Babies and children do not have legal capacity. Legal capacity is gained by reaching the age of legal majority (commonly age 18, depending on state statutes). Black�s Law Dictionary defines capacity as "legal qualification (i.e. legal age), competency, power or fitness. Mental ability to understand the nature and effects of one�s acts."

Various state statutes may grant specific capacities at different ages, such as the capacity to consent to marriage or the capacity to contract for life insurance (commonly age 15). Persons beyond the age of legal majority are assumed to be competent to contract on their own behalf, grant deeds, and create valid wills.

Competent is defined by Black�s Law Dictionary as follows:

However, people can lose their competency for various reasons. A comatose person lacks both the physical and mental ability to make decisions or discharge duties. Insanity impairs one�s mental ability and renders him or her incompetent.

Conditions leading to incompetency may be either permanent or temporary. Duress and intoxication are possible sources of temporary incompetency. Alzheimer�s disease is usually a cause of permanent incompetency.

The most important aspect of competency for our purposes is the ability to make decisions about one�s own medical care, property management, and creation or alteration of a will. A competent person can delegate medical care decisions and property management decisions to another party by appointing that party to be his or her agent (known as an attorney-in-fact).

The written document making such an appointment is called a power of attorney even if the person appointed as agent is not a lawyer. The person creating the power of attorney (the principal) can specify very explicit and limited powers to be conferred, such as the power to pay bills and to make bank deposits, or the powers may be general (full conference) powers. A general power of attorney cannot delegate the power to create or alter a will on behalf of the principal.

One potential problem of a simple power of attorney is that it may terminate if the principal becomes disabled or incompetent (all powers of attorney terminate upon the death of the principal). A durable power of attorney can be established that will preserve the agent�s power after the principal�s disability or incompetency and thus extend the delegation up to the principal�s death. Many people are reluctant to create a full and immediate durable power of attorney before they become disabled or otherwise experience diminished capacity. Consequently it has become an established practice to create a springing durable power of attorney that becomes effective only after the occurrence of specified events, such as disappearance or loss of physical or mental competency. This approach establishes the desired representation should it ever be necessary without delegating powers before they are needed or desired. A competent principal can terminate existing or springing powers of attorney at any time.

Because a durable power of attorney can survive the principal�s incompetency, the agent can carry on necessary transactions regarding property management and health care decisions without waiting for competency hearings and court appointment of a guardian. Further, the actions of the agent under a durable power of attorney need not become part of the public records (open to public scrutiny) as is the requirement for all actions of court-appointed guardians or conservators. The principal determines who can act on his or her behalf under a power of attorney, whereas a court-appointed guardian may be someone the principal would find less desirable than an agent he or she chose.

For estate planning purposes it is desirable for the durable power of attorney to specify that it delegates the power to make gifts, implement any and all retirement plan transactions, and execute any property transactions consistent with the plans and desires of the principal. Failure to explicitly stipulate an intended power could result in subsequent litigation over whether the attorney-in-fact possessed that power. The IRS regularly challenges the power to make gifts unless it is specified in writing.

Sometimes the principal creates separate durable power-of-attorney documents for property management and for health care. Quite often different people are chosen to represent the principal for these distinctly separate functions.

Legislative interest in the health care durable power of attorney and the living will (discussed below) have prompted the states to adopt statutes acknowledging these advance medical directives. Some of these statutes refer to a durable power of attorney for health care as a medical power of attorney. The primary focus of these statutes is to allow the appropriate decision maker to reject long-term artificial life support when there is little or no hope for recovery, when death is imminent, and when the principal has written his or her desire to avoid prolonged artificial life support.

The written intent to avoid prolonged artificial life support is usually set forth in a document known as a living will. It addresses the principal�s desires regarding use of artificial life support systems when he or she is terminally incapacitated or permanently unconscious. Most states have statutes acknowledging living wills, but the statutes differ in how they define a terminal condition.

