Arrangements
As a relative or close friend, some day you may find yourself in the position of handling funeral and cemetery arrangements. Here is some important information to help you through that difficult time:
Before making any arrangements, determine if the deceased left any instructions about funeral arrangements or had already purchased or prepaid funeral or cemetery services. Funeral arrangements made by the deceased prior to his death must be carried out after he dies.
If no prepaid arrangements have been made or if the prepaid purchases do not cover the entire amount required, you may be asked to sign a contract when ordering services.
While the contract usually binds the person who signs it to pay the charges, that person can seek reimbursement from the estate, or can utilize money from other sources. However, if the estate is not sufficient to cover the funeral costs or other assets cannot be quickly converted to cash, the person who signed the contact may be required to pay the costs.
Check to see if the deceased had any death benefits that would help cover funeral costs.
Funeral Costs
Under Federal Trade Commission rules:
Funeral directors must offer accurate price information to people making inquiries over the telephone about funeral costs;
If you inquire in person, funeral directors must give you a written, itemized price list with all the specific goods and services the funeral home offers;
After making your selections, the funeral director must provide you with a written statement showing the total cost and a breakdown of each good or service purchased;
You cannot be required to purchase goods and services you do not want in order to receive others.
For Prearranged Funeral Services:
A full refund of all money shall be given to the purchaser of a prearranged funeral contract if it is cancelled within 30 calendar days of when it was signed;
The funeral establishment must place 90 percent of the cash purchase price for a prepaid funeral service contract (excluding sales tax) into an insured trust account;
After deduction of a maximum of 10 percent administrative fees and taxes, all interest, dividends, and increases earned by the trust becomes part of the trust;
An alternative to a trust agreement would be a pre-funded contract with an approved insurance company.
Embalming
Washington State does not always require embalming. A body must be embalmed only if it is to be held more than 24 hours without refrigeration, or under certain conditions if required by rule of the State Board of Health.
If a body is to be transported by common carrier (airplane, train, etc.) more than 24 hours after death, the body must be either embalmed or prepared in accordance with the Washington Administrative Code Chapter 308-48.
Cremation
Under Washington State Law, if the family wishes, the remains may be cremated.
Funeral Notices
Information on deaths appear in many local newspapers. Some automatically publish a list of names of people who have died based on the filing of the death certificate. Many papers also print short articles called obituaries. Information submitted for an obituary should be typed or printed and should include information about the deceased person's family, activities, affiliations, funeral ser vice, and any suggestions for remembrances. Some newspapers also publish paid funeral notices, which are optional and can be handled by the funeral director.
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Social Security Administration – Payment for covered individuals can only be made to an eligible surviving widow, widower or entitled child.
Veteran's Administration – Death benefits may be available for qualifying veterans through the Veteran's Administration.
Funeral Insurance – The deceased may have purchased funeral insurance, or have been a member of a civic or employment organization which provides death-related benefits. Also, check records to see if the deceased joined a "memorial society" which provides low-cost funeral options through a specific funeral home.
Prepaid Funerals – If the contract is paid for in advance,the funeral establishment must place 90 percent of the cash purchase price, excluding sales tax, in an insured trust account. After deductions for reasonable administrative fees and taxes, all interest, dividends or other additions become part of the account.
If a prearranged funeral contract is cancelled within 30 calendar days of its signing, then the purchaser shall receive a full refund of all moneys paid under the contract.
On the Job Death – The State Department of Labor and Industries may pay a benefit for a worker whose death resulted from an injury in the course of employment.
Victims of Crime – If the death was the result of a criminal act, benefits may be available from the Crime Victims Compensation program administered by the State Department of Labor and Industries.
Death Certificates – Copies of the death certificate are usually necessary during the process of settling the estate. The easiest way to obtain a copy is to ask the funeral director for assistance. Or, you can obtain a copy of the death certificate yourself.
Within 30 days: Your County Health Department can provide you with a copy of a death certificate on a death occurring within 30 days. The first copy is available at a fixed rate, with additional copies obtained at the same time, offered at a discount. If you order additional copies at a later date you will pay a higher price.
