12 Financial Moves to Make When a Loved One Dies

By Tim Lemke on 3 February 2016 0 comments

There are few things more challenging than a loved one's passing. In addition to being emotionally difficult, there is an enormous amount of work required to handle the person's estate.

No one likes to discuss the finances of your departed loved ones, but there are many key things that should be done shortly after their passing. These 12 items are the most common financial priorities during a difficult time.

1. Do as Little as You Need To (At First)

Losing a loved one is a stressful, tiring, and emotional experience. That's why it's wise to avoid making any key financial decisions immediately. Decisions about money and property should be made with a clear head, psychologists say. It's important to begin collecting some documentation and making funeral plans, but many key decisions can wait a while.

2. Find the Will — and Its Executor

If your loved one planned properly, he or she outlined their wishes in a will and tasked a trustworthy person to carry things out. This is known as probating the estate. Things can get complicated if there is no will, or if the executor has passed away or is otherwise unavailable. But start by finding out if your loved one's wishes were written down. If you are the executor, you will need letters testamentary that prove you have the right to handle the affairs of the deceased.

3. Collect as Many Documents as You Can

Hopefully, your loved one had some sort of filing system for bills, tax receipts, and other financial information. Collect as much of this paperwork as you can, including anything associated with his or her estate planning, plus credit card statements, bank statements, life insurance policies, car titles, and any similar things you can think of.

4. Determine If the Funeral Was Prepaid

You may find that your loved one had already made plans with a funeral home to have arrangements paid for. But if not, you'll need to determine if there is money available from the deceased to pay for the funeral. This may require opening a special checking account for the estate.

5. Get Copies of the Death Certificate

As you work through the complicated financial matters after a loved one dies, people and institutions will request copies of the death certificate as evidence of the person's passing. Obtain dozens of copies from the state, as many organizations will require an original document. Always have a copy handy any time you deal with a bank or brokerage house.

6. Get in Touch With Financial Institutions

This is often a challenge, because most people have multiple bank accounts, plus various investment accounts, pension providers, loans, credit cards, and insurance companies. Start with the the life insurance company, as the policy may mean that there will be a payout that can be used toward final expenses. Then check with banks to stop any automatic payments, such as regular contributions to charity. Brokerage companies may freeze accounts once notified of a death, so plan in advance if you think this may pose a problem.

7. Call Utility Companies

If a loved one lived alone, it will be important to call the electric company, water provider, cable provider, and phone company to stop service and avoid any additional charges. (Make sure you clean out the fridge before cutting off the electricity.)

8. Contact Government Agencies

You need to contact the Social Security Administration to stop payments, and see if you are eligible for any death benefits. If your relative served in the Armed Forces, call the Veterans Administration. There are many state and local agencies that may also need to be notified, in order to stop payments from things like pensions or legal settlements.

9. Get the Credit Report of the Deceased

It will be important to contact credit bureaus to protect against a case of identity theft. But it's also helpful to review your loved one's credit report to see if there were any major errors or cases of fraud.

10. Hire an Accountant

Dealing with taxes can be very challenging following the death of a loved one. There may be inheritance taxes, and if they worked in the year of their death, they may owe taxes or at least have required tax forms you'll need access to. Let an accountant do a lot of the heavy lifting here. (See also: 14 Reasons Why an Accountant Is Worth the Money)

11. Change Online Passwords

If you have access to the online accounts of the deceased, you may want to consider changing the passwords for access. This will guard against anyone looking to steal your loved one's identity, and prevent others from gaining access to account information they should not have.

12. Roll Over Their IRA

If your wife or husband passed away, you are the beneficiary of his or her retirement account and can roll it into yours. Or you can tap the money immediately and you won't have to pay a penalty for early withdrawals. If your spouse was over 70 ½, you may have to take a required minimum distribution.

What steps have you taken to prepare for the loss of a loved one?

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