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First Steps In Handling The Estate Of A Loved One

After a loved one dies, your first thoughts are probably not about his or her estate plan. But it is important to take certain steps soon after the death in order to protect the estate. These steps include making funeral and burial arrangements, locating the will, and maintaining the estate’s value.


What Should You Do First?

When someone passes away, you should not immediately start taking items from their home or distributing their estate. There is a legal process to follow for estate distribution, and violating it can get you in trouble. Instead, first focus on funeral and burial arrangements.

The deceased person may have had specific wishes surrounding organ donation, anatomical gifts, funeral arrangements, and burial or cremation. You and other people close to the loved one should look for a document that lists these wishes. It may be a will or a separate piece of paper, and it may be with other important documents, with the person’s lawyer, or in another safe place. Sometimes, people include wishes about organ donation and anatomical gifts in their health care directives too. If you find a document listing these wishes, then notify family members and do your best to carry out the wishes.

Looking for the Will

In addition, you and others close to the deceased person should look for his or her will. Again, it might be in a safe place like a safe deposit box or with a lawyer. You may not be able to gain access to the safe deposit box right away without help from the probate court. If you can’t find a will, don’t stress out. Sometimes wills are difficult to locate, and sometimes people do not make wills. Again, you should not start distributing the deceased person’s property. Talk to an estate planning and probate lawyer instead for help beginning the estate administration process.

Maintaining the Estate’s Value

Finally, you can take important steps towards maintaining the estate’s value. This may involve tasks like keeping an eye on the loved one’s house or caring for a child or pet. You may receive reimbursement from the estate later, and you will help out enormously until the executor or personal representative of the estate can step in. Once the executor is located and takes charge, he or she will handle finances, maintaining property, and other needed tasks.

How Does a Living Trust Work After Someone Dies?

A revocable living trust is a popular estate planning tool that sets out who will get your property when you die. Unlike a will, a living trust avoids probate. When you create a living trust, you typically name yourself as the “trustee,” meaning that you manage the property placed in the trust. You also name a successor trustee—someone who will take over when you die. The trust remains revocable while you are alive; you are free to cancel it, replace it, or make changes as you see fit.

Once you die, your living trust becomes irrevocable, which means that your wishes are now set in stone. The person you named to be the successor trustee now steps up to take an inventory of the trust assets and eventually hand over property to the beneficiaries named in the trust.

Getting Started as the Trustee

Here’s an outline of your initial tasks. These are fairly universal, even for a simple trust:

  • get death certificates (obtain 8-12 certified copies)
  • find and file the will with the local probate court
  • notify the Social Security Administration of the death
  • notify the state Department of Health
  • identify the trust beneficiaries
  • notify the trust beneficiaries
  • make an inventory of trust assets
  • protect trust property (such as by securing and maintaining a home until it’s transferred or sold)
  • get a Taxpayer Identification Number
  • transfer property into your name as trustee
  • review trust investments
  • set up a record-keeping system
  • get assets appraised, and
  • pay debts.

Many of these tasks are straightforward. For example, the funeral home will usually order death certificates for you and may also notify Social Security of the death. Get eight to 12 copies of the death certificate—you’ll need them for nearly everything you’ll have to do, since financial and other institutions will want to see proof of death before they work with you.

Note that you’re required to return any Social Security payment that was for the month of death, no matter what day of the month the death occurred. It can be confusing to figure out whether a Social Security check or deposit needs to be returned. Payments are usually made during the first week of the month for the prior month.

When the Executor and Trustee Are Different People

Most estates with a living trust also include a will. (Even if you make a will, you should still have a backup will or pour-over will to account for any property that doesn’t make it into the trust.) It’s common to name the same person as both the executor of the will and trustee of the trust. But if you’re the trustee and there’s a separate executor, stay in close touch with the executor during these first few months. You need to know what the executor is doing and why. In the case of a pour-over will, the executor will transfer the estate’s assets (assets not held in the name of the trust) to the trust, where they become your responsibility.

Getting in Touch With Trust Beneficiaries

One of the first steps on your list is to notify the beneficiaries of the trust. Start by reading the trust instrument and making a list of the people it identifies. A trust may not be perfectly clear about this. If the trust doesn’t individually name the beneficiaries, but instead uses a term like “children” or “issue,” you might need help understanding what state law does and doesn’t include in that term. If you have any questions whatsoever, consult a trusts and estates attorney—it’s very important to get this part of the trustee job right. To notify the beneficiaries, you should send a simple letter telling the beneficiary that the trust has become irrevocable because of the trust maker’s death, and that you are now in charge of the trust property and will distribute them as soon as is practical. Some states have deadlines, by law, within which the beneficiaries need to be notified—such as within 30 or 60 days of the death.

Creating an Organization System

Almost all of your trustee tasks hinge on your ability to organize what you’re doing. You’ll need to know what the trust owned and what the trust owed. You’ll need to get a federal tax identification number from the IRS so that the trust can accurately report the gains and losses it incurs before you distribute the property to the heirs. You’ll also need to figure out the value of the assets the trust owned at the time of the deceased person’s death. For this, you’ll likely need to hire appraisers and scrutinize account statements. Finally, you’ll monitor the deceased person’s incoming mail and pay debts as they come up: funeral expenses, administration expenses (like lawyers, housecleaners, and tax preparers), and possibly (if you’re also the executor) personal debts like credit cards and medical expenses.