Because of these differences, it is advisable to draft a living will that conforms to the applicable law in the person�s state of domicile. Persons who reside in more than one state need a living will that conforms to all of the applicable statutes in each state of residence.

Many physicians consider the living will to be an inherent conflict with their duty to prolong life. They may be unwilling to abide by a living will unless they are convinced that the combination of the specific document and the pertinent statute relieves the doctor of any civil or criminal liability for the death of the patient as a result of not initiating artificial life-support systems. Most of the statutes grant some immunity to health care providers acting in accordance with the patient�s living will.

A strong case has been made for supplementing the living will with a durable power of attorney for health care. The attorney-in-fact (agent) for health care can make sure the physicians are aware of the living will. In order to get the health care providers to comply with the living will the attorney-in-fact may have to take a strong stance as the patient�s advocate. In some cases there may even be a conflict with a provider�s religious philosophy. There is almost always a moral conflict because so many providers view a patient�s death as a failure rather than a natural termination of the life cycle.

Some people decide to donate their body or parts of it to living persons or to medical research. Execution of a uniform donor card records such a wish and communicates it to those present at the time of death. A completed donor card eliminates the need for survivors to decide whether or not to donate the decedent�s body because it stipulates which parts of the body the donor intends to give. The card must be properly witnessed by two persons and carried by the donor so that it will be with the body at the time of death. Doctors, relatives, friends, attorneys, or anyone else likely to participate in care decisions should be informed of the donor card. (A representative sample of the Uniform Donor Card appears at the end of this chapter.)

Anatomical gifts enable living persons with impaired health to improve their health through transplants of healthy organs and/or tissue. Medical technology currently permits transplanting such organs as kidneys, livers, lungs, and hearts. This type of donation must be carried out within a few hours of death and can be accomplished only if the death occurs in a hospital. Thus intended donors who die outside of hospitals will not be able to donate their organs for transplants.

Other parts of the body that do not require that death occur in a hospital may also be donated. These include the cornea for the eye, bones for the inner ear, and skin tissue for healing severe burns. These gifts may restore sight or hearing to living people and enable burn victims to survive.

Medical schools often take whole bodies for purposes of medical research and teaching, and those that accept full-body gifts also dispose of the body. When parts of the body have been donated, the family disposes of the rest of the body.

Making anatomical gifts does not preclude a funeral. Donated parts can be removed before the funeral, or the funeral can be held before the body is delivered for research. There are statutes in some areas that prohibit anyone from paying for dead bodies; however, the donee is allowed to pay transportation costs for cadavers.

It is important to realize that not all intended donations are accepted. The gift cannot be used if the tissue is either diseased or mutilated. Organs cannot be successfully transplanted unless there is a recipient with blood and tissue types similar to those of the donor. Sometimes medical schools even have more donations than they can handle and must reject some. For these reasons, anatomical gifts may or may not affect funeral plans.

Just as it is important to know whether the deceased wished to donate his or her body or its parts, it is important to know what kind of funeral the deceased desired. There are many alternatives, and someone must make the arrangements. It is possible to bury or cremate the body without having a funeral or wake. Bodies from which organs have been donated are available for funeral preparation shortly after surgery has been completed; when the entire body has been donated, funerals can be held before the body is delivered to the donee. With the help of a funeral director, it is possible to make arrangements for funerals and burial or cremation before death when it is much easier to be objective.

The wide range of funeral services and caskets leads to wide variations in funerals costs. One recent survey disclosed that the lowest-cost service, including a casket, can vary by 300 percent from one provider to another. These costs do not include burial or cremation expenses. At the other end of the spectrum are full-service funerals with the most expensive caskets. These can cost over $15,000 exclusive of burial or cremation expenses. In some areas memorial societies aid families in obtaining low-cost funerals and cremation or burial.

If the body is to be buried, a plot must be purchased and a separate fee paid for opening and closing the grave. Some cemeteries add a fee for perpetual care of the cemetery grounds, and some require that the casket be placed in a vault to prevent caving in if the casket deteriorates and collapses in later years. This adds additional expense to the burial.