After 30 days: If the death occurred in Benton, Clark, Franklin, Grays Harbor, King, Pierce, Snohomish, Spokane, Thurston or Whatcom Counties, copies of death certificates for deaths occurring more than 30 days ago are available from the county health department.
In other areas, after 30 days, contact the State Department of Health Center for Health Statistics.
Caring for the Deceased's Property – When a person dies, it is important to account for the deceased person's property, making sure it is safe and protected. If the person lived alone, make arrangements to stop newspaper deliveries and to have mail forwarded or held at the post office for daily pick-up.
BEWARE: Some burglars will burglarize the homes of deceased persons at the time of the funeral service. Make arrangements to guard the home during the funeral.
The matter of who will inherit the deceased's property is determined by the estate planning arrangements that were made by the person during their lifetime.
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When a death occurs, people and businesses who are owed money usually understand and will work with you to get through this difficult time:
Contact creditors and make special arrangements if it is difficult to make timely payments;
Family members or friends providing money to cover immediate needs will be reimbursed from the estate;
When paying bills, keep careful records of the payments or loans.
Paying Bills
Utility Bills
Make sure to pay utility bills to ensure continued service.
Medical Bills
These bills are often covered by Medicare, Medicaid or a medical insurance plan. Before making any payments, call the appropriate agency to obtain the necessary information or forms.
Long Term Debts
Make sure to make regular payments on long term debts such as mortgages, car loans or retail installment contracts until the estate is settled.
Access to Bank Accounts
– If the deceased was the only one authorized to sign on a bank account, money in accounts at banks or other financial institutions may not be immediately available.
– Accounts with co-signers or joint accounts will generally be able to draw funds out of an account with rights of survivorship. The other account holder will generally have access to the funds and may be deemed the owner of the funds.
Stocks and Bonds
United States Savings Bonds
Payable upon death to another person. Any person whose name is registered along with the deceased's name on bonds payable upon death, may redeem the bonds immediately.
Stock Shares
Certain documents will need to be provided before a person whose name is registered on the stock with the deceased's can sell those shares. Consult a stockbroker or legal or financial advisor for more information.
Safe Deposit Boxes
Under Washington law, the safe deposit box of the deceased is NOT SEALED:
Anyone who has the right of access to that box may open that box;
When opening a safe deposit box, make an accurate record of the contents and note any items removed;
If the deceased was the only one authorized to open the box, or if the other authorized person is not available, legal or formal proceedings may be necessary in order to open the box.
Life Insurance
Life insurance proceeds are usually paid to the named beneficiaries within a few weeks after filing the required form. This form is submitted to the insurance company, together with the policy and a copy of the death certificate. If the death was accidental and the policy contains a provision for additional coverage in that event, some proof of the accident will be required.
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Inventory of Property
A very complete and detailed listing of all property of the deceased, its value at the time of death, and the "fair market value" of each item should be compiled immediately. If the deceased was married, the list should reflect any items that are community property. If necessary, a professional appraiser can be hired and paid from the estate.
All property should be listed in the order and categories shown below. This list will also help people inheriting property to determine its value and in reporting any capital gains tax if they sell the item.
1. Real Estate – Includes the deceased person's residence, any summer or recreational property lots, or other interests in land owned by the deceased. Property tax statements show the assessed value, not the fair market value. Estimates of fair market value may be obtained from a real estate agent or an appraiser.
2. Stock and Bonds – Shares of stock, bonds, notes payable to the deceased and other securities, including the exact name or names in which they are registered.
If the securities are traded on a stock exchange, the average between the high and the low on the date of the death will be used as the value per share. United States Savings bonds are valued by using a table which is available at most financial institutions.
3. Cash, Financial Institution Accounts – On each account, list the exact name on the account, the account number, the financial institution and branch and balance as of the date of death. Note whether the account has a right of survivorship.
4. Insurance – List any insurance policies which pay benefits upon the policy holder's death. Include life insurance, mortgage insurance or credit insurance.
