The last thing you may want to think about when a loved one passes is financial matters. Managing the finances of someone who has died may seem overwhelming if you aren’t aware of their financial situation or wishes. During this difficult time, it’s important to start managing the deceased’s assets relatively quickly, to minimize the risk of fraud or other financial complications (such as having to pay back Social Security benefit payments).
By staying organized and enlisting professional assistance where needed, you can help your family get through this trying time. Most importantly, don’t let the financial responsibilities that come with a loved one’s passing take away from what’s essential: grieving your loss.
What to do immediately after losing a loved one:
- Embrace the support of family.
Upon the death of your loved one, call close family members, friends, and clergy first–you’ll need their emotional support. - Make final arrangements.
Arrange the funeral, burial or cremation, and memorial service. Hopefully, the loved one will have made arrangements ahead of time. Look among his or her papers for a letter of instruction containing final wishes. Such instructions may also be stated in his or her will or other estate planning documents. Arrange any cultural rituals, and make any anatomical gifts. - Keep everyone informed.
Notify family and friends of the final arrangements. - Notify any others who may need to know.
Alert your loved one’s place of work, professional organizations,
and organizations where he or she may have volunteered. - Prepare to step away from your existing obligations.
Contact your own employer and arrange for bereavement leave. - Prepare an obituary.
Place an obituary in the local paper, or online. Keep in mind to be cautious about putting info online for security reasons.
What to do within one week of losing a loved one:
- Obtain death certificates.
Order 10–25 certified copies of the death certificate from the county registrar, health department, or funeral director (you’ll need these for insurance and other accounts to prove your loved one has died). - Call the employer (if applicable).
Ask for information on death benefits, company-sponsored life insurance policies. Find out if your loved one had any 401(k)
assets and, if so, who the designated beneficiaries are. If you
are a beneficiary of these assets, consider rolling them
into an IRA. - Notify the executor.
If you are not the executor of your loved one’s will or estate, notify him or her of the deceased’s passing. If the loved one was your spouse, set up a time to meet with the executor to discuss the legal and tax issues related to settling the estate. Additionally, if the decedent had a trust, notify the remaining co-trustees or successor trustees if they have not already been notified. Administering trust assets will be the responsibility of the remaining trustee(s) or successor trustee(s), not the executor. - Start gathering legal and financial documents.
Use the attached financial inventory checklist to make sure you don’t miss any accounts for which you’ll need documentation to close out the deceased’s finances. - Establish a waiting period for making financial decisions.
Hold off on making any major financial decisions (such as selling
a house or other investments) while you think carefully about what next steps are right for his or her assets. And don’t allow a salesperson to talk you into buying financial products such as additional insurance at this time. Many unscrupulous people prey on those who have recently lost a loved one, so establishing a “financial waiting period” will help weed out people who may not have your best interests at heart.
What to do within the first month after losing a loved one:
- Protect against identity theft and fraud.
- Contact all companies at which the deceased held an account to close or freeze the accounts as quickly as possible. Many institutions may require a certified copy of the death certificate to close the account.
- Use the financial inventory checklist on page six to help make sure you don’t miss any accounts; consider all bank, credit card, insurance, mortgage, investment, and pension accounts, among others.
- Pay your loved one’s outstanding bills on time, to avoid late charges.
- Notify credit reporting agencies of your loved one’s death. Provide a copy of the death certificate to each of the three main credit reporting agencies–Equifax, Experian, and TransUnion–as soon as possible, so they can flag the account. One to two months later, you should check the deceased’s credit history to make sure no fraud has occurred.
- Also, contact the Department of Motor Vehicles to cancel the deceased’s driver’s license.
- Be sure to stop benefit payments to the deceased, such as Social Security, or you may have to repay any amounts paid posthumously. Inquire about survivor benefits from entities providing benefits or payments to your loved one, including life insurance companies, Social Security, and Veterans Affairs. Note that if you are the deceased’s spouse, it may make sense to wait until you reach full retirement age to claim a Social Security survivor benefit: If you do, you’ll receive a payment that is equal to 100% of the deceased spouse’s benefit. If you are already collecting a spousal Social Security benefit, you can “step up” to a survivor benefit (note that your spousal benefit will cease if you do this).
- Get expert professional assistance.
- Contact an estate attorney, tax professional, and wealth advisor to help with financial and legal matters related to the estate.
- An estate attorney can determine if probate is needed and can help with legal filings and letters testamentary, which are needed to close out the deceased’s business dealings.