Cremation of the body is another method of handling the remains. This service will usually cost less if it is provided in conjunction with a funeral.

The actual prices for any funeral, burial, or cremation services depend on geographic location as well as on the kind and amount of services performed. Prices tend to be higher in large cities and in the eastern United States.

One very important issue seldom considered prior to death concerns the care of children if both parents die. This involves a search to find a person or family whose lifestyle is conducive to raising the deceased�s children in the way he or she would like. Even if such an environment is found, the person or family may not be willing to accept that responsibility if the need should arise. It is best to obtain agreement from potential guardians before naming them in a will or other written documents. Intended guardians for children must meet the approval of the court before they can be officially appointed. (A person nominates guardians in his or her will; usually the courts will honor these wishes.)

The laws of each state give individuals the privilege of indicating how their property is to be distributed after death. This privilege is exercised by creating a will before death. If death occurs without a will, state laws of intestacy determine how the property is to be distributed. Even if all survivors know what distribution the deceased intended, they must distribute the property according to the state statute if no will is found or if the will is for any reason declared invalid.

It is best to have a lawyer draw up a will so that it will be concise and unambiguous. The existence of the will and its location should be communicated to family members and friends to ensure that the will can be located and put into effect after death. If the will cannot be located, the estate will be settled as if there had never been a will.

The will should indicate who is to be executor of the estate, the trustee of any testamentary trusts, and who should be guardian of minor children in case neither parent survives. It should provide for the disposition of all assets the testator owned. The will should be redrawn or amended whenever it is appropriate because assets not included in the will may be distributed according to the laws of intestacy.

The will should also be reassessed regularly. Whenever the family moves from one state to another or the family configuration changes due to births, deaths, marriages, or divorces, the will may need to be changed. Particular attention is necessary if a move involves both a common-law state and a community-property state.

After a death, it is often a monumental task to locate all of the important papers necessary to settle the estate and secure death benefits for the dependents and spouse. The documents should be inventoried on a list that indicates both their existence and their location. One copy of the inventory should be kept in the home and a duplicate in a safe-deposit box or other safe location separate from the home. The location of all safe-deposit boxes should be known by both advisers and proposed executors. Spouses should generally either have access to the safe-deposit box or know where the key is located.

The inventory (a sample inventory is at the end of this chapter) should contain personal information for each family member, such as name, current address, date of birth, place of birth, social security number, and family relationship. There should also be a section of the inventory devoted to advisers. This section should give the type of services provided by each named individual, along with the provider�s address and phone number. Accountants, insurance agents, investment brokers, clergy, funeral directors, executors, lawyers, and trust officers should be included in the adviser inventory.

A number of standard documents should be included in the inventory, which should also give the location of those documents in existence. (Originals should be kept in a safe-deposit box.) Such documents include birth certificates for all family members, marriage certificate(s), divorce papers, military discharge papers, passports, citizenship papers, death certificates of deceased family members, and adoption or guardianship papers. The inventory should indicate who drafted the latest will and where it is located. It should also reflect any trust agreements and their locations, as well as the name, address, and phone number of all trustees. This type of inventory is also an excellent place to record any prepaid funeral and/or burial arrangements, the location of any plots purchased, and the funeral home that is to handle the funeral.

There should be an exhaustive inventory of all insurance policies, giving the name of each company, the policy number, and the agent�s name, address, and phone number. This portion of the inventory should include life insurance, health insurance, disability insurance, automobile insurance, home insurance, liability insurance, and any other policies in force.

Bank accounts and any other deposit account must be listed individually by account number. The name, address, and phone number of the institution is also necessary. Such accounts include certificates of deposit, as well as credit union accounts.

Holdings of stocks and bonds should be listed individually and should state the location of certificates. This is a good place to include purchase date and price or an indication of where that information can be found.

