Problem if I purchase someone's Verizon iPhone 5 S still under contract?

A friend of mine has an iPhone 5 S that is still under contract with Verizon. However, it use to belong to one of his family members who recently passed away.

Questions for you Experts:

1. As the iPhone 5 S (purchased before January 2013) is an unlocked phone anyway and can use other sim cards and 3rd party pre-paid services, being still under contract, can Verizon block that phone even if another replacement sim card was used?

2. Is the complete identify and account of an existing Verizon iPhone 5 S phone found all on the sim card? If yes, I guess I can just swap the Verizon sim for a 3rd party sim.

3. My friend told me they own the phone, and they already contracted Verizon about the death in a family, but still I worry some as it's under contract yet. Maybe this does not matter?

1/ It is unlocked. You can use any SIM card you wish.
2/ You can use any SIM card, but you have to pay the contract subscription.
3/ If you stop paying it, you will get your ESN (of the iPhone) blacklisted. You won't be then able to use it with ANY SIM card. Go ahead, tell Verizon about what happened and send them proofs as they will request it. They might terminate the contract for some fee or under the condition that you return the phone to them or another condition. Have never done that.