The death of a loved one is a trying time. Making funeral arrangements, coping with grief, and finalizing the deceased's estate can take time and energy when you have little to spare. Use this guide to help you organize yourself while tackling the immediate needs of the family after the death of a loved one. It also includes helpful information on paying estate and income taxes, investing an inheritance, and a summary of the probate process.

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Call the Funeral Home
When making arrangements with the funeral home, bring along (if applicable) the deed to the grave plot, pre-paid cremation documents, military discharge papers (this provides a small stipend for burial and an American Flag), and/or any written instructions on the deceased's viewing and burial preferences. Typically, family and friends call the funeral home to learn all the arrangements, including treatment of flowers and preferences regarding charitable donations (i.e, American Heart Association, American Cancer Society, plant a tree, etc.)

Write Obituaries
Jot down pertinent information about the person's life, education, career, military service, notable achievements, etc. to assist the funeral director in compiling information for the obituaries in local newspapers. Resumes can be helpful in this process.

Obtain Death Certificates
Ask the funeral director for as many copies of the death certificate as there are accounts or assets in the deceased's name—when in doubt, ask for at least 10 (e.g, when you contact a credit card company to transfer the account from joint to single name, they are likely to request a copy of the death certificate and the Surrogate Court Certificate.)

Review Last Will and Testament
An updated Will gives the deceased the greatest hope that his or her wishes will be carried out upon death. Original copies of Wills should be kept in the attorney's Will safe or in a fire-proof safe at home—NEVER leave Wills in a safe deposit box, as the box may be "frozen" at death. Since the Will tells the court who has access to the safe deposit box, this can be quite a dilemma for the heirs and the executor.

Obtain Surrogate Court Certificates
If the estate is relatively simple and there is a Last Will and Testament, the executor named in the Will should go to the County Surrogate Court (this court is known by other names, such as Widow's and Orphan's Court and is the clerk's office in the county that handles the probating of Wills). Bring a copy of the Will and the death certificate. The clerk will provide as many copies (for a fee) of the Surrogate's Certificate as are needed to transfer ownership of anything from the deceased to his or her heirs. A Will can be probated with or without an attorney. Without a Will, things can get very complicated because the judge will determine the disposition of the deceased's assets, regardless of what the deceased would have wanted.

Contact Former/Current Employers
Ask the human resources department to mail benefit summary and distribution information on any or all of the following: life insurance, accident insurance, profit sharing plan, retirement plan, flexible spending plan, etc. Go back to every employer that person has had and you may discover a pension or annuity benefit that the deceased forgot to document.

Contact Social Security
Contact the local Social Security office and notify them of the death.

Contact Life Insurance and Annuity Providers
Obtain any policies and process death benefits.

Access Safe Deposit Box
The executor may want to access the safe deposit box to retrieve any instructions, policies, etc. and valuables that may be stored there. Naturally, this presumes that the deceased thought ahead and let this person know where to find the key! In order to access the safe deposit box, you will either need a Power of Attorney or a copy of the Will and Surrogate Certificate, which will tell the bank that you have legal access.

Call the Attorney
Simple estates may not require an attorney. These are typically ones in which a spouse dies leaving everything via a Will to the living spouse. However, if an estate reaches a certain asset size and/or if there are trusts or other complex arrangements in place, it may be advisable to have an attorney handle the affairs of the estate, including probating the Will. Having all the pertinent documents at the ready will make working with the attorney much easier. Executors should bear in mind that statutes exist in many parts of the country that permit the attorney to charge a fee for a percentage of the estate's value.

Call the Accountant
The executor needs to know if the deceased was paying estimated taxes, if payments are currently due, what real estate taxes were being paid, if there is a credit at the IRS, etc. The accountant should be brought in to the loop as quickly as possible, since work must be done to ensure that a federal estate tax payment is made within nine months after death. Also, the estate may need to file a final year federal and state estate tax return.

Pay the Bills
Utility, credit, mortgage, and other payments should continue in a timely manner after death. The executor needs to ensure that these payments are made and that a record of all expenses is kept up-to-date, as the accountant will need this when filing the returns.

Notify the Post Office
If you are the executor, you will want to forward any future mail to your address. Also, utilities and subscriptions will need to be cancelled.

Change Ownership
While you are settling the estate, bank, brokerage, and/or other accounts, you will need to have the ownership changed. If there is no surviving spouse, it will be placed in the estate name (e.g, "Estate of Mary Jones"). In most cases, if there is a surviving spouse who is the heir, assets will need to be switched from a single or joint name to the name of the surviving spouse. To do this, you will need a copy of the death and Surrogate Court Certificates for each account requiring a change in ownership.