Any accounts or notes receivable should also be recorded on the inventory. The location of both the agreement and the payment record should be indicated, along with the debtor�s name, address, and phone number. This is a good place to note the existence of any business agreements, the subject of each agreement, and its location.

Credit cards, too, should all be recorded on this inventory. The necessary information includes the name of the issuing company, the account number and number of cards, as well as the address and phone number of the issuing office. There are services that provide protection against lost or stolen credit cards. If such a service is being utilized, it should be identified in the inventory. After this service has been informed of a subscriber�s death, the service should notify all credit card issuers.

In addition to credit cards, it is important to indicate all other unpaid debt accounts. This portion of the inventory should give the name, address, and phone number of the creditor, the purpose for the debt, and the location of both the agreement and the payment record.

No inventory would be complete without an exhaustive listing of personal property and approximate values. This portion of the inventory is essential for insurance claims after a fire or theft, as well as for settling the estate. Major items of personal property include household furnishings, paintings, books, cameras, tools, jewelry, furs, autos, trailers, boats, and planes.

All real property or real estate should be accounted for in this inventory. The necessary information includes a listing of the location of each parcel of property, a description of each, the names of all owners and the type of ownership they have, the identity of any mortgagee and the mortgage number, as well as the location of the deed, mortgage, and mortgage note for each property.

Finally, but not least important, comes a listing of all possible sources of nongovernmental retirement and death benefits. Employee or union pension plans, annuity contracts, individual retirement accounts, 401(k) plans, Keogh plans, and plans with fraternal organizations or professional associations should be detailed if any are applicable.

Once an inventory such as the one above has been compiled it should be updated annually. This information will be invaluable to the executor or administrator. Many life insurance companies have developed a checklist or inventory form similar to the one discussed here, but unfortunately, most of them only make such material available after death. Insurance companies that sell homeowner�s insurance usually have very good inventory forms for personal property and will share them with their policyowners.

Individuals who have an ownership interest in either a partnership or a closely held corporation should create a business agreement. Such an agreement would determine how to settle the business ownership interests after the death or permanent disability of one or more of the part owners. These agreements should be very carefully drawn with the aid of competent legal counsel and must realistically ensure that there will be adequate funds available to carry out the specified terms. Insurance policies are usually used to provide the funds for these arrangements. (Business agreements are covered in CLU course HS 331.)

When death occurs without any established guidelines for settlement, the surviving owners are not likely to make a settlement that is as favorable to the deceased party�s estate or beneficiaries. The absence of funding arrangements often forces liquidation of ownership interests at less than their market value. This result occurs because most of the business assets are in capital goods instead of cash or working capital, and the capital assets usually cannot be quickly sold at a price that is equal to their value to the firm. Predeath planning and funding can avoid these problems, and it can ensure business continuation for the surviving owners.

There have been cases where there has been sufficient predeath planning and funding but the plans have not been shared with the family members. This may lead to survivors� improper utilization of assets and negate a well-planned program. It is just as important to share plans with intended beneficiaries as it is to make plans. This is because deviations from the plan may unnecessarily increase the tax burden and/or result in a loss from liquidating assets that should have been retained. These dangers are most prevalent when the deceased�s family members or other of his or her beneficiaries have little knowledge of financial or business matters.

All lives terminate in death. At that time responsibility for finally settling our affairs is generally passed to the one or more persons who survive us. Many of these responsibilities require prompt action, especially the arrangements for the deceased�s body.

In the absence of prior arrangements, the decision to make anatomical gifts may rest solely with the suriviors(s), and funeral arrangements must be made if a funeral is desired. Burial or cremation must be arranged as well unless the entire body has been accepted as an anatomical gift.

Even if the deceased has communicated his or her desires or has actually prearranged the funeral and final disposition of the body, a survivor will have the responsibility of notifying the funeral director or other appropriate representatives. The survivor may contact the wrong organization if he or she is not aware of prior arrangements and does not have access to an inventory or other notice of the deceased�s plans.

