Losing a loved one is a devastating process, no matter if it is expected or not. Meanwhile talking about and planning for death can be uncomfortable and emotional. Unfortunately, COVID-19 has made this uncomfortable process a reality for many Americans.
During an emotional time when you should be able to grieve, you will also need to make critical financial decisions to protect your loved one and the assets that they worked so hard to acquire throughout their life. As a first responder, you’ve already prepared to handle the worst ahead of time. Are you prepared for the worst for your finances?
More often than not, people are not prepared for a loved one’s death. They find themselves struggling to find passwords, they aren’t sure what financial accounts exist until statements come in. This all makes mourning stressful and complicated.
One way to make this time less stressful is through preparation beforehand. Sit down together and take stock of the entire financial landscape. Layout where assets are and how to access them. Store this information, like life insurance policies, in a secure place. If something happens, you will have all the information you need.
This includes looking at retirement and investment accounts, cash holdings, and assets like houses and vehicles. Talk through what post-death desires are and intended asset distribution. You should do a cash flow analysis on your household’s income and expenses to ensure you won’t be overdrawing any accounts.
If you recently lost a loved one, it is essential to address the financial decisions below sooner rather than later to avoid additional stress and ensure peace-of-mind. Be sure to take time to pause so you can make logical decisions level-headedly. If you don’t feel comfortable making these decisions on your own, reach out to an attorney or financial advisor for support during this difficult time.
Obtain Letters of Administration
When a loved one passes, you will need to obtain what is referred to as a “letter of administration” or a “letter of testamentary.” These letters will authorize an individual to handle the financial accounts and documents of someone who has recently passed away. This will be necessary so that financial accounts can be settled, any necessary bills or outstanding debts can be paid, and affairs in the deceased’s name can be resolved.
You can obtain these letters by taking a copy of the death certificate and your loved one’s will to the local courthouse where they most recently resided and open up a probate file. Once opened, you will be able to handle financial issues on their behalf. If you feel too overwhelmed or unsure about what to do, you can hire an attorney to perform these duties.
Close or Reassign Any Necessary Financial Accounts
Start your closing process by making a list of all accounts that will need to be closed or reassigned to someone such as a spouse or other survivor. You may also want to note what the policy is for the closing or transfer of each account. Some credit card companies will require a full payoff at closing, while others may be simply reassigned to another person.
If you transfer bank accounts, make sure to remove the original name and add anyone else who needs to have access to the account. Some accounts you will need to consider include:
Safety deposit boxes
Phone, internet, and utility bills
Financial accounts, such as stocks, bonds, and retirement
Notify Government Institutions and Financial Companies
It is essential to notify the government of a loved one’s death as well as any insurance companies and financial institutions. Giving notice will be necessary to collect any benefits for survivors and serve as a way to prevent your loved one’s identity from being used for fraudulent purposes.
Companies that you should notify include:
Social Security Administration – Depending on the age of your loved one, there may be social security survivor benefits that will need to be filed for. Even if there are no benefits to transfer, you should call SSA immediately to prevent your loved one’s social security number from being used for fraudulent reasons.
Insurance companies – You will need to call any life insurance companies to begin the collection process on any