June 11, 2021
When you're grieving the loss of a family member, finances are probably the last thing on your mind. Not knowing your loved one's financial situation or final wishes regarding assets can be especially difficult.
However, tough as it may be, you must start making decisions as soon as possible if you hope to avoid complications or fraud. Enlisting the assistance of financial experts and estate planners can help you make the right choices quickly so you can return your focus to your family and the healing process.
Steps to Take After a Loved One Dies
Here's a timeline-focused checklist to walk you through the tasks that need to be completed in the weeks and months after losing a loved one.
Within the First Week of Losing a Loved One
- Obtain certified copies of the death certificate: Contact the county registrar, health department, or funeral director to request 10-20 certified copies of the death certificate. These are necessary to prove your loved one has passed away when collecting insurance payouts and changing account information.
- Contact the employer: If your loved one was employed, inquire about death benefits, employer-provided life insurance coverage, and retirement assets. If you are the beneficiary of a 401(k), consider rolling it into an IRA.
- Notify the executor of the will: Your loved one's will must be filed with the probate court. Assuming you're not the executor, contact the person who is, and schedule a meeting to discuss the legal and tax implications of settling your loved one's estate. If there is no will, the court will designate an administrator to handle the estate and determine how inherited assets will be distributed.
- Gather documents: Have important documentation on hand to help you settle your loved one's affairs. These include estate planning documents, personal records, financial statements, real estate documents, insurance policies, retirement account information, and employee benefits.
- Establish a financial waiting period: Salespeople may approach you about signing up for financial products you don't need right now. Give yourself a waiting period of six months to a year before you take any drastic measures, such as selling a house or investing in long-term products. In the meantime, put inheritance and benefits in a short-term location, such as a money market account.
Within a Month of Losing a Loved One
- Guard against identity theft: Notify the three credit reporting agencies (Equifax, Experian, TransUnion) of your loved one's passing so they can flag the account. Contact lenders, banks, credit card companies, insurance agencies, and other institutions to freeze or close your loved one's accounts. Also, call the DMV to cancel the driver's license. All of these tasks will help to avoid identity theft.
- Pay your loved one's bills: Avoid late charges on credit cards, utilities, car loans, and mortgages by making sure those bills are paid on time. However, don't pay any debts that are the responsibility of the estate. The executor will handle this. If you pay out of pocket, you may have to wait for reimbursement, which could leave you short on cash. Many creditors simply need to wait until the estate is settled to get paid.
- Stop benefit payments and look into survivor benefits: If your loved one was collecting Social Security or other benefits, cancel those now. Then, find out about Social Security survivor benefits, life insurance payouts, pensions, and Veterans Affairs benefits.
- Sit down with financial experts: Now is the time to work with an estate lawyer, financial consultant, accountant, and tax specialist to help you with the legal proceedings, insurance claims, account transfers, and tax liabilities.
- Inventory assets: Contact financial institutions where your loved one had accounts to determine the total assets. They can tell you who the named beneficiary is once you provide a death certificate. A financial advisor can help with this.
- Claim joint assets: The spouse of the deceased can often claim joint assets — such as bank accounts, credit cards, auto deeds, and property titles — without going through probate. An estate lawyer can help with this.
Within Three Months of Losing a Loved One
- Update accounts: Review beneficiary designations and insurance information on personal accounts to bring them up to date.
- Cancel subscriptions and memberships: Contact services and businesses where your loved one was a member and inform them of the person's passing. Cancel clubs, magazine subscriptions, university donations, AAA, AARP, and others.
- Prepare the final tax filing: You must file taxes with the IRS one last time on behalf of the deceased. This will help you understand what the estate is truly worth. A tax specialist can help with this.
- Review the credit report: Check back in with the credit reporting agencies to ensure no fraudulent activity has occurred in your loved one's name.
- Encourage contact between beneficiaries: To help avoid estate disputes, make sure everyone entitled to an inheritance maintains open communication with one another.
Within Six Months to a Year of Losing a Loved One
After several months have gone by and your financial waiting period has ended, it'll be time to reconstruct your financial goals. Things will have settled by then, and you should be ready to update your personal budget and reallocate your investments to get you on track to meet your new long-term goals.