To receive the benefits from individually owned life insurance, contact the deceased's life insurance agent. The agent will provide the necessary forms to file a claim. You might also want to check if the deceased held any life insurance through credit card or bank offers, and so on. In most cases, life insurance companies require only two forms to establish proof of a claim: a claimant's statement and a death certificate or an attending physician's statement. The beneficiary completes the claimant's statement.

For work-related benefits, visit the deceased's employer's Human Resources Department. Since most people are covered by group insurance where they work, inquire about the benefit that may be due and how to file a claim. Also, ask about pension fund benefits, accrued vacation and sick pay, terminal pay allowances, disability income, and credit union balances. Pay special attention to the deceased's hospital, surgical, and disability coverages to see whether the dependents are still eligible for benefits and, if so, for how long.

Notify the Social Security Administration of the death. If the deceased was covered under Social Security, spouses may be eligible for a lumpsum death benefit. Spouses "must have been married for at least nine months before the spouse's death to be eligible for benefits, unless the spouse's death was the result of an accident or military service," says ivillage.com.

To apply for Social Security benefits, MSMoney.com notes that the Social Security number of the beneficiary and the deceased, the death and marriage certificates, if applicable, and the bank account number of the beneficiary are required.

Contact the Department of Veterans Affairs. If the deceased served in the military, he or she may be eligible for a veteran's burial in a state or national cemetery, funeral costs reimbursements, life insurance proceeds, and even funeral honors. For more information, contact your local VA office.

Contact organizations to find out whether the dependents are eligible for any benefits. Many such groups (unions, service organizations, or professional organizations) offer life insurance policies at group rates.

Thanks to the 1985 Consolidated Omnibus Budget Reconciliation Act (COBRA), a surviving spouse may still have coverage under the deceased's spouse health insurance plan if the spouse worked for a company that has a health plan covering 20 or more employees. The plan must continue to offer the spouse and any dependents coverage for at least 18 months. Coverage can be stretched up to three years if there are dependent children. For more information, talk to a human resources representative at the deceased's former employer.

Upon death, the most significant tax is the federal estate tax. Depending on the size of the taxable estate, the top federal estate tax rate is 45% in 2007-09 for estates over $2 million ($3.5 million in 2009). The IRS allows a surviving spouse who is a U.S. citizen to receive an unlimited amount of property, free from federal estate tax (the unlimited marital deduction). However, when the spouse dies, the remaining estate is subject to estate taxes

In addition to the federal estate tax, there are state taxes, also called "estate," "inheritance," or "succession" taxes. State taxes are much less than federal taxes and vary by state. Basically, the difference between the two is this: the federal tax is assessed on the transfer of the deceased individual's total estate; the state tax is based on the value of a gift passed to a particular beneficiary and the relationship of that beneficiary to the deceased person.

There are other taxes as well. For example, death duties may be levied on property owned in a foreign country or stock in a foreign corporation. There are also fiduciary taxes that the estate must pay on income received on estate assets. Income tax will need to be paid for the last year of the deceased's life by the following April 15. "If your spouse is the decedent," notes MSMoney.com "you may file a joint return, as long as you do not remarry before the end of the tax year."

Put simply, most inheritances are tax free, but the income earned on the asset (if sold, for example) is taxable.

A common tax break for stocks is called the step-up basis. This means if the deceased bought a stock 50 years ago for $10 a share, and dies when the stock is $100 a share, the basis is $100 on the inherited stock. Essentially, the stock has been stepped up to the fair market value at the time of death. If the stock is sold, the capital gain or loss would be based on the difference in value from the date of inheritance to the date of sale.

In addition, a surviving spouse who rolls the deceased's retirement plan into an IRA will have to handle the transaction as a direct rollover. Otherwise, he or she will be liable for a mandatory 20% income tax withholding.

Sudden and unexpected wealth isn't all it's cracked up to be. It is not uncommon for heirs to experience anxiety, stress, and guilt over benefiting from a loved one's death. Some heirs actually end up financially worse off than before. Time and time again, this can be seen with lump sum life insurance proceeds.

Why all the problems? Few people have the expertise to deal with sudden wealth. Oddly enough, people who manage well on tight budgets often have the most difficulty adjusting to a large, sudden influx of cash.

With an inheritance, the goal should be to get the best long-term value for the money, and not go on a spree, well-deserved or otherwise. Here are some tips:

• Avoid drastic, knee-jerk decisions. Consider doing nothing for at least six months. Maintain present spending habits and lifestyle. Resist the temptation to increase spending.
• Set or review financial goals. Set objectives and then identify how the funds can be used to achieve those objectives. Also, distinguish between wishes and goals. Ask: "What do I want to accomplish with this money?" not "What do I want to spend it on?"
• Choose advisors carefully, double-checking qualifications. Especially if the windfall is sizable and/or the person is inexperienced in money management, talk with reputable financial experts only.
  
  

Consider financial vehicles such as mutual funds, life insurance, and annuities.

