After a loved one passes, in addition to the heartache, comes a long — and often overwhelming — list of things to be done. This week, I wanted to provide a checklist that can hopefully make life easier for those dealing with an already very difficult situation. I broke the list down into action steps including what to do first and ending with closing the estate. It is important to note that almost everyone should seek the advice of an attorney, CPA and advisor when going through this process to ensure everything is done timely and correctly to minimize mistakes and delays.
Immediate actions after death
1. Obtain multiple certified death certificates (10–15 is common)
2. Secure the decedent’s home, vehicles and valuables
3. Locate the original will and any codicils
4. Identify whether assets are probate vs. non-probate (Non-probate examples: jointly owned property, TOD/POD accounts, life insurance with beneficiaries)
Open the estate (Surrogate’s Court)
1. File the original will with the County Surrogate
2. Apply for Letters Testamentary. If there is no will, apply for Letters of Administration
3. Pay filing fees (varies by county, typically modest)
4. Obtain executor certificates (short certificates) for banks and institutions
Estate administration setup
1. Apply for an Estate EIN (IRS Form SS-4)
2. Open a separate estate bank account
3. Forward mail to executor’s address
Notify interested third parties
1. Banks & investment firms
2. Social Security Administration
3. Pension administrators
4. Insurance companies
Create an inventory and valuation of assets
1. Identify and list all estate assets such as
a. Real estate
b. Bank and brokerage accounts
c. Business interests
d. Vehicles
e. Personal property
2. Obtain date-of-death values; Retain appraisers if needed (real estate, business, collectibles)
New Jersey does not require a formal inventory filing unless requested, but you must keep one.
Address debts, expenses and creditor claims
1. Publish notice to creditors (optional but recommended)
2. Identify and pay: Funeral expenses, final medical bills, and any credit cards & loans
Do NOT distribute assets yet. It is important to keep the accounts open until all debts have been paid. Note that many bills, especially medical bills, can take several months to come in. Creditors generally have nine months to make claims. Making distributions to heirs (who may become impatient) before everything is paid can be a big problem. Remind heirs that the process takes time and that you are bound by a fiduciary duty to properly administer the estate. Be sure to keep detailed records of every payment.
Taxes (critical in New Jersey)
1. File final personal income tax return (Form NJ-1040)
2. File estate income tax returns (NJ-1041 if required)
3. Determine if NJ Inheritance Tax applies. Class A beneficiaries (spouse, children, grandchildren) are exempt. Class C, D beneficiaries may owe tax.
4. File NJ Inheritance Tax Return (Form IT-R)
5. Obtain tax waivers before asset distribution
Executors are personally liable if taxes are missed.
Interim accounting and executor duties
1. Maintain detailed accounting by tracking all receipts, disbursements and executor fees.
2. Communicate periodically with beneficiaries
3. Avoid conflicts of interest
NJ allows executor compensation based on statute or will language
Distribute assets
1. Confirm all debts and taxes are paid
2. Obtain receipts and releases from beneficiaries
3. Distribute assets per the will
4. Transfer titles (real estate, vehicles, securities)
Close the estate
1. File final accounting (if required). Retain records for at least seven years
2. Close estate bank account
3. Obtain beneficiary releases protecting the executor
Executor risk checklist (read this twice)
1. Never co-mingle estate funds
2. Never distribute before tax clearance
3. Keep everything documented
As I mentioned earlier, always consult an Attorney or CPA/Advisor if you are unsure about how to complete any of these steps. Paying for help is a lot cheaper than making a mistake and having to go back and correct it later.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations.