When applying for benefits, ask the insurance company to send you a copy of Internal Revenue Service Form 712 for each policy. This form lists the policies, the face amounts, any cash additions, premium refunds and loans against the policy. This information will be needed to complete the inventory of property and may be needed by the beneficiary to file federal income tax returns.
5. Miscellaneous Property:
Motor Vehicles – Include year, make, model, registration number, mileage and condition. Determine the value of the vehicle from the Kelly Blue Book or NADA Guide.
Boats – Include year/make/model/identification numbers.
Furniture and Furnishings – Include major appliances, sporting and hobby equipment, and antiques.
A detailed listing is not necessary except for specific items of particular value.
Jewelry – A detailed listing is not necessary except for specific items of particular value.
Business Interests – List sole proprietorships, partnerships, or shares in a closely held corporation or limited liability company.
Employment Benefits – List pensions, and profit-sharing plans, IRA's or 401K's.
Transfer of Estate Property
Probate is the technical, legal term for distribution of the deceased person's estate under the supervision of the court. It is designed to protect all those who have an interest in the deceased's property, such as immediate family, joint tenants, creditors and the taxing authorities.
Is Probate Necessary? – In many cases, probate proceedings are not necessary to transfer property of the deceased to persons entitled to it. Depending on a variety of factors, probate may be necessary or prefer able. Consultation with a legal advisor is recommended.
The probate procedures in Washington state are relatively simple and, in most cases, require very little court intervention.
Appointment of an Executor or Administrator – This person takes charge of the property, its distribution, and the filing of necessary papers in court. Often times, this person is named in the will. If there is no will, the court will usually appoint a surviving spouse or relative to serve this function.
Executor Responsibilities:
Provide proof that the will is valid and is the last will of the deceased;
Provide written notice of probate proceedings to all known heirs and beneficiaries;
Give actual notice of the deceased's name and social security number to the State of Washington – Department of Social and Health Services, Office of Financial Recovery;
File with the court and publish in a legal newspaper a notice of death advising creditors to file any claims against the estate within four months;
File an inventory of all the deceased person's property;
Prove to the court that the estate is solvent (the total estate assets are greater than its total debt);
After all these steps have been taken and non-intervention powers granted by the court, the executor can do whatever is necessary to administer the estate without going to court for approval. That includes appraising property, investing and managing assets, paying creditors, filing and paying taxes, and transferring of property; and
File a Declaration of Completion of Probate with the court once the probate process is concluded and all the steps have been completed.
Estates Under $60,000 – As long as real property is not involved, Washington state law allows the transfer of small estates to surviving heirs, as long as they are entitled to the estate, notify other potential heirs, and these conditions are met:
It has been 40 days since the death;
The estate is under $60,000;
No probate is pending;
All creditors have been satisfied; and
All estate debts have been paid.
If all these conditions are met, the claiming heir must submit a completed, signed and notarized affidavit affirming that these steps have been accomplished. That affidavit would allow the transfer of assets to the claiming heir.
Remember, depending on a variety of factors, going through probate may be necessary or preferred.
Joint Tenancy – Property held in joint tenancy with a right of survivorship usually can be transferred after a few prerequisites are met. These may include furnishing a copy of the death certificate and if the estate is over $600,000, proof that no federal or state estate taxes are due. Estates under $600,000 are no longer required to file federal estate tax returns, therefore Washington State no longer requires they submit a non-liability tax release form.
Community Property Agreement – Upon death, these agreements are used to transfer property to the surviving spouse without going through formal probate proceedings. (See Community Property) According to the law, community property agreements cannot interfere with the right of creditors to collect debts. That means the deceased person's debts must still be paid. Contact an attorney to assist in the transfer of property covered by a community property agreement.
Informal Methods – It is possible to transfer some kinds of property, such as final paychecks, on an informal basis, without going through probate court proceedings. Other assets, such as insurance policy proceeds and some employee benefits, can be transferred directly to the designated beneficiaries without formal court probate proceedings. Likewise, some financial investments may be held "P.O.D.," payable on death, or "T.O.D.," transfer on death to named beneficiary. The transferee has no ownership interests in the investment until the death occurs.
