Losing a spouse, friend or family member can be tremendously difficult, and handling their financial matters and final wishes can make grieving their loss even harder. While few want to think about the death of a loved one, it is helpful to be prepared when that time comes.
Take a look at steps you can take in the days and weeks after death to settle a loved one’s finances.
Gather official records
A death certificate is needed to complete several financial tasks below, but to get the death certificate, you first need to obtain a legal pronouncement of death. If your loved one died in a hospital or nursing home, the facility will typically handle the pronouncement. However, if they pass at home or in a private setting, you will need to bring in a medical expert to legally declare the death. To do this, call 911 as soon as possible to bring a medical professional to the site. They will move your loved one to an emergency room to be declared deceased.
Once you have the pronouncement of death, you can start planning the funeral and obtain the death certificate to proceed with handling their financial matters. You can request the death certificate through the funeral home you will be using or the office of vital records in your state. Either way, it is recommended to request several copies as it is a crucial document in this process.
Prepare for funeral costs
The average cost of a funeral in 2022 is over $11,000. While costs can vary based on whether the individual wished to be buried or cremated, service fees of the funeral home and more, this is a major expense for many.1 If you have the means, it can be helpful to budget for this cost in advance to avoid a big surprise fee. However, a sudden passing can leave survivors unprepared. In this case, families can lean on life insurance, if available, as well as assistance options from the funeral home and state and local government to help cover expenses.
Within a few days
Many people and organizations need to know of your loved one’s passing to provide you with necessary documents and close accounts. These include:
- The Social Security Administration
- Financial institution(s)
- Life insurance companies
- Financial advisors and stockbrokers
- All three credit reporting agencies (TransUnion, Equifax and Experian)
- Department of Motor Vehicles
- Medicare, Veterans Affairs and other agencies providing benefits to your loved one and beneficiaries
Secure the will and trust
An original will and trust guide the decedent’s final wishes for their assets, including who is named as the executor of their estate. Locate your loved one’s will and trust, if they’ve prepared them, and keep the documents in a safe place ahead of probate, which is the legal process of executing the will and distributing property and assets.
Collect financial documents
To get a firm idea of the decedent’s financial affairs, you will need to make an encompassing list of their bills and accounts. While your loved one may have made preparations for their finances, it is important to search for those that may have been overlooked such as non-recurring bills. As a start, gather information on the following:
- Financial institution and investment accounts
- Statements of mortgage and other loans
- Letter of administration, if an estate is established
- Estate tax identification number (EIN), provided by the IRS if an estate is established
- Retirement accounts
- Insurance policies
- Bills, including credit cards, utilities, services and property tax
- Tax returns
Within a few weeks
Take the will to probate
To carry out the deceased’s final wishes and ensure their finances are taken care of, file their will with the probate court. Probate ensures the payment of your loved one’s debts and liabilities, as well as the transfer of any remaining assets to the noted beneficiaries. The executor of the will is responsible for following the terms of the will and handing out assets. This is typically done at a county or city probate court office. If your loved one did not create a will, the probate court will name an administrator to assess the estate and divide the assets.
The process of dealing with wills, trusts and estates can be overwhelming. While it is not required to have an attorney present when settling an estate, it may be helpful for you and your family to have an experienced party on your side.
Cancel services and credit card accounts
When going through their financial documents, you will likely come across bills from service providers and financial institutions, which are no longer needed. Be sure to cancel cell phones, streaming services and cable and internet services, as well as credit card accounts. While credit bureaus send card issuers an alert of a deceased customer as part of their regular reporting process, you can also reach out to the customer support line of their financial institution directly to ensure timely cancellation of the card(s). You will need a copy of the death certificate to do so.
If the card is shared with another individual who is still using it, such as a spouse of the deceased, keep the card open while notifying the financial institution so they can remove the decedent’s name from the account. Be sure to destroy any cards with your loved one’s name on them to avoid theft or fraud and keep records of all account closures.
If the estate is not large enough to cover secured debt, the family of the deceased is generally responsible for it. For example, if an auto loan is not settled by the estate, the person inheriting the car will be responsible for continuing to make payments or selling the car to pay off the debt. However, families are typically not responsible for credit card and unsecured debt, unless they are a joint account holder or co-signer of a loan. Ultimately, inheriting debt is determined by the state and the value of the estate.
Prepare to file final taxes
You will need to prepare and submit final tax filings on behalf of your loved one’s estate. Collecting all information about this process sooner rather than later can give you more time to understand what needs to be done. You may also be required to file an estate tax return if the estate is valued at $12.06 million or more.2 Seek the guidance of an accountant, CPA, tax attorney or tax preparer if needed.
Plan for the unexpected
Talking with your family and loved ones about end-of-life planning, while uncomfortable, can alleviate stress and provide valuable information for survivors.
At APGFCU®, we recognize how difficult this experience can be and are here to help you navigate the process. Visit our Deceased Member Account page, for guidance for submitting a Deceased Member inquiry.
This article has been provided for educational purposes only and is not intended to replace the advice of a financial advisor or tax professional. The examples provided within the article are for example only and may not apply to your situation. Since every situation is different, we recommend speaking to a loan representative or financial advisor regarding your specific needs. You may also want to contact your tax advisor for additional tax information.