An unexpected death can leave the person or people left to handle the finances unprepared. It’s a challenging time. Not only are you grieving the loss of a loved one, you’re also called upon to untangle the person’s estate.
We hope this checklist of financial responsibilities may ease part of the burden during such a difficult time.
Follow This Checklist
Request death certificate.
Gather important documents, including life insurance policies, will or trust documents, financial and retirement accounts, bank statements, tax documents, mortgage information, bills, etc.
Update the address on all accounts and bills if needed and/or forward mail to an appropriate address.
Make copies of the will or other documentation showing the executors.
Call credit card companies, the three credit agencies, utilities and other billing companies, and existing creditors.
Determine assets and outstanding debts.
Work through will or trust.
Order Official Certificates
One of the first things you’ll need to do for your loved one’s finances is to close unused accounts and claim property. Each time you claim property or notify a creditor, you will need a death certificate.
Contact your state or local vital records office to order official copies. According to Nolo, these typically cost $10 - $15 for the first copy. The executor of the estate can reimburse themselves from the estate if they pay for the certificates.
You’ll also want to gather all important paperwork, including life insurance policies, will or trust documents, financial and retirement accounts, bank statements, tax documents, mortgage information, bills, etc.
Notify Creditors and Credit Bureaus
Criminals can take advantage of the situation by charging up credit cards or opening new credit in your loved one’s name. To prevent this, notify existing creditors and the three major credit bureaus that the person has passed. This step will prevent financial identity theft that can be messy to correct later.
Also contact any companies that bill the person on a recurring basis, such as a cable provider or cell phone company. Close those accounts unless a surviving spouse is still using the service.
Each company may have a different process and require different paperwork. Often, you will need an official death certificate and proof that you are named the executor of the will—keep copies of these documents near.
Understand the Person’s Assets and Liabilities
If your loved one used an estate lawyer, their office should help you understand what assets and liabilities the person had. Assets may include real estate, vehicles, personal belongings, and life insurance payouts. Liabilities could include mortgages, car loans, credit card balances, or other debts.
The will should outline how these assets will be distributed after debts are paid. If there are any outstanding debts, the lenders will generally pursue the person’s estate, not the heirs. This is a process called probate. Each state has different laws about how long probate lasts.
Some assets—such as life insurance policies and qualified retirement accounts—are not subject to probate. They go directly to the beneficiaries.
If the person had a reverse mortgage on their home, that means fewer assets for their heirs. But, if the inheritors pay off the reverse mortgage, they can generally keep the home rather than sell it.
How to Prepare
If you’re the executor of a will, there are a few things you can do in advance. That way you’ll be prepared and know what to do when the time comes.
Get contact information. Have the person share contact information for their estate lawyer and tell you where to find key estate documents. You can also have them list bank accounts, retirement accounts, creditors, and other information you’ll need for later.
It can be hard to have these conversations. But knowing that you are prepared to take care of a loved one’s estate and carry out their wishes can provide them a sense of relief.
Confirm beneficiaries. Have them confirm that they’ve named the correct beneficiaries on any life insurance policies or retirement accounts. This is especially important if they’re remarried or they’re in a blended family. They may have named an ex-spouse as beneficiary but want an adult child to inherit the retirement account instead.
This is such a trying time, please make sure to take the time to grieve your loss and take care of yourself too. Each person is different—you might seek counseling, join a support group for the bereaved, or just reminisce about the person with loved ones.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.