Losing a family member is never easy. Aside from trying to handle your emotions, you have to figure out the logistics of the loss — such as funeral arrangements, dividing out assets, and handling the deceased’s finances. Before you get started, take a moment to familiarize yourself with some of the most common terms associated with the loss of a loved one.
Hopefully, to make it easier on the ones they left behind, the deceased individual would have created an end of life planning checklist. On the list, they may have included directions on taking care of their finances after their passing. The following article will be a guide on how to handle those finances and what to do if you’re faced with challenges along the way.
Important documents like the ones listed below may be needed to accomplish tasks on behalf of the deceased. When sorting through their belongings, set aside the following documents that belonged to your loved one as you come across them:
If the document is missing, inquire with the applicable organization as to what steps you need to take to request a duplicate copy. To replace a vital government record, you will need to locate the vital records office in the state in which your loved one was born.
Taking inventory can allow an individual to see which items are going to whom or where they’re going. Examples of assets include:
After you have taken a complete inventory of assets, it’s now time to determine their value, which can be very difficult. Luckily, there are ways to help you determine the asset valuation. You can determine the fair market or present value of an item by:
Following someone’s death, it is important to cancel all accounts, subscriptions, memberships, and/or services that will no longer be in force. As a part of their estate planning or will, your loved one may have established who they wish would carry on the responsibility of accomplishing this task.
Per their request, the responsible individual should contact all companies associated with the departed individual’s memberships and cancel accordingly, or, transfer the account to a different name. Not only does canceling accounts prevent further charges, but it can also help reduce the risk of fraud and identity theft.
Notifying financial institutions, government agencies, and other administration offices (e.g. Social Security Administration, insurance companies, credit bureaus, credit card companies, Postal Service, utility companies, and creditors) is another necessary step to take when handling a deceased family member’s finances.
Make sure to communicate to creditors to freeze, transfer, close accounts, and stop automatic payments/deposits. You will also want to cancel ongoing subscriptions and services in the deceased’s name.
Survivors’ benefits are benefits that are “paid to the spouses and children of workers who die.” For all kinds of insurance policies, as well as financial contracts (e.g. car loans, mortgages, and credit card agreements) you should find out whether insurance premiums were paid on the accounts; if so, cash benefits may be due to the heirs; same goes with survivor pensions.
According to The Hartford, “Inheritance theft can take many forms, ranging from manipulating the person’s wishes while they’re still alive, to theft and embezzlement that occurs after death.” There are multiple types of inheritance theft/ hijacking:
One of the important aspects of handling your inheritance is being aware of inheritance theft and ensuring you or the person who left behind the inheritance does not fall victim to theft. This is also why it is important to pay attention to how you handle your inherited funds and stay up to date on inheritance tax rules and regulations to prevent yourself from accidentally committing inheritance fraud.
Out of common courtesy, it is good to inform their former employer of their passing. Aside from the obvious reasons, doing so also allows you to collect any of their belongings and remaining benefits that are due to survivors.
For example, the estate may be due a final paycheck or payment for unused vacation and sick leave. If you were on the deceased’s healthcare plan, get details about continuing coverage for yourself for up to 36 months under the federal COBRA law. However, to qualify for said benefits, dependents must apply within 60 days and pay any associated premiums.
Even though they have passed away, the bills your loved ones left behind will still need to be paid. Some survivors may choose to consolidate debt of the deceased, including their credit card debt, and pay them out of pocket. If this is the case, the payers may have to wait to be reimbursed — and that could leave them short of cash, both for living expenses and a financial emergency.
The executor of the will pays all debts owed by the deceased that are the responsibility of the estate. Many creditors will simply need to wait until the estate is settled to get paid. You can utilize a credit score report resource center to better inform yourself about what a credit score is, and how your report may be affected if you are the executor in charge of taking care of all these bills.
Even though your loved one has passed on, you will still need to file their taxes. According to the IRS, “All income up to the date of death must be reported and all credits and deductions to which the decedent is entitled may be claimed.” More information on how to do so can be found on the tax Form 1040 or 1040-SR instruction sheet.
A death in the family also carries legal and tax responsibilities for the executor of the deceased person’s will. Money from the estate pays for professional services you use to carry out your duties. Consult an attorney experienced in estate settlements to find out what actions are required of you.
The financial impact of a family member’s passing can result in damaged credit. This ultimately may require you to conduct damage control to resolve any credit issues that occur after the death of a loved one. Aside from this, you will want to practice basic credit repair methods such as fixing debt mistakes, lowering your balance, and understanding when to take on new debt.
As we briefly mentioned earlier, identity theft can still occur, even if the victim is deceased. Take precautionary measures to help prevent this from happening to your loved one by:
As we mentioned earlier, dealing with the loss of a family member is never easy. Here are a few resources that are available to those who need help handling their grief.
Although the times are tough, know that you are never alone. There is a bounty of resources available for widows, children, and adults to help you navigate these emotional times.