How a Loved One’s Death Could Impact You Financially

Introduction

Losing a loved one is one of the most challenging experiences to go through. In that time of mourning, there are likely a million different things on your mind.

And while most of those will be rooted in feelings and memories, some may be tied to practical matters like finances.

If you find yourself in the difficult position of dealing with the aftermath of a loved one’s death, this guide may help set you on the right path.

A Legal Matter

When someone has passed away, their possessions are legally known as their estate. The person handling those belongings is the administrator or executor.

These two terms essentially have the same duties, differing only in that an executor is named in a will, while an administrator is appointed by the courts. This could happen when there is no will or if the named executor can’t serve for some reason.

If you’re the administrator or executor of an estate, it’s your responsibility to work within the legal system to handle any financial issues.

How does the deceased’s debt affect you?

One of the primary issues you may need to work with when administering an estate is managing debts.

Laws vary from state to state, but you’re generally not responsible for a deceased loved one’s debt unless you were a co-signer or guarantor on any of their loans.

However, if you stand to inherit some or all of the deceased’s estate, you should know that creditors usually receive priority over inheritors in terms of distribution.

You may also find yourself dealing with calls from debt collectors in this time. Make sure you consult the Fair Debt Collection Practices Act (FDCA) FAQ so you’re fully aware of your rights and protections in dealing with creditors and collectors. These rights include restrictions on what times debt collectors can contact you (never before 8 a.m. or after 9 p.m., unless you agreed to it) and frequency of contact (no more than seven times in a seven-day period).

Initial steps to take after a loved one’s death

It can be incredibly hard to juggle responsibilities and tasks in such a difficult time, but it helps to go in prepared.

First, a death certificate is necessary for many of the steps ahead. Generally, the funeral home who handled arrangements can provide certified copies or point you in the right direction. Copies can usually be obtained from the local vital records office, too.

In addition to the death certificate, there are other documents that you’ll need or that can at least be helpful for reference.

These may include:

• Any estate planning documents, such as a will

• Financial account statements

• Utilities and bills

• Tax returns

• Insurance policies

   

Before taking action, you may also want to contact any relevant financial or legal professionals that the deceased worked with. This could include attorneys or estate planners. You may also want to meet with your own advisors at this point so they can help you with next steps for your specific situation.

Contacting Social Security Administration and other benefit institutions

Notify benefit agencies like the Social Security Administration, Medicare and Department of Veteran Affairs of the death. If the deceased was eligible for union or pension benefits, you’ll also want to contact the relevant institution.

Funeral homes sometimes inform the SSA, but as the responsible party, it’s best to confirm. These agencies may provide survivors’ benefits to the deceased’s spouse and children.

Informing financial institutions, insurance and other services

Gather your documentation and contact any financial institutions, insurance agencies, utility companies and other services where the deceased had an account.

This is a broad category and there may be individual next steps. For example, in the case of a joint financial account you shared with the deceased or a life insurance policy. But the relevant institution will be able to assist you with the process.

Thwarting ID Theft

It’s an unfortunate thought, but the deceased’s personal information is still vulnerable to identity theft. Criminals can take advantage of any lag between the time of death and notifying relevant parties, so you’ll want to act fast.

In this situation, you have to contact the three major credit reporting agencies directly to notify them of your loved one’s death and provide a certified copy of the death certificate as proof.

You can use the following contact information:

• Experian: Experian.com
  Phone: 888-EXPERIAN or 888-397-3742

• TransUnion LLC: TransUnion.com  
  Phone: 877-322-8228

• Equifax: Equifax.com
  Phone: 888-202-4025

It’s a good idea to request a copy of your loved one’s credit reports from each agency. The credit reporting agencies generally delete a deceased person’s account after about a year, so it’s best to access the credit reports sooner rather than later.

Using the information contained within the credit reports, contact any creditors with open accounts for the deceased and ask them to note your loved one’s death accordingly in their systems. You will need to provide them with a copy of the death certificate and proof that you are the administrator of the estate.

Bottom Line

The loss of a loved one is a difficult topic and it’s one we don’t often think about, if we can help it.

But it’s still good to inform yourself, should the situation arise where you find yourself administering an estate.

By proactively following the above steps, you can hopefully avoid or limit any financial damages that may otherwise arise.

And now that you know a little more about the process, you may want to consider how to best organize your own finances and legal documents.