What To Do When a Loved One Dies
When a loved one passes away, it is often difficult to take on the immediate financial responsibilities that come with this sometimes unexpected responsibility. Whether you’re the executor or are asked to help out, you should know what’s involved.
Take Your Time
Delay making any major financial decisions right away. When an insurance settlement or other payout is made, put the money in short-term savings such as a money market account to allow time to research and assess the next step.
You may be asked for a lot of information about yourself and the deceased when making financial transactions. Keep these documents on hand:
- Social Security number and certified copies of death certificate
- Document with the deceased’s signature
- Estate planning documents, including wills and powers of attorney
- A folder with the most recent bills and financial statements/transactions on all accounts (including credit cards, mortgage, bank accounts and investments, taxes, etc.)
Some examples include financial accounts, valuable jewelry and collections (art, stamps, coin, etc.), real estate, life insurance (both individual and employer-provided coverage), employee benefits such as a deceased spouse’s pension and/or 401(k) plan, and possible veteran’s benefits, including burial in a national cemetery. When assets such as life insurance and retirement accounts go directly to individuals listed as beneficiaries, they are not part of the estate. For all other assets, generally you’ll need to turn them into cash as soon as is feasible and deposit them into a newly opened, specially designated estate checking account that’s for paying bills and making distributions to heirs.
Change the deceased person’s name on jointly held assets (such as bank accounts, credit cards, auto titles, and deeds to property, including the family house) into the joint owner’s name as soon as possible. After the transfer, any expenses related to the assets become the responsibility of the owner, not the estate.
Inform them of the death. Instruct creditors to freeze, transfer, or close accounts. Stop any automatic payments or deposits. Cancel ongoing subscriptions and services in the deceased’s name. Notify Social Security (if the deceased was receiving benefits).
If the deceased person was employed, contact his or her employer regarding benefits 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 health care plan, get details about continuing coverage for yourself up to 36 months under the federal COBRA law (dependents must apply within 60 days and pay the premiums).
Paying the Bills
Review what's owed. The executor 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. If survivors pay bills out-of-pocket or with savings, they also may have to wait to be reimbursed—and that could leave them short of cash, both for living expenses and a financial emergency.
Consider Expert Help
If you are the executor of the deceased person’s estate, you have legal and tax responsibilities in that role. 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.
If the estate can't afford to pay for professional services, call your local bar association to ask about estate attorneys who will provide a free initial consultation. (Check “State and Local Bar Associations” at
www.americanbar.org.) Another source of information is the probate court serving the area where the deceased resided. (Get the number online at http://estate.findlaw.com/probate/state-probate-courts.html.)
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