Having read many replies, I keep coming back to this line... You want to stay neighbors (and it appears ya'll have a good working friendship)
I think I would be taking a dish (crockpot, casserole, etc.) over and expressing my condolences about the sister in law. Offering to help with the chores wouldn't hurt too.
Get plenty of pictures of the wagon/calf situation and offer to bury it while he takes care of the family situation, and tell him ya'll will figure out settling up after things have calmed down little the wifes side. It's going to be hard conversation to have from all the other advice I see... and it isn't the kind of conversation that will go well at the stage he's at now with his wife's sister passing. He's hurt... and there's a lot going on that will cause him to think differently than normal.
My 2 cents... the friendship is way more important than the calf.
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