Your First Dos and Don'ts When a Loved One Dies
It can be overwhelming to know what steps to take when a loved one dies. During this deeply emotional time, the fear of making mistakes can add to the stress. Here are some Dos, Don'ts, and FAQs to guide you through this challenging period.
Do:
Handle Funeral/Final Disposition Arrangements: Check if the deceased made any arrangements in advance (including pre-payments and pre-need plans). If not, look for any instructions or letters of guidance left by your loved one.
Mourn: Allow yourself time to grieve and be with family and close friends. Reflect on the life of your loved one and cherish the good memories. Share stories with family and friends to celebrate their life.
Secure Assets and Find Important Papers: Ensure your loved one's home and property are secure, with their vehicle (if any) parked in a safe place. Find the deceased's original (pen-to-paper/"wet signature") Will, if they left one. If they had a Revocable Living Trust, find those documents as well.
Keep Receipts for Funeral Expenses/Final Disposition: Family members (and other individuals who were close to the deceased) who pay for the funeral (and other final disposition costs)are reimbursable in the estate/probate process (as long as there are sufficient funds and the Court approves). Keep all receipts for out-of-pocket expenses.
Identify Assets: Determine what your loved one owned and how they owned it (individually or jointly). If they handled most of their finances online, it can be tricky to figure all of this out without account logins and passwords. Reviewing the previous year (or two years) of tax returns will help you identify income sources like investments and accounts. Look at the 1099s and K-1s filed with the tax return, and review bank deposits and electronic fund transfers.
Identify Debts: Check their mail, look over their checkbook, and review monthly account statements to identify any debts.
Report Their Death to Credit Bureaus: Contact the three credit bureaus to report the death to prevent scammers from opening new credit accounts.
Report the Death to Financial Institutions. Contact the banks, credit unions, and other financial institutions where the deceased had accounts to inform them of the death. Ask them to stop electronic payments from the deceased's individually-owned accounts* (this does not apply to jointly-owned accounts). *Some banks, credit unions, and financial institutions will not take this step until a court-appointed Executor is in place.
Wait for Executor Appointment: Some tasks must wait until the County Clerk of Superior Court appoints an Executor. The Court only does this upon receipt of the necessary documents and forms (including the Death Certificate).
Seek Legal Counsel: After receiving the Death Certificate, consult with a lawyer. You may only need one meeting to understand how to proceed on your own, or you might need assistance with opening and handling an estate.
Don't:
Use the Deceased's Money for Personal Expenses: Avoid using the deceased's money for food, clothes, or travel for family and friends.
Give Away the Deceased's Property Right Away: Although it's common practice, you should not give away your loved one's property until you have a better understanding of the status of their estate. Proceed with caution even if the item in question is subject to a specific gift or bequest in their Will or Trust. An Executor or Trustee must take care of this and can only do so after using estate/trust assets to pay the deceased's debts and estate administration expenses.
Pay Bills with the Deceased's Money: Do not pay bills with the deceased's financial accounts. It is the Executor's responsibility to (1) close the deceased's financial accounts and consolidate the funds in an estate bank account, and (2) use funds from that consolidated account to pay the deceased's bills. Certain creditors have priority, and paying the wrong bills first can make the Executor personally liable to priority creditors.
Rush to Open an Estate: If you open an Estate before you have all the necessary information, you may end up opening a Formal Administration case when all you actually needed was an Affidavit for Collection or Year's Allowance case. Keep in mind, estates can take a year or more to settle, so consider seeking legal advice first.
Navigating the aftermath of a loved one's passing is never easy, but following these guidelines can help ensure that you honor their wishes and handle their affairs responsibly.
FAQs:
Q: If the deceased was a co-owner of a joint bank account, can those funds be used before an estate/probate case opens?
A: Generally speaking, if the deceased was a co-owner of a joint bank account, their ownership transfers to the other joint owner(s) upon death. This means the surviving joint owner(s) can use the funds in the account. However, some common misconceptions and exceptions to that need to be considered are:
Having access to someone's bank account (including your own login/password and the ability to write checks and take withdrawals from the account does not automatically mean you are a joint owner. The names of joint owners appear on the account's "signature card" (a bank document). Being a joint owner is different from being an "Authorized User" or the deceased's Durable General Power of Attorney Agent, which are non-owners with legal access to the account.
Even if you are a valid joint owner, you must provide the Court with the bank statement detailing the balance of the account on the deceased's date of death. If the estate is insolvent (meaning there aren't enough assets to pay the bills), the Court can order you to give funds from the joint account to the estate.
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Q: I am the deceased's Power of Attorney Agent; can I use that authority until an estate case opens?
A: No. The authorities granted to an Agent in both the Health Care Power of Attorney and Durable General (financial) Power of Attorney terminate at the Principal's death (Principal = person who made the document and granted named Agents authorities).
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Q: Some of the beneficiaries/heirs need (or want) their distributions early. (and/or) The deceased's Will makes some specific personal property gifts, and the beneficiaries wish to take them home after the funeral. Is this (/are these) possible?
A: Regardless of whether these things happen "all the time" or happened without problem in another estate, the answer is no. North Carolina has strict laws about when and how distributions are allowed. Beneficiaries named in a Will (to receive financial or personal property distributions from the estate) and legal heirs (the person/people who inherit if the deceased died without a Will) have to wait until after the (1) estate case is open, (2) the appropriate Fiduciary (Executor or Administrator) has authority to act, (3) all the required filings are made to the Court, and (4) all the deceased's debts and cost of administration are paid. People who make or take early and unauthorized distributions can and will be held liable by the Court.
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Q: How long does an estate case take?
A: The exact length of time depends on the specific facts and type of case. The shortest possible amount of time for a Formal Administration case is 3-4 months. Cases regularly close within one year (of filing, not of the date of death), but it's best to plan for them to take at least that long.
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Q: How much does an estate case cost?
A: This varies based on the type of case, the value of the assets subject to probate, and whether/how much professional assistance (such as attorneys, accountants, etc.) is needed. Most estate cases have court fees of at least $135 and as much as $6,120, plus publication costs for the Notice to Creditors. Professional assistance fees are in addition to the court fees and publication costs.
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Q: I've heard that real property titles transfer immediately upon death. Is that true?
A: It depends on how the real property was titled, whether they left a Will, and if so, what the Will says. However, if the title was in just the deceased's name and they died without a Will, the title vests in their legal heirs immediately. And, the real property goes to those heirs along with the responsibility for any mortgages, liens, tax bills, insurance, and utilities. If the deceased had a Will, the terms of that document control what happens to the real property.
DISCLAIMER: This blog post is based on North Carolina laws and is provided for informational purposes only. This is not legal advice.