RIP

OK, granted I can only hear one side of it, but no phone conversation should start like this:

HNG: How are you doing?
Other party:
HNG: Did you bury her?
Other party:
HNG: Well, dust to dust, as they say.

The way I see it, there's two answers to your second question:
a. "Yes, in the ground."
b. "No, she's still being refrigerated/embalmed/autopsied."

There have got to be more delicate ways of expressing your condolences. On the other hand, maybe the Other Party has found the easiest and most efficient way of getting off the phone with you, in which case, kudos.