Take These Financial Steps When a Loved One Passes Away

Take These Financial Steps When a Loved One Passes Away

When a loved one dies, survivors must attend to a number of issues during a difficult time.

Aside from notifying friends and family, making funeral arrangements and dealing with immense grief, there are important financial and legal details that also require attention. Whether you’re a spouse, child, or executor of the will, knowing about these financial tasks and the necessary documents will make this part of your job much easier.

Was a Letter of Instruction prepared?

This tool can be invaluable in handling the affairs of the deceased. Although it isn’t legally binding in any way, it provides specific information regarding preferences on anything from medical care to funeral directives to the distribution of assets and property. Some things the Letter of Instruction may include can be particularly helpful to the executor, such as:

  • A list of all assets
  • The location of any assets that may not be readily accessible
  • All account information, including passwords, PIN numbers and account numbers, for any bank accounts or retirement accounts
  • Contact information for attorneys, brokers, bankers, CPAs, insurance agents and financial advisors
  • Informal directions about how the executor should disperse heirlooms or other sentimental possessions
  • Where recent tax returns, Social Security statements, birth certificates and other important documents are kept
Financial Steps When a Loved One Passes Away

Obtain death certificates. 

Your first order of business should be to collect certified copies of the death certificate. They’re generally obtained through the funeral home, but they can also be ordered from the Vital Statistics office in the state in which the death occurred. There’s typically a charge for each certified copy requested. Some recipients may accept a reproduction but most entities will require a certified death certificate, so be sure to order a sufficient number of original documents. Experts advise ordering at least twenty, as you will need them for insurance providers, financial institutions, creditors, and others.

Contact the employer. 

If your spouse or loved one was still working, call the human resources department at his or her employer’s office to notify them of the death. They should be able to provide you with important financial information, including details regarding any life insurance policies that may be in place and contact information for the company that administers the retirement plan. In addition, there may be benefits outstanding for survivors, such as a final paycheck or payment for unused vacation and sick leave.

Get help from the experts.

Does the deceased have a financial advisor? They can offer tremendous help in getting your loved one’s affairs in order. Additionally, contact an estate attorney, CPA, and financial advisor if needed for guidance 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 obtaining letters testamentary, a document issued by the court that authorizes the executor of a will to take control the decedent’s estate. This information is necessary to close out the deceased’s business dealings. A CPA will be able to determine if there any tax liabilities associated with the estate or inherited assets, and can assist in filing a final tax return for the deceased. Your financial advisor will coordinate the work of the estate attorney and CPA as well as assist with the transfer of assets, the closing of accounts, and can provide valuable ongoing guidance regarding financial matters that will need to be addressed.

Gather legal documents. 

When you experience a death in the family, a lot of information about yourself and the deceased will be required as you go through the process of handling their affairs. If your loved one had a Letter of Instruction, the location of many of these legal documents will be listed. In addition to the death certificates, keep these documents on hand:

  • Social Security cards or numbers for both of you
  • Birth certificate
  • Marriage license
  • Divorce decree, if applicable
  • Deeds to property
  • Automobile titles
  • Military service records, if applicable
  • Estate planning documents, including Wills and Powers of Attorney

Collect financial information. 

You’ll need to locate all of the decedent’s accounts. Again, if your loved one created a Letter of Instruction, the location of these documents is likely to be listed there. Many will be apparent, but others that are less obvious can be easy to overlook. Sort through your loved one’s mail for at least three to six months to find any missing information, such as non-recurring bills. The primary financial documents and information you should collect includes:

  • Bank and investment accounts
  • Retirement accounts
  • Mortgage and other loan statements
  • Insurance policies
  • Tax returns
  • Bills, including utilities, credit cards, and insurances
  • Email and logins for all accounts (this information is vital and in Maryland it cannot be obtained from the company or financial institution)

Transfer joint assets.

 Removing the decedent’s name from jointly held assets such as bank accounts, credit cards, auto titles and deeds to property should be done as soon as possible. After the transfer, any expenses related to those assets become the responsibility of the owner rather than the estate.

Notify government agencies. 

It’s important to notify the Social Security Administration and any other applicable government agencies in a timely manner to end or begin receiving benefits. (Note: In Maryland, the funeral home will contact Social Security for you). A surviving spouse or children may qualify to receive a one-time $255 death benefit from the Social Security Administration. Additionally, survivor benefits may be available for spouses and ex-spouses who were married to the deceased for ten years or more.

Notify businesses. 

Any businesses with which your loved one had dealings need to be informed of the death. Instruct creditors to transfer or close accounts. Stop any automatic payments or deposits and cancel any subscriptions in his or her name.

Inform the credit reporting agencies. 

It’s a sad truth, but there are plenty of fraudsters who seek to take advantage of the bereaved. To reduce the chance of identity theft and other forms of financial fraud, contact all three major credit reporting agencies (TransUnionExperian and Equifax) so they can add a ‘deceased’ indicator to the account. Check the deceased’s credit history in a few months to make sure no fraud has occurred.

Take your time.

 Although you may feel an urgent need to tie up the many financial loose strings in the wake of your loss, you don’t need to do it all at once. During times of grief, judgment becomes clouded and decision-making isn’t at its best. Postpone making any major financial decisions in the immediate aftermath of the death of a loved one. In fact, experts advise waiting at least six months before addressing significant fiscal matters. If you receive money from an insurance settlement or other payout, put the funds into a savings account while you assess your next steps.

When you lose a loved one, especially if it’s your spouse, your financial situation is likely to change. 

At FAI Wealth Management, we’re here with sound, compassionate guidance to ensure that you’re on track to meet your long-term goals. Please contact us for more information or to request a copy of our helpful “Surviving Spouse Guide”.  

About FAI Wealth Management, Inc.: Located in Columbia, Maryland, FAI focuses on helping clients create the financial future they desire by protecting their wealth, making the most of their assets, and planning for life's uncertainties. The firm combines fee-only, fiduciary-driven guidance with highly personalized, consultative financial planning and investment services that enable individuals, families, and businesses to navigate complex life transitions. Founded in 1987, FAI currently manages more than $350 million in client assets nationwide. For more information about FAI Wealth Management, please visit the website at https://www.faiwealth.com or call 410.715.9200.

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