Three to Six Months

Consider Hiring an Accountant

Depending on how involved you’ll be with settling the estate, you may want to find a tax accountant to help you coordinate your efforts with your attorney.

For the year in which the death occurs, the deceased person’s income taxes will be due on the normal filing date of the next year. Of course, you can easily request an extension, which will be granted automatically. If you’re the husband or wife of the deceased, you can still file a joint return for the year of death. Furthermore, if you have dependent children, you can file a joint return for two more years.

According to Internal Revenue Service (IRS) regulations, you may need to file a federal estate tax return (Form 706 from the IRS) within nine months of the death. Currently*, estate taxes are due only on estates valued at $2,000,000 or more. Special deductions are available for spouses. Your attorney or a tax accountant can guide you in preparing tax forms and give you valuable information on your state's estate tax, inheritance or gift tax, and fiduciary income tax, if applicable.

You can download forms and obtain more information from the Internal Revenue Service website.

Review Your Finances

The following is meant mainly for spouses, but it can also apply to anyone whose financial resources were supplemented by the deceased.

Once you’ve applied for benefits and have some idea of your financial position, you can start planning for the future. First, review your cash flow. Take a look at how much money is coming in each month and how much money is flowing out to meet expenses. From this, you can put together a short-term budget. If your monthly expenses are greater than your income, look for ways to cut spending or for possibilities to boost your income. If your monthly income exceeds your expenses, you can consider additional savings or investments for your future.

Of course, this is a very basic approach to taking stock of your finances. There’s no formula we can provide here that will yield a perfect plan for everyone. The idea is to face your finances, realizing that expenses go on and must be met.

Please keep in mind that TIAA-CREF and its affiliates do not provide tax or other advice. Please consult your own advisors.

*The personal exemption amount, currently $2,000,000, is scheduled to increase to $3,500,000 by 2009, disappear in 2010, and then come back to the 2002 limit of $1,000,000 in 2011, provided Congress does not act to change it.

© 2014 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017