- Your wealth advisor can help with the transfer of assets and closing of accounts; if applicable, you should also contact your loved one’s wealth advisor to assist with asset transfers if you did not utilize the same financial professional.
- Your loved one’s life insurance agent can help with claim
forms to ensure you are paid any death benefits that may
be due to you. - A tax specialist or CPA can help you determine any tax liabilities associated with the estate or inherited assets, and can assist in filing a final tax return for decedent’s estate. These tax returns must be filed by April 15 of the year following your loved one’s passing. Note that you should keep all documents that show individual and joint account values on the day of death.
- Claim joint assets.
If you are the deceased’s spouse, joint assets can typically be passed on to you without approval from a probate court. However, in some states joint bank accounts are automatically frozen upon the death of a spouse (in this case, you’d need to ask the bank to release the funds to you). Note that rules for changing property titles of joint assets can vary by county, but usually you can request a title transfer by contacting your county’s assessor and state’s Department of Motor Vehicles.
What to do within three months after losing a loved one:
- Update account information.
Review and update information on your personal accounts and property, including beneficiary designations, insurance, and property titles. - Cancel memberships.
Contact organizations of which your loved one was a member, to terminate the membership. Pay particular attention to those memberships for which the deceased may have set up an “auto renewal” to pay fees or charitable donations from a bank account or with a credit card. Consider organizations like AAA, AARP, clubs, magazine subscriptions, universities, and professional groups, among others. - Review credit information.
Check back in with credit reporting agencies to ensure no fraudulent accounts have been opened in the deceased’s name. - Maintain an open line of communication among beneficiaries.
Most estate disputes arise due to a lack of communication between beneficiaries. Since the last thing you want is to be dealing with infighting over inherited assets, encourage all parties to communicate with one another as much as possible.
What to do within one year of losing a loved one:
- Seek out financial guidance.
When you lose a loved one, especially your spouse, your financial situation and your financial goals often change. A wealth advisor can help you adjust, working with you to update your personal budget and reallocate your investment portfolio so that you’re on track to meet your revised long-term goals.If you are thinking ahead and considering the emotional toll that managing your estate can have on your loved ones, you should consider reviewing and updating your estate plan, or creating one if you don’t have one already. Periodically reviewing your plan every three to five years with the help of a local and experienced estate planning attorney can help your loved ones avoid an expensive, time-consuming, and emotionally draining process after you pass away. Creating or reviewing your estate plan involves taking a full inventory of everything you own—including any real estate and other property, bank and investment accounts, and insurance policies—as well as any liabilities, including mortgages, lines of credit, and other debt. With the financial inventory checklist below, you’ll create a plan that specifies who will inherit what, what will be needed for the care of any dependents, and who will administer your estate upon your death.
Financial Inventory Checklist
At this time, getting organized can help you feel more in control. Use this checklist to help gather the documents you’ll need to settle your loved one’s affairs.
Pull together important documents:
- Tax returns for the past five years (both state and federal)
- Pay stubs for the last six months
- Estate planning documents including wills, trusts, and ancillary documents
- Beneficiary designations
- Pre- and postnuptial agreements
- Previous divorce settlement agreements
Locate all financial statements:
- Bank and credit union accounts
- Certificates of deposit (CDs)
- Investment statements and brokerage accounts
- Credit card accounts (business and personal)
Collect real estate documents:
- Title papers
- Original purchase documents
- Mortgage agreements
- Home equity loan document
Locate all insurance policies:
- Health
- Life
- Disability
- Homeowner’s / Auto
- Umbrella
Gather statements on all retirement accounts:
- 401(k)s
- 403(b)s
- Pensions (defined benefit plans)
- IRAs
- Keoghs (Qualified Retirement Plans)
- SEP-IRAs
- Profit-sharing plans
- Annuities
- Dividend reinvestment plans (DRIPs)
Compile records of employee benefits:
- Stock options
- Bonuses
- Health and other types of insurance
Compile other financial-asset documents:
- Partnerships or interests in limited liability companies (LLCs)
- Business financial statements
- Promissory notes owed by family members or third parties
- Patents, trademarks, and royalty or rental income
- Auto registrations
- List of valuables—antiques, artwork, collectibles, jewelry
- Inheritance records
- Records of monetary gifts made, or received (including charitable donations)
- Any pending litigation or arbitration proceedings
- Safety deposit box key(s)
- Educational records
- Birth and marriage certificates
- Social Security documents