Survivors should obtain the original copy of the decedent�s last will if a will exists. The will and any other papers should be reviewed to determine whether the deceased indicated who should be executor of the estate. Even if the will indicates an executor, it must be presented to the court for probate. (Probate means to prove that the will is in fact that of the decedent and that it was in fact his or her last will.) The court must officially appoint the executor. (Personal representatives appointed in the will are called executors.) If the person indicated in the will is deceased or refuses to accept the appointment, the court must appoint someone else to be the administrator. (When the court has to select the personal representative, that person is called the administrator.) The court must be petitioned to appoint an administrator to handle the estate if the deceased left no will or if no valid will could be located.

The personal representative is responsible for the collection of all monies owed to the deceased, payment of all debts owed by the deceased, payment of taxes, and the distribution of any remaining property. If there is no will, the property must be distributed according to the state intestacy statutes.

There are many matters that must be settled after death, and most of them require that a death certificate be submitted. Copies of the death certificate can be obtained from the funeral director or from the local registrar of vital statistics. Settlement of even the simplest estate will often require a dozen copies of the death certificate, and complex estates may need three or four dozen copies of the death certificate.

All of the deceased�s life insurance policies should be located, and the agent or company home office should be notified. The information to be forwarded includes the name of the insured, the time and manner of death, and the policy numbers of all life insurance policies issued by that company covering the deceased.

Preferably the life insurance agent, who can assist by supplying the necessary forms and helping the beneficiary to understand the questions, should be contacted. The agent may advise the beneficiary about the different modes of settlement available if the insured did not select one. The beneficiary of the policy will have to complete a proof-of-death statement and return it, along with a copy of the death certificate, to the insurance company.

If the beneficiary is a minor or otherwise incapable of providing the proof-of-death-statement information, a duly appointed guardian or legal representative must complete the form. In these cases a copy of the court order appointing such guardian or representative must accompany the proof-of-death statement and death certificate.

In cases where the primary beneficiary predeceased the insured, a copy of the primary beneficiary�s death certificate must accompany the customary papers. This will enable the insurance company to make the proceeds available to the contingent beneficiary or to the insured�s estate if there is no contingent beneficiary.

Whenever the insured and the beneficiary die from the same cause, it is important to establish which person died first. If the beneficiary died first, the proceeds are payable to the contingent beneficiary. However, the proceeds will be payable to the beneficiary�s estate if the beneficiary died after the insured. This result may be modified if a delay clause has been included in the beneficiary designation.

Insurance companies usually investigate more closely death claims that occur during the contestable period or claims in which death was not from natural causes and accidental death coverage was in force. In both of these cases the insurer will usually require a proof-of-death (physician�s) statement to be filled out by the attending physician. This will be in addition to, rather than in lieu of, the beneficiary�s statement and death certificate.

The agent should inform the beneficiary if there will be any delay in processing the claim and the reasons for that delay. The prompt payment of claims can be a great source of goodwill for insurance companies and agents, and it generates peace of mind for the survivors. Such an important task should not be jeopardized by unexplained delays. Professional servicing of death claims reaffirms the trust created when the policy was purchased. Prompt and courteous service of the death claim also gives the agent an opportunity to meet the surviving family members and impress them with his or her competency and trustworthiness. This is especially true when the choice of settlement option has been left open to the beneficiary. There is a strong tendency for beneficiaries to take a lump-sum settlement before they even realize that other options are available. It is often better for them to take a partial cash settlement that is sufficient to cover their immediate needs and leave the balance on deposit until they know more about their current and later needs. This protects their right to receive a life income or other form of settlement if that is desirable. Settlement options that are available from life insurance policies are usually more advantageous to the beneficiary than what would be available if an annuity were purchased separately.

All credit contracts should be checked for credit life insurance coverage that will pay off the outstanding debt. Notificiation of the death and a copy of the death certificate should be sent to the creditor.

If the deceased was in poor health prior to death, there may be benefits payable in connection with health insurance or disability insurance contracts. The agent should be notified of the potential claim, the policy number involved, and the name of the insured. If any benefits are payable, the appropriate claim forms will have to be completed.

