Back to Coping with Death of a Loved One
Death of a Loved One: Frequently Asked Questions
When someone close to you dies, practical financial matters arrive at a time when you least want to handle them. These answers cover the most common questions about taxes and finances.
What should I do first?
Obtain several certified copies of the death certificate, since banks, insurers and agencies will each ask for one. Locate the will and other key documents, and contact an attorney if the estate will need to go through probate. Notify the Social Security Administration (the funeral home often does this) and the person's employer, banks and insurers.
Who is responsible for the final tax return?
The executor or personal representative must file the final income tax return for the year of death, and any returns the person failed to file earlier. A surviving spouse can generally file jointly with the decedent for that year. The IRS explains the process at irs.gov.
Does the estate have to file its own return?
An estate that earns income after death may need to file a separate income tax return. Larger estates may also face federal estate tax filings, and Georgia does not currently impose its own estate tax. Because thresholds change, check with us or an attorney.
Are inherited assets taxed?
In general, inheriting property is not income to you. Inherited assets such as stocks or real estate usually receive a stepped-up basis, equal to value at the date of death, which can reduce gain if you later sell. Income from inherited retirement accounts is another matter and is typically taxable when withdrawn.
What about inherited retirement accounts?
The rules for beneficiaries depend on your relationship to the deceased and the type of account, and they have changed in recent years. Spouses have more options than other heirs. Do not withdraw or roll over funds before understanding the consequences.
Are life insurance proceeds taxable?
Generally the death benefit is not taxable income to the beneficiary, though interest paid on delayed payouts is.
What survivor benefits might be available?
Social Security may pay survivor benefits to a spouse or children who qualify, and employer plans and pensions may have survivor options. See ssa.gov for eligibility. Contact each plan administrator promptly.
We are here to help families handle the financial and tax details. Please contact us when you are ready.
This article is general information, not tax, legal or investment advice for your specific situation.