What to Do When a Client Dies

As a trusted advisor, one’s CPA is often one of the first people notified when a client dies.  As a CPA, it is critical to know and understand both the legal and moral steps involved in helping a family cope with a death.

It is important to note that family members and friends are likely to be distraught immediately following the death of a loved one, even those who typically understand business and financial matters.  Therefore, it is the CPA's job to step in and provide the executor, family members, and friends with comfort, support, and financial advice.

Many times, when a client dies, the CPA will need to begin working with new people to help them settle all of the issues at hand.  Often, a family member is the one appointed to conduct all of the financial affairs.  Regardless of who will be involved in settling a decedent’s estate, it is important to start building relationships with those people as soon as possible.

One way to do this is to attend the wake or other observance, as the family’s customs and practices dictate, as well as to send a condolence letter to the family.  This lets them know that you are thinking of them during this difficult time and will help you to gain their respect and trust.  The second step that should be immediately taken is to let the appropriate members of your office know that the individual has passed away.  This will ensure that firm mailings or solicitations to the deceased will stop.

The next step that should be taken is to assess the executor's knowledge of their responsibilities and duties.  The CPA should inform the executor of all that will be expected of them.  Although being appointed as executor can be an honor, it is a difficult task for a variety of reasons.

A couple of those difficulties include dealing with beneficiaries who second guess every decision made along with being subject to personal liability for errors in administering the estate that may be made.  

Following is a list of some of the most important duties a CPA should make an executor aware of:

• The executor must locate the will and take it to the local probate court to file a petition to probate.  Once this is done, the executor will be granted the right to collect and distribute assets.

• The executor should take an inventory of all of the assets and secure them.  For example, if the decedent had multiple brokerage accounts, the executor may want to transfer them into a single account.  The executor should also keep track of any personal property still in the estate.

• The next step is to pay off the debts of the deceased.  Some or all of the decedent’s assets may need to be liquidated if there aren't sufficient funds to satisfy all the outstanding debts.

• After all debts have been paid by the estate, the executor can then determine which assets are to be liquidated and distributed to the heirs in the form of cash and which assets are to be distributed directly to them.

• It is also the responsibility of the executor to make sure that all required tax returns are filed and that any tax payments associated with those returns are remitted in a timely manner.

• Throughout the implementation of all of the above steps, the executor has a fiduciary duty to keep all of the beneficiaries reasonably informed.  Many states have laws on the books that require this.

• Finally, the executor must distribute the remaining estate assets according to the decedent’s Last Will, or state law if there is no will.

The ultimate goal of the CPA should be to compassionately guide the executor through the above process as easily as possible.  Encourage the executor to seek your professional guidance and the advice of legal counsel immediately after the passing of the decedent, as well as at any time they have questions or concerns.  This will ensure that all steps are executed properly and will help the client avoid unwanted and unnecessary complications in the future.