It is often necessary for the surviving spouse to assess the ongoing needs for health insurance coverage and adjust the coverage to meet these needs. If all health insurance was previously provided by group coverage through the deceased�s employer, there may not be any current coverage for surviving family members.

There may be a conversion privilege in the group coverage that allows the dependent spouse to continue the coverage on an individual basis. The conversion request and premium payment must be made within one month of the death to continue coverage without a medical examination.

Medical expenses just before death are often very high, sometimes reaching many thousands of dollars. One study found that about one-half of deceased persons required treatment for at least a month before death and one-fourth of them required treatment for more than a year before death. At current prices hospitalization can cost $1,500 per day.

After his or her spouse�s death, the surviving spouse should check all policies covering the home, automobiles, and other property. The deceased person�s name should be deleted from the policies and the survivor�s name should be retained or added, if necessary. Necessary coverage should be continued and not allowed to lapse during the turmoil following a death. In some cases the death will create the need for the surviving spouse to have new or different coverages than those that are already in force.

Most working people are eligible for a $255 lump-sum death benefit from social security after death. This benefit can be obtained by filing the appropriate social security form and a certified copy of the death certificate with the local social security office. The benefit is payable to the funeral home or to a person who has paid for the funeral services. Funeral directors often file this form.

Quite often the deceased�s spouse and any dependent children under 18 are eligible for survivorship benefits from social security. Widows or widowers of deceased workers may receive survivorship benefits if they have any single children under age 16 or if the widow(er) is over 60 years of age. The local social security office can provide the appropriate forms. A certified copy of the death certificate and the completed form should be submitted to the local social security office for processing. Certified birth certificates must also be furnished.

The level of benefits provided depends on the deceased�s previous earnings. Benefits are also affected by the age and relationship of the beneficiary. Dependent children�s benefits terminate when they either marry or reach age 18 (the age for full-time students).

If the deceased has served on active duty in the United States armed forces and did not receive a dishonorable discharge, the Veterans� Administration (VA) will provide some form of burial benefits. This can be either burial in a national cemetery or a cash burial expense allowance of up to $400. The expense benefit may be applied for at any VA office and is payable to either the funeral director or to the person who paid the funeral expenses. If burial in a national cemetery is desired, application must be made to the superintendent of the national cemetery. Any local VA office can advise an applicant on how to apply.

Deceased veterans are also eligible for a headstone from the VA. This benefit can also be obtained through the local VA office.

Widows or widowers and dependent children under age 18 of deceased veterans who died as a result of service-connected disabilities are eligible for medical care from the VA.

There is a pension benefit available to widows or widowers of nearly all deceased veterans. The amount of the benefit depends on the beneficiary�s income. The maximum monthly benefit is available if the recipient has an annual income lower than a specified threshold amount. As the income level increases, the monthly VA benefit available is reduced. No monthly benefit is available to a widow(er) with an annual income over an upper threshold unless the veteran�s death was in some way related to military service. The local VA office can provide details and help an applicant file for any available benefits.

There are benefits provided for widow(er)s and children of veterans who died while serving in the armed forces. These benefits include a death gratuity equal to 6 months of the deceased�s pay. In addition to the gratuity, the widow(er) and children are eligible for monthly pension benefits. The level of these payments depends on the deceased veteran�s military rank. This benefit is called Depen-dency and Indemnity Compensation (DIC), and the payments will cease if the widow(er) remarries.

Obtain the proper forms from a local VA office to apply for any VA benefits. The completed forms should be accompanied by copies of the death certificate, marriage certificate, and birth certificate for each dependent child and should be forwarded to the appropriate office. If the VA claim number for benefits is not known, it will be necessary to provide the following information about the deceased: military serial number, branch of service, inclusive dates of active duty, a copy of the discharge paper (form DD214), and the deceased�s date of birth.