Your system doesn’t have to be complicated. If all you need to do is collect the trust assets, pay the settlor’s debts, and distribute what’s left to the beneficiaries, you won’t need to track income and expenses for very long—probably three to six months, tops. You won’t even have to file a trust tax return unless the trust assets generate more than $600 in income. For a very simple trust, you may be able to do a good job with chronologically organized bank and brokerage statements and some notes. However, if you are administering a trust that will exist for more than six months, you should buy basic accounting software (such as Quicken) to keep track of the movement of money in each trust account. The cost is a perfectly permissible trust-related expense. If you spend a few hours to set up the accounts, you will avoid countless problems at the end of the year.

Distributing the Trust Funds and Property

After inventorying assets and paying debts comes the most well-known job of the trustee: transferring property to the beneficiaries. After the property is distributed according to the terms of the trust, it’s a good idea also to send the beneficiaries a final statement that summarizes all of the trust assets, the value of each asset at the date of death, and how and when they were distributed.

How Do You Close a Trust After Death?

Trust property doesn’t go through probate, so there aren’t formal procedures or filings for ending the trust. Once you’ve distributed all of the trust property, you’re done. But if your trust made more than $600 in income or capital gains, don’t forget to file a trust tax return (on IRS Form 1041).

How long a trust remains open after death depends on several factors, such as:

  • whether you’re administering an ongoing trust (a trust for children until they reach a certain age, for example), or whether the trust otherwise requires special time for distributing property
  • whether everyone gets along, or whether conflicts arise, and
  • whether the trust property is complicated, including whether trust assets must be sold.

If you’ll be distributing all the trust property to beneficiaries quickly, you’ll probably get most of your work done in less than six months. If you are administering an ongoing trust, there will be more work to do, but you’ll still have tackled most of the largest tasks in the first few months.


Do You Need a Lawyer If You’re a Trustee?

If you’re the successor trustee of a fairly simple trust (no complicated assets such as a family business, no estate taxes, no unhappy family members looking to contest the trust), you probably won’t need a lawyer to complete your initial tasks during the first few months of a trust administration. In the initial stages, most of what you need to do involves just getting organized. Some tasks require only a phone call; others may take hours of information-gathering, letters, and follow-up calls. However, you might still want to begin your search for a trusts and estates attorney. Later, when it comes to such things as filing tax returns, transferring the ownership of real estate, funding subtrusts, and distributing property, professional advice from an accountant or trusts and estates lawyer may be well worth the money.

What Documents Should I Collect?

After a loved one dies, important papers must be collected in order to settle the deceased’s final affairs in order to complete the probate or trust settlement process.

Here are some of the important documents you should have copies of:

  • Account statements
  • Life insurance policies
  • Beneficiary designations
  • Deeds for real estate
  • Automobile titles
  • Stock and bond certificates
  • Corporate, LLC, or partnership documents
  • Contracts (leases, loans, etc.)
  • Business license
  • Income tax returns
  • Prenuptial or postnuptial agreements
  • Loans
  • Leases
  • Bills (utilities, cell phone, credit card, mortgage, etc.)

If the deceased had an estate plan, copies or originals of those documents are also required. These include the last will and testament as well as a copy of any amendments made to the will. Lastly, you will also need to have a copy of the death certificate.


What Information Should I Look For In The Will?

Wills are written with very specific legal language to ensure that the deceased’s final wishes are followed to the letter. This can, however, make it difficult to understand the terms of the will.

Here is what you should look for in your loved one’s will:

  • Personal declarations: This is basic information that defines the will-maker’s closest family members and the references to them, such as “my children” or “my partner”.
  • Nomination of the executor: This section names the executor of the will as well as any potential alternates.
  • Gifts: This clause lists items or property that is to go to specific beneficiaries such as personal effects and sums of money.
  • Children’s guardians: If children under 18 are left behind by the deceased, and there is no surviving parent, the will-maker can appoint a personal guardian for them.
  • Trusts: A trust is an arrangement under which one person controls property and manages it for another. This is typically set up for children under the age of 18.
  • Payment of debts and taxes: The executor is responsible for paying any debts via the estate. The deceased may specify which source of funds to use for debts and taxes.
  • No-contest clause: A no-contest clause discourages beneficiaries from contesting the will in court. If they do, they receive nothing.

Perhaps the most important piece of information to look for in your loved one’s will is the naming of the executor. The executor is the individual responsible for carrying out the wishes of the will.


What Do I Do If My Loved One Didn’t Have A Will?

If your loved one died without leaving a will they are considered to have died “intestate”. This means that the government must use provincial laws to decide how to distribute the estate and appoint an executor. Someone can apply to the courts to be appointed as the administrator of the estate and perform the same duties as the executor once they are granted permission. If nobody applies for this role, the court will appoint a public trustee.

Wills and Succession Act to distribute the estate in the following order:

  • Spouse, but no children – 100% to spouse
  • Spouse and children (with spouse) – 100% to spouse
  • Spouse and children (not spouse’s children) – 50% to spouse, rest divided among children
  • No spouse, surviving children – divided equally among children
  • No spouse, no children – divided equally among deceased’s parents
  • No spouse, no surviving children – divided equally among grandchildren
  • No surviving parents, no spouse, no children – divided equally among siblings
  • No surviving siblings – divided equally among nieces and nephews

When your loved one dies with no will, it’s important to speak with a lawyer to ensure that you understand the next steps that need to be followed.


Responsibilities After Death

Figuring out what to do next when a loved one dies can be a confusing and emotional time. To simplify the process, here is a checklist of responsibilities:

  • Get a legal pronouncement of death.
  • Notify friends and family.
  • Secure the deceased’s property (lock their house, car, etc.).
  • Find someone to take care of their pets.
  • Figure out their funeral plan and make arrangements.
  • Notify their employer.
  • Get a copy of the death certificate.
  • Locate their will and take it to probate.
  • Cancel their services and close their accounts.
  • Delete their social media accounts or switch them to a memorial.
  • Close their email accounts.


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