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Income Tax
Even after death, federal income taxes are still due by the April 15 deadline, just as they would be if the person was alive. If the information needed to file the tax return is not available, an extension can be requested from the Internal Revenue Service.
Obtain a copy of the free IRS Booklet (Adobe PDF), "Tax Information for Survivors and Executors and Administrators", PUBLICATION 559.
For further information, contact the nearest IRS taxpayer information services listed under United States, Internal Revenue Service in your telephone directory.
Property Taxes
Property taxes are also due at the same time and in the same manner as if the deceased person was still alive. After the transfer of property, the deceased's estate has no further obligation, and the taxes are paid by the person who received the property. Contact your county treasurer's office for more information on property taxes.
Federal Estate Taxes
The federal government assesses a tax based on the value of the deceased person's estate. For deaths occurring in the year 2004, a federal estate tax return has to be filed only if the total value of the deceased person's estate exceeds $1,500,000. Please note that the federal filing threshold will change several times over the next few years.
IF THE ESTATE IS REQUIRED TO FILE A FEDERAL TAX RETURN, IT MUST BE FILED AND ALL TAXES PAID WITHIN NINE MONTHS OF THE DATE OF DEATH.
The tax will be based on the following:
All property in which the deceased had an interest at death;
Gifts in excess of the annual exclusion made prior to death;
Life insurance proceeds, unless ownership was transferred more than three years prior to death or the decedent never actually owned the policy;
Half of the value of the community property; and
All property held separately from community property.
The "Marital Deduction" – The value of most property which passes to a surviving spouse is deducted from the value of the estate. Check with the IRS or a financial advisor for information on what can and cannot be subtracted from the estate under the marital deduction.
Washington State Estate Tax
Washington levies an estate tax. For deaths occurring after December 31, 2001, the state of Washington has different estate tax reporting requirements than the federal government. In the year 2004, estates with a gross value (or a taxable estate value plus any taxable gifts) between $850,000 and $1,499,999 must file an estate tax return with the state of Washington, but may not be required to file with the federal government. The reporting thresholds for both the state of Washington and the federal government will change several times over the next few years.
If you have any questions regarding Washington's estate tax, please contact the Department of Revenue's Estate Tax Section at (360) 570-3265. The revised Washington Sate Estate Tax Return and instructions are available on the Department of Revenue's web site at www.dor.wa.gov.
If You Have to File...Be Aware:
The estate tax applies to estates of Washington residents and non-residents with property in Washington;
It includes real estate and other tangible property including motor homes, boats and cars;
The state estate tax is due nine months from the date of death;
Federal law, as it existed on January 1, 2001, set the rate and amount to be paid in state estate tax;
Tables to determine the state estate tax due are found in WAC 458-57-015 or on the state estate tax return instruction;
When you pay your state estate taxes, the state will give you a receipt for payment to send to the IRS, if a federal return must be filed;
If a federal return must be filed, submit the return with proper evidence that the state estate taxes have been paid;
When you pay your state estate taxes, the state will give you a receipt for payment to send to the IRS, if a federal return must be filed; and
Release of state tax liability comes only after the personal representative of the estate forwards a copy of the federal estate tax closing letter or IRS audit report to the Department of Revenue. Or for those estates that are not required to file a federal return, a release will be issued when the correct amount of estate tax due to the state has been paid.
Gift Tax
There is no Washington State gift tax. Therefore, any gift transferred after January 1, 1982, will not be taxed under Washington State law. It may, however, still be taxable under existing federal tax law. Information and State tax forms can be obtained from the Washington Department of Revenue.
Generation Skipping Transfer Tax
Washington State taxes certain generation-skipping transfers. If you have any questions regarding the generation-skipping transfer tax, please contact the Department of Revenue's Estate Tax Section at (360) 570-3265.
Summary
Information and state tax forms can be obtained from the Washington Department of Revenue at www.dor.wa.gov. If you have any questions regarding Washington's Estate Tax, please contact the Department of Revenue's Estate Tax Section at (360) 570-3265.
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