sell, they donated to charity.
Until the day of closing on the real estate, by the way, the estate will have to pay utility and tax bills. If it is going to auction, you may wish to keep the utilities on, but with thermostat turned down to minimize the cost. If winter is coming, you may need to 'winterize' the property. There are costs associated with all these choices.
Once the real estate goes to closing, and you get the big fat check in your hands, the buyer should put the utilities in their name, and you will get final bills from each.
At this point, the entire estate should be in the form of money in the checking account. You can meet with an accountant to fill out federal tax form 1041 and any other necessary tax forms. When these are ready, which should not take very long, you will have to sign them. In my case, this has not yet happened.
You and the lawyer will need to finalize the plan for final resolution of the estate, and submit it to the court for approval. This should include his fees, your fees as administrator, and any residual divided among the heirs as provided by the will, or as directed by the laws of your state for intestate inheritance.
Yes, you are supposed to be paid a fee as executor or administrator. Both the lawyer's fee and yours are capped by law to some fraction (formula) of the final value of the estate. Other than that, how you calculate them is up to you and your lawyer. You may wish to simply charge the maximum. If you have kept track of your hours and expenses, you can calculate it some other way. As long as it is less than the maximum, the court does not really care; however, some heir or claimant may object to it as excessive.
There will have to be a court hearing for approval of the final estate resolution. At this point, anyone can object to anything in the plan. The court is not likely to accept any objections, but anything is possible. The red sweater, however, is gone for good and not coming back. Doctors and other claimants may suddenly show up wanting money. Look them in the eye and say, "I'm sorry, you are outside the 90-day period, and therefore your claim is denied." What a happy feeling that will give you!
It's likely been over a year by this point. Meet with your lawyer and write all the checks. This should result in the bank account being closed.
There may be a final report to the court closing the estate. Keep a few copies of some of the papers, which likely stack over a foot high, in case there is any later inquiry or audit by the IRS. Most important papers will have to be kept for seven (7) years.
At any point in this long process, things may abruptly stop happening. Your lawyer may seem to lose interest in the project and stop doing any work, even though he/she is collecting huge fees for doing simple routine work. In my case it was the accountant, who just stopped doing anything. You may try phone calls, he/she doesn't return them. You may simply have to get a new lawyer or accountant.
Again, in my case this process has been underway for a year and a half, and is still not complete. I will update it as the process wends its long way to its eventual conclusion. It is astonishing that death is such a complicated process, when it is so certain.