What to Do When a Loved One Dies: From Estate Planning to Funeral Arrangements

Losing a loved one is an incredibly challenging season in life. Very little can prepare you for their loss. And while you grieve, you have a lot of steps you need to take, like dividing up the estate, planning the funeral, and managing what’s been left behind. 

Our team at Flynn Wealth Partners has walked with many people facing the death of a loved one, including in our own families. We understand how disorienting this season can be. We want to offer practical support—a step-by-step guide to help you after the death of a loved one. While it doesn’t take away the grief, we hope it can help you and your family have more peace about your loved one’s estate, ensuring that their wishes are carried out and you have time to remember them and honor their memory instead of stressing the details. 

First Steps to Take When a Loved One Dies

When a loved one passes away, there are a few things you need to do right away. But remember—you don’t have to do these things alone. If you need help, ask other family members or professionals who have worked with you throughout the process, such as hospice nurses or lawyers. 

Here’s what needs to be done right away: 

• • Notify family and close friends: We recommend giving the news over the phone instead of email or text. You might also need to reach out to your loved one’s employer if they were still working. You and your family will also need to contact other authorities, like the Social Security Administration, but you do not need to worry about this right now. 

• • Obtain multiple copies of the death certificate: You will need the death certificate for legal and financial purposes, including settling the estate. We recommend having at least 10 copies. You will need them to cancel certain bill payments, open safety deposit boxes, sell property, and more. 

• • Find essential documents: If you haven’t already, find your loved one’s will, life insurance policies, and financial account details. You will need these to manage the estate and honor their wishes. 

• • Contact professionals: An estate attorney, financial advisor, and funeral director can help you with the next steps. If your loved one had an attorney or advisor they were working with, they can help you continue to plan. 

Taking these initial steps will set you up well for the weeks and months ahead. 

Understanding Probate and Trusts

As you settle your loved one’s estate, the terms probate and trust may come up often. You may have never encountered these words until now, so here’s what they mean: 

• • Probate involves validating a will through a legal process. It may involve appearing in court, appraising your loved one’s material goods, and paying additional legal fees. 

• • If your loved one had a trust, this is a legal arrangement that allows assets to bypass probate, ensuring faster and often more private distribution to heirs.

If probate is necessary, a lawyer or estate attorney can help you navigate the process. 

Tax Implications of Inherited Assets

Once you have taken the first crucial steps of letting family members know and gathering essential documents, the executor of the estate can begin distributing assets. From here on out, the people you will work with the most are the executor of the estate (named in the will), an estate attorney, and anyone named in your loved one’s will like heirs and beneficiaries. 

Regardless of whether you inherit anything, settling an estate often comes with tax implications. These may include: 

• • Estate taxes: Paid by the estate before assets are distributed. Estate taxes are uncommon. An estate attorney can determine whether or not you owe them. 

• • Inheritance taxes: This tax is imposed on anyone who inherits assets from an estate. Michigan does not impose inheritance taxes. However, if your loved one passed away in a different state or heirs live in different states, this tax may apply. 

• • Income taxes: Income taxes need to be paid on money withdrawn from inherited retirement accounts. There is usually an option to spread out the taxable income over time.

• • Capital gains taxes: When you inherit assets like real estate or investments, the step-up in cost basis resets the value used to calculate taxes to the asset’s fair market value at the time of the original owner’s death. If you later sell the asset, you’ll only owe capital gains tax on any increase in value from this stepped-up basis rather than from the price your loved one originally paid. However, retirement accounts do not receive a step-up in basis, so distributions from these accounts remain taxable as ordinary income.

A financial advisor can help you find strategies to minimize the tax burdens of the estate. At Flynn Wealth Partners, we can even help you incorporate these additional taxes into your overall tax strategy. 

Planning a Funeral with Financial Wisdom

There is no right or wrong timeframe to hold the funeral or memorial—several factors like the ability for family to travel, holidays, weather, or even finances can delay a funeral. However, work with your family to create a rough plan and realistic budget as soon as possible so everyone is aligned. 

Look in your loved one’s will for any instructions they left—anything from special music they would like played at their funeral to whether or not they’d like to be cremated. Check to see if your loved one had any prepaid funeral plans. This may include funeral services, casket or urn decisions, burial plots or cremation services, a headstone or marker, transportation, a funeral program, a prewritten obituary, or other items. Some of their wishes will inform how much your family will spend. During this time, check to see if your loved one had any burial expense coverage. You would find this coverage in any life insurance policies they had. There are very few limits to how you can spend burial expense coverage, so this money can help you pay for funeral expenses, outstanding bills, legal costs, and more. 

Life insurance policies can also help cover burial expenses. These policies typically take 7-30 days to be processed and paid, so if there is not quickly available cash in the estate, you may need to pay the final expenses out of pocket or put them on a credit card for a short time while waiting for the life insurance proceeds.

Funerals and memorials can be expensive. Some families feel as though they need to spend more to memorialize their loved one best. This is not true! At Flynn Wealth, we often say that the funeral is for those who were left behind—to help them spend time together and share memories. 

During this time, be sure to keep lines of communication open in your family. It will be up to you and your family to honor their memory in a way that seems appropriate and that everyone is aligned with. 

Common Mistakes to Avoid When A Loved One Passes Away

In the midst of planning a funeral, finding key documents, and sharing memories of your loved one with your family, it’s easy to make common mistakes. It’s impossible to navigate this season perfectly, and that’s okay—that’s why our team is here to help families like yours when the road ahead becomes more challenging. 

Here are some common mistakes to look out for: 

• • Rushing major financial decisions: There’s no need to make hasty financial decisions after a loved one passes away. In most cases, you have time to make decisions regarding the estate, selling property, and filing taxes. If you feel pressure from friends or family to rush these decisions, ask a financial advisor or estate attorney for help. 

• • Overlooking important details: Every estate plan is different, and your loved one might have left behind disorganized documents. Make sure you’ve found all their documents and details—we’ve included a checklist in this blog to help you. 

• • Skipping professional guidance: Estate planners, estate attorneys, and financial planners will be valuable partners when you’re on this journey. Not only can they offer personalized advice when emotions are running high, the right professional will also have compassion for the situation you are in. They encounter families of all shapes and sizes, so they will be able to help you navigate delicate conversations and family dynamics. 

Staying mindful of these pitfalls can help you and your family make more informed decisions and ask for help when you need it. 

How We Can Help

The challenges you face after the death of a loved one can cause a lot of stress and uncertainty. That’s why Flynn Wealth has a team of financial advisors to help. Whether you are preparing for a loved one to pass, are navigating the aftermath, or are wondering about your own legacy, we can help with: 

• • Estate Planning: As you begin to plan your legacy, we can help you with wealth transfer strategies, philanthropic planning, and even business succession plans. 

• • Tax Guidance: Our team carefully examines the tax implications of your estate and strategizes ways to minimize your tax burden. 

• • Ongoing Support: After a loved one’s death, it can be difficult to know what to do with the sudden wealth of an inheritance. We provide compassionate, personalized financial counseling tailored to your family’s unique circumstances. 

With our guidance, you can focus on what matters most—honoring your loved one and finding a path forward. If you need more help, download and save the checklist outlining what to do when a loved one dies. 

In difficult seasons like this, no question is too small and no challenge is too significant. Schedule a complimentary consultation with our team anytime to find out how else we can help. 

What to Do When a Loved One Dies: A Checklist

Immediate Steps