Mutual Funds
Mutual funds can potentially maximize the investment growth of an inheritance. Mutual funds offer investors many advantages:¹

Professional money management
Most people do not have the time, expertise, or resources to choose and manage individual securities. Professional managers have a full-time commitment to their investment responsibilities, a wealth of financial research, economic information from various resources, and the experience and skill to identify, select, and manage their portfolios.

Diversification
With mutual funds, a balanced investment portfolio can be created that may help to reduce risk—compared to that of individual securities—and that may perform during volatile markets. Mutual funds, by nature, are diversified because their portfolio managers will typically invest in anywhere from a few dozen to hundreds of different securities. Even a concentrated fund will be more diversified than the average individual who invests in just a few stocks or bonds. Diversification also means not only investing in different asset classes (e.g., stocks, bonds, cash), but different types of holdings or sectors (e.g., technology, retail, or health care industries) within asset classes.

Accessibility
Mutual funds have given many more people access to investing in the financial markets because of their low minimum investment amounts and transaction costs (as compared to individual securities). Additionally, mutual funds can offer immediate access to money via the telephone or internet. Many convenient features, such as systematic withdrawal plans, automatic reinvestment, and record keeping services are often available as well.

Which mutual fund is right? Identifying the mutual funds that have the greatest potential to meet an investment objective is no easy task, especially given the large number of funds that may fall into a specific objective category. For example, small-cap, mid-cap, large-cap, index, and concentrated funds may all be included within the equity category. It's important to speak with an investment professional for guidance in choosing a mutual fund.

Life Insurance
If you've received an inheritance, you may decide that one thing you'd like to do is provide financial protection for your loved ones in the same spirit that it was provided for you. The loss of your loved one may mean that others are even more dependent on you, and that's when the importance of life insurance becomes evident. Since life insurance proceeds may not be subject to probate, they can provide a lasting legacy and offer immediate protection against financial loss in the event of your death.

Permanent life insurance can also offer many living benefits such as tax-deferred cash value accumulation, the ability to borrow from cash value on a tax-free basis, and eligibility to earn dividends as declared by the insurance company.² In addition, loans will accrue interest and reduce the death benefit.

Annuities
Many people choose to place inheritance money in annuities to grow long-term funds for the future. There are some solid reasons for this choice. Annuities are flexible, tax-deferred vehicles that can be used to help achieve long-term financial goals and provide a source of retirement income. Additionally, the money in an annuity accumulates tax-deferred, which means taxes are paid on your earnings when the money is withdrawn. However, any withdrawals made prior to age 59^1/2 may be subject to a 10% IRS penalty tax.

Annuities also offer flexibility. With some annuities, a guaranteed interest rate is "locked in" for a specific period of time. With others, a variety of funding options offer different levels of risk and growth opportunity, and funding choices can be changed regularly. Ultimately, annuities can help offer protection against outliving your savings. Lifetime income annuities are guaranteed to keep paying an individual for as long as they live. Lastly, an annuity can provide the security of a guaranteed death benefit for the protection of loved ones.

There are several different types of annuities from which to choose. Which one may be right? There is no general answer, as it all depends upon individual needs and objectives. It's a good idea to speak to an investment professional who can clearly explain the options available.

Probate is a process for determining heirs, paying creditors, and distributing assets. Probate will not necessarily be avoided because of the presence of a Will. Any contractual asset (bound by contract) payable to the estate of the owner must go through probate court. It also only applies to individual or jointly-owned property.

Typically, after a death, the estate executor will file the Will with the court, which will determine its validity. If an individual dies without a Will, a personal representative will file a petition with the court. Then the court appoints an administrator, usually the nearest relative. Notice of probate proceedings are published in the local newspaper to alert anyone with claims against the estate to file them, usually within five months.

The Uniform Probate Code, established in 1969 and adopted by 18 states, specifies the rights of a surviving spouse when their spouse dies without a Will or trust. Their rights include:

• If there are no parents, children, or grandchildren of the deceased spouse, the surviving one inherits the estate.
• If a parent survives, the surviving spouse inherits the first $50,000, then splits the remaining half of the estate.
• If a child or grandchild survives, the surviving spouse inherits the first $50,000, then splits the remaining half of the estate.

If the deceased had no Will, ask to become the personal representative for the decedent, advises MsMoney.com. If validated, you will be responsible for carrying out all of the duties of an executor.

1. The underlying securities in mutual funds are subject to market risk and fluctuations in value. Mutual fund investment objectives may not be met.
2. Please note that dividends are not guaranteed. For information on your eligibility to receive dividends, see your policy.

The preceding information has been provided for informational purposes only. Neither New York Life Investment Management nor its representatives provide legal, tax, or accounting advice. Please contact your own advisors.

Securities are distributed by NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, New Jersey 07054.