Important Financial Steps After a Loved One Passes

Losing someone close to you is incredibly difficult. Unfortunately, alongside grief and mourning often comes navigating the finances of the person you’ve lost. Doing this, especially in the early stages of grieving, can be a heavy burden.

To help you through this process, we’ve gathered some important financial steps to take after the death of a loved one so you can focus on healing and moving forward.

What are the financial steps to take after a loved one dies?

• Obtain a death certificate (as soon as possible)
  Without a death certificate, not much can be done in the way of finances — this first step is key for any financial paperwork moving forward. Depending on if an autopsy was performed or organs were donated, the death certificate can sometimes take weeks to receive in some states. You’ll need to visit the vital records office in the state of the deceased in order to receive a copy. Be sure to get multiple copies, as you’ll need the original death certificate for a variety of different financial matters. Bring cash, as you’ll need to pay for each certificate, and there is often a fee to charge credit cards. You can sometimes order them by mail, but this only increases the amount of time to receive the certificates. See how to order a death certificate in your state.

• Review the last will and testament (within 1-2 weeks)
  If your loved one had a last will and testament and named you as the executor, also referred to as a personal representative (PR), then you’ll have a much easier time making financial arrangements than those without this key document. If you’re not sure whether or not a will exists, you can check to see if it was registered in the county courthouse where the deceased resided. If there is no will on file, search the deceased’s home in places like filing cabinets and safes, or contact their attorney to see if a will was created, but not registered. If this is the case, you can register the will yourself at probate court.¹

• Obtain letters of administration (within a 1-2 weeks)
  Next, you’ll need to obtain letters of administration. These can be granted at the county courthouse where the deceased resided. You’ll need to bring the death certificate, last will and testament, and an estimated list of assets. In addition, you may need to post an executor’s bond², sometimes called a probate bond or a fiduciary bond, which acts as an insurance policy that will reimburse the estate should the executor financially damage it — intentionally or unintentionally. The letters of administration officially authorize the executor to settle the decedent’s estate.

• Visit the bank (within 2-3 weeks)
  Once you have a death certificate, last will and testament, and letters of administration, it’s time to take a trip to the bank. These documents will allow you to have access to the decedent’s bank accounts. You’ll need an official bank printout of all their accounts and balances.
  
  However, all liquid cash must be placed in an estate account, which you can set up while you’re at the bank, you just need to apply for an EIN. The estate account will also serve as a place for any money owed to the deceased, such as paychecks.

• Check other investments (within 2-3 weeks)
  If the deceased had a 401(k), other investments, and/or mortgage, you’ll also need official documentation of these items as well. If the deceased had a financial advisor, they would be a good resource to contact.

  • Mortgage
    If the deceased was a parent and held a mortgage, you may want to know how to take over your deceased parent’s mortgage, but that isn’t always necessary. In most cases, children are not obligated to pay for a deceased parent’s debt. Depending on the circumstances, you can create a forbearance agreement³ with the lender to suspend payments and quickly sell the house. Some lenders may agree to suspend payments until the sale of the home, while others may only agree to 30 – 90 days. After the lender deducts the amount they are owed, all proceeds will need to remain in the estate account until the probation period is over.
    
    

  • 401(k) and Other Retirement Accounts
    If you are the beneficiary listed on the 401(k), you can contact the company where the 401(k) or equivalent is held and collect these funds without having to wait for the estate to close. The most likely option will be a lump sum distribution, which is not subject to any early withdrawal fees. However, you will need to pay income tax on the amount of money you receive — any proceeds from the deceased’s 401(k) cannot be rolled over into your 401(k) accounts. Learn more about inheriting a 401(k).

• Pay the courthouse another visit (within 2-3 weeks)
  Once you’ve gathered all of the official financial documentation of the decedent’s assets and investments, you’ll go back to the county courthouse to submit the official list. The court will use this information to publish a death announcement in the newspaper, which you’ll need to pay for, which serves as a notice to creditors.⁴ Depending on the state where the deceased resided, the notice will run for a certain length of time and creditors will have a certain amount of time to file a claim against the estate. If the deceased had any outstanding debt that creditors make a claim against, it will need to be paid from the estate account prior to beneficiaries receiving anything.
  
  While you’re there, you’ll also need to provide the court with a list of “interested parties.”⁵ For example, if a parent passed away and you are one of three children, but the only child named in your remaining parent’s will, you are legally bound to provide the names and addresses of the other siblings, whom will be contacted by the court and then have the right to contest the will. Someone may even object to the appointment of the executor named in the will. But, if the will was created properly and is legally sound, contesting the will won’t have any legal validity.

• Check to see if there’s life insurance (within 3 months)
  Within less than three months of the decedent’s passing, you’ll want to double-check to see whether or not they had life insurance. Pay close attention to the mail that arrives for them to see if there are any statements from a life insurance company. If you’re named as a beneficiary on the policy, you’ll need to provide the life insurance company with the death certificate and your proof of identity. Life insurance is typically paid out as a lump sum check and can be collected prior to closing the estate.

• File tax returns of the deceased (by the IRS filing deadline after the death)
  After the calendar year is over, you’ll need to file tax returns on the deceased’s behalf. Taxes are filed the same way as if they were still alive, with all income reported up to the date of death. Any money owed will be paid through the estate account.

• Close the estate and any other accounts (approximately 6-12 months after death)
  Once the probation period is over, and all of the deceased’s financial obligations have been paid, it’s time to close the estate — this typically happens after a minimum of six months, but could take years depending on the probate process. The executor can make distributions to all of the beneficiaries and close the estate. Laws between states vary, so be sure to check with the court prior to doing so. Also close any remaining bank accounts, even if they have a zero balance, to protect against fraud.

Planning – and paying for – a funeral

Amidst gathering financial documents, it’s likely that you’ll need to plan a funeral or celebration of life ceremony. If your loved one had a will, you’ll want to check it for any special requests, especially regarding happens to their body.

The average funeral – including a casket, funeral home and gravesite – costs over $7,000⁶, and it’s important to note that whoever pays for the funeral should save all receipts and document all expenses. If there is money in the estate, the executor, beneficiary or someone else, will get reimbursed.

Take it one task – and one day – at a time

The financial steps you need to take after a loved one dies can be tedious and bureaucratic. Remember to take things one task, and one day, at a time. We wish you the best as you navigate these responsibilities during your grieving process.