Yes, this would be correct. The reason TurboTax is saying you have an excess is because his contributions are prorated based on the months he was alive. So since he passed away in April, and was over 55, his prorated amount would be $3,183.33. To calculate this you would take the Family Contribution limit of $8,550+ the $1,000 catch up for a total of $9,550. Since he was only eligible for 4 out of 12 months, you would multiple that $9,550 by 4/12 for a total of $3,183.33. That would be HIS contribution limit for 2025. Since he contributed $3,960 he has an excess contribution of $777 (3,960-3,183)
Form 8889 instructions says "If you were not an eligible individual on the first day of the last month of your tax year, use the Line 3 Limitation Chart and Worksheet (in these instructions) to determine the amount to enter on line 3. (See (6) in this list.)"
Since he was not eligible on the last day of the tax year, the limitations are being applied.
After he passed away, the HSA was treated as yours. So your contributions would have been ok for the full amount as long as you were still eligible on the first day of the last month of the tax year.
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