Many veterans have life insurance policies that were offered through the armed forces prior to 1966. Claims for benefits under the policies are processed in one of two regional offices. For eastern United States, claims are handled at the VA Center, 5000 Wissahickon Avenue, Philadelphia, PA 19101 ([215] 438-5225). Claims for western United States are handled at the VA Center, Fort Snelling, St. Paul, MN 55111 ([800] 827-1000).

If the veteran had life insurance coverage under either Servicemen�s Group Life Insurance (SGLI) or Veteran�s Group Life Insurance (VGLI), the claims should be sent to the Office of Servicemen�s Group Life Insurance, 213 Washington Street, Newark, NJ 07102 ([800] 419-1473). These coverages were not available prior to 1965. Those insured under these programs are basically persons on active duty or veterans who have been separated from active duty for less than 5 years.

Deceased persons who worked under the Federal Civil Service for more than 18 months may have earned survivorship benefits for family members. For potential benefits check with the Civil Service Bureau of Retirement Insurance and Occupational Health at 1900 E. Street, N.W., Washington, DC 20415 ([202] 606-3500).

It is possible that some of the pension plans covering the deceased provide death benefits and/or survivorship benefits to the spouse. Each potential source should be contacted individually. Former employers should be contacted and asked about the availability of benefits from group life insurance, pension plans, and employer-sponsored tax-deferred annuities. If the deceased was a union member, there may be benefits available from union plans. Professional and fraternal organizations to which the deceased belonged should also be contacted. If the deceased had established any separate retirement plans, there may be an unpaid balance payable to the surviving spouse. These separate plans are especially likely if the deceased was self-employed.

A registered letter (with a mandatory return receipt) similar to the following should be sent to each organization that could possibly be a source of benefits:

The person appointed by the court to be executor or administrator will have the responsibility of collecting monies owed to the estate, paying the deceased�s outstanding debts, and distributing any property left in the estate. If there is no inventory like the one suggested earlier in this chapter (a sample inventory is included at the end of the chapter), the personal representative will have to create one. He or she will also have to update any existing inventory. Without such a guide it is possible that the representative will not be able to identify and collect all money owed to the estate. The representative should pay special attention to debts where credit life insurance may have been purchased. A claim for benefits must be made to the creditor or insurer by sending a copy of the death certificate.

Payment of debts owed will include federal and state income taxes up to the date of death as well as federal estate taxes�if the estate is large enough to owe any�and in most cases, state death taxes. A survey of some estates previously settled shows that expenses average between 4 percent and 6 percent of the estate assets; this percentage varies widely. As might be expected, the expenses are a large portion of the estate value for smaller estates and also for persons who die at younger ages. (CLU course HS 321 covers federal income taxes, and HS 330 covers federal estate taxes.)

The personal representative is eligible for compensation out of the estate and usually collects such compensation. When a family member or close friend is the representative, he or she sometimes serves without compensation.

Some predeath planning can save the representative considerable work and, in some cases, emotional stress. In sizable estates with federal estate tax obligations the taxes are due within 9 months after death and must be paid in cash. Very often there is not enough money available to pay the taxes unless the deceased�s property or business or part of its assets is sold for cash. Adequate amounts of life insurance in force at the time of death may enable the property or business to be retained and distributed to survivors.

If clients and/or customers were dependent upon the services of the deceased, there may be a need to refer them to someone else for service. Case histories may have to be located and released to the client�s new adviser. A doctor�s patients may be advised to contact a new doctor immediately and obtain a new prescription for necessary medicine. Legal clients of deceased lawyers will need all of the information gathered by the deceased in order for their new counsel to proceed with impending litigation. Accountants who die may possess the business records that their clients must have in order to file their taxes on time. These records should be released to clients as soon as possible.

Office help and other employees will have to be terminated if the business is not to be continued. Some employees may be retained during the time the business is being closed out. These people will probably need references when they seek new employment. If no one is able to give these recommendations, the prospective employer should be informed by the executor that the death of the former employer makes it impossible to respond.