When trees die, they’re consumed by fungi, and the carbon is sequestered in humus (soil). That’s totally fine, and in fact is an important reason to ensure that planted forests have a fungal culture so this decomposition process occurs properly.

You’re right about fire releasing carbon. But even after devastating fires, forests don’t burn completely and plenty of plant matter remains. Even ash and soot is still sequestered carbon, not to mention charred wood even if the tree doesn’t survive.