Losing a Loved One

Rande Spiegelman
CPA, CFP®, Vice President of Financial Planning, Schwab Center for Financial Research

The death of a parent or a spouse can be one of life's most traumatic events. Compounding the stress, at a time when grief and emotion can overwhelm us, are important legal and financial details that must be contended with. If you face such a loss yourself, or can help someone who has, consider the following important first steps:

• Let family members and close friends know about your loss as soon as you can. A friend or family member might even take care of notifying others on your behalf.
• You will need to make arrangements for funeral and burial services, an obituary and so on. Let the funeral director know how many certified copies of the death certificate you will need (get at least 10 to begin with, and possibly more).
• Contact the Social Security Administration and other entities (both governmental, such as the Department of Veterans Affairs, and private, such as former employers and insurance companies) that may have been providing benefits or payments to the decedent (including health insurance). Inquire about survivor benefits.

What documents to gather

Collect and review the decedent's estate documents, financial statements and insurance policies, including, but not limited to:

• Will and/or trust documents
• Funeral and burial plans
• Social Security number
• Bank, brokerage and retirement account statements
• Stock certificates or bonds
• Documentation of business ownership interests
• Pension plan information
• Life insurance policies and annuities
• Prior income tax and gift tax returns
• Marriage, birth and death certificates
• Real property deeds and titles to motor vehicles
• Health insurance information
• Outstanding bills or obligations
• Inventory of personal belongings, household goods, etc.

Who to call

Contact the family's attorney, CPA and the estate's executor, as applicable, regarding probate of the estate, preparation of final tax returns and updating of the survivor's estate documents. Contact account providers for title changes and beneficiary designations. Depending on how accounts are titled, the required documentation (e.g., death certificate, affidavit of domicile, copy of trust, etc.) for accounts may vary. You may also need to contact the county assessor and state motor vehicle department for property title changes.

Talk to a trusted financial planner about a comprehensive review of the survivor's finances, including the investment portfolio. Depending on state law and how the accounts and property were titled, the survivor may be entitled to a full or partial "step-up" in cost basis on inherited assets. Hopefully, there will be little if any tax consequence to keep you from allocating the portfolio appropriately based on individual goals and risk tolerance. For more details, see "Heir Economics" on Schwab.com/marketinsight. Be sure to consult with your CPA or tax advisor about the tax treatment of inherited assets.

Take your time

Be wary of people who might prey financially on surviving family members. Such predators vary from criminals who scan the obituaries for funerals, hoping to find an empty house to rob, to unscrupulous financial salespeople who target vulnerable widows or widowers. Don't make any rash decisions. Take time to grieve, and defer financial decisions until you're under less emotional stress.

Think of your own heirs

Keeping your own heirs in mind, put your own financial house in order. Unclaimed assets, including bank and brokerage accounts, go by law to the state within a certain timeframe. New York alone holds $7.2 billion in unclaimed funds; California $4.8 billion. Keep a list of all your accounts, safety deposit boxes, and insurance policies (group and individual) along with your estate documents (e.g., your up-to-date will, durable powers, and trust documents) and let your loved ones know where to find it in case something happens to you.