Handling Finances When You’ve Lost a Loved One

As you would expect, we each respond in our own way to the death of someone close to us. Some focus on getting things done while others find themselves unable to function. The range of reactions spans the full spectrum of emotions. During this time you will also need to know how to begin the process of taking care of the deceased’s finances. The following are a few important points to keep in mind.

First and foremost, before reporting the death to financial institutions you must ensure that you (or the executor) have access to legal/financial documents and to sufficient assets to pay for all expenses associated with this process. Be prepared that if the documents are stored in a safety deposit box it will be sealed when notice of the death is received and not available to anyone that doesn’t have their name on the box. Since some accounts will also be sealed it is also a good idea to determine the source of assets that will be used to cover ongoing expenses and to support dependents while the deceased’s estate is processed. If funds are in joint accounts be sure they will not be frozen once you submit the death certificate.

A surprising tidbit is that you’ll need 20-25 certified death certificates (one original per financial institution) from the County Registrar or Funeral Director or Health Department. Your instinct might have been to ask for one.

As early as possible, engage with your support team (CPA, estate attorney, financial advisor, executors and trustees), then keep the lines of communication open throughout the process of settling the estate. There may be time constraints associated with certain filings and activities related to settling the estate making it doubly important to work together.

A sampling of other financial considerations:

  • Identify all automatic deductions and regular subscriptions to determine which need to be changed or terminated
  • Debt should be handled with care since some will end with the deceased
  • In partnership with the executor, obtain a tax ID for the estate
  • File the necessary tax forms (e.g., Forms 1040 and 1041)
  • Take particular care when handling tax-advantaged accounts and when making decisions on insurance proceeds – check with your team
  • Take a close look at the fine print. Spouses, partners and children may be entitled to survivor benefits

This is only a partial catalog of considerations.

Edi Alvarez, CFP®