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Retirement & Planning

Managing the Finances of a Lost Loved One


Managing the Finances of a Lost Loved One

Losing a loved one is never easy, and the last thing you may want to do in the midst of your grief is to think about money matters. This task may seem particularly overwhelming if you aren’t aware of your lost loved one’s financial situation or wishes.1 But it’s important to start managing the deceased’s assets relatively quickly to minimize the risk of fraud or other financial complications (like having to pay back benefit payments such as Social Security).

To make a potentially overwhelming situation a little easier, use the steps below as a guide to help you close out your loved one’s finances.2

What to do within one week of your loved one’s death:

  • Get death certificates.

    Order 10-25 certified copies of the death certificate from the county registrar, health department, or funeral director (you’ll need these for insurance and other accounts to prove your loved one has passed).

  • Call the employer (if applicable).

    Ask for information on death benefits, company-sponsored life insurance policies, and any pay due. Find out if your loved one had any 401(k) assets and if so, who the designated beneficiaries are. If you are a beneficiary of these assets, consider rolling them into an IRA.

  • Notify the executor.

    If you are not the executor of your loved one’s will, notify him or her of the deceased’s passing. If the loved one was your spouse, set up a time to meet with the executor to discuss the legal and tax issues related to settling the estate.

  • Start gathering legal and financial documents.

    Use this financial inventory checklistpdf to make sure you don’t miss any accounts for which you’ll need documentation to close out the deceased’s finances.

What to do within the first month after your loved one’s death:

  • Protect against identity theft & fraud.

    Notify all companies at which the deceased held an account of his/her passing as quickly as possible. Many institutions may require a certified copy of the death certificate to close the account.

    • Use the financial inventory checklist above to help make sure you don’t miss any accounts; consider all bank, credit card, insurance, mortgage, investment, and pension accounts, among others
    • Be sure to pay any of your loved one’s outstanding bills on time to avoid late charges.
    • Notify credit reporting agencies of your loved one’s death. Provide a copy of the death certificate to each of the three main credit reporting agencies – Equifax, Experian, and TransUnion – as soon as possible so they can flag the account. One to two months later, you should check the deceased’s credit history to make sure no fraud has occurred
    • Also contact the Department of Motor Vehicles to cancel the deceased’s driver’s license.
  • Cancel benefit payments & inquire about survivor benefits.

    Be sure to stop payments to the deceased from agencies like Social Security, or you may have to repay any amounts paid posthumously. Inquire about survivor benefits from entities providing benefits/payments to your loved one, including life insurance, Social Security, and Veterans Affairs.

    • Note that if you are the deceased’s spouse, it may make sense to wait until you reach full retirement age to claim a Social Security survivor benefit: if you do, you’ll receive a payment that is equal to 100% of the deceased spouse’s benefit
    • If you are already collecting a spousal Social Security benefit, you can “step up” to a survivor benefit (note that your spousal benefit will disappear if you do this)
  • Get expert professional assistance.

    Contact an estate attorney, CPA, financial advisor, and tax specialist to help with financial and legal matters related to the estate.

    • An estate attorney can determine if probate is needed and help with legal filings/letters testamentary (needed to close out the deceased’s business dealings)
    • Your financial advisor can help with the transfer/closing of assets; if your financial advisor is not the same as your loved one’s financial advisor, you should contact him or her as well to assist in the closing & transfer of assets
    • Your loved one’s life insurance agent can help with claim forms to ensure you are paid out on any death benefits
    • A tax specialist/CPA can help you determine any tax liabilities associated with the estate or inherited assets, as well as assisting in pulling together a final tax return for the deceased individual & estate (which must be filed by April 15 of the year following your loved one’s passing). Note that you should keep all documents that show individual and joint account values on the day of death
  • Claim joint assets.

    If you are the deceased’s spouse, joint assets can typically be passed on to you without approval from a probate court, although in some states joint bank accounts are automatically frozen upon death of a spouse (in this case, you’d need to ask the bank to release the funds to you). Note that rules for changing property titles of joint assets can vary by county, but usually you can have them changed into your name by contacting your county assessor and state’s Department of Motor Vehicles.

What to do within three months of your loved one’s death:

  • Update account information.

    Review and update information on your personal accounts and property, including updating beneficiary designations, insurance, and property titles.

  • Cancel memberships.

    Contact organizations in which your loved one was a member to terminate his/her membership. Pay particular attention to those memberships for which the deceased may have set up an “auto renewal” with his/her bank account to pay for fees or regular charitable giving. Consider organizations like AAA, AARP, clubs, magazine subscriptions, universities, and professional groups, among others.

  • Review credit information.

    Check back in with credit reporting agencies to ensure no fraudulent accounts have been opened in the deceased’s name.

  • Maintain an open line of communication among beneficiaries.

    Most estate disputes began over a lack of communication between beneficiaries. Since the last thing you probably want is to be dealing with infighting over inherited assets, encourage all parties to communicate with one another as much as possible.

What to do within one year of your loved one’s passing:

  • Seek out financial guidance.

    Particularly if the deceased is your spouse, it’s likely your financial situation and financial goals have changed since you lost your loved one. A financial advisor can help you with everything from updating your personal budget to reallocating your investment portfolio to ensure you’re on track to meet your (revised) long-term goals.

Keep in mind that during this difficult period, you should give yourself time to process your loved one’s financial situation. Hold off on making any major financial decisions for at least six months (like selling a house or other investments) while you think carefully about what next steps are right for his or her assets. And don’t allow a salesperson to talk you into buying financial products at this time (like additional insurance) – many unscrupulous people prey on those who have recently lost a loved one, so establishing a “financial waiting period” will help weed out people who may not have your best interests at heart.

By staying organized and enlisting professional assistance where needed, this trying time can be a little easier for yourself and your family. Most importantly, don’t let the financial aspects of death take you away from what’s most important during this time: having the space to grieve your loved one and begin to move on.

How Schwab can help:

With a wide variety of investment options and a highly-qualified team of over 350 financial consultants nationwide, Schwab can provide comprehensive investment and estate planning help and guidance3 in a personal way that’s right for you. Let us help you make sense of a lost loved one’s finances and make this difficult time a little easier. Visit us online to learn more or call us at 877-302-5886 to speak with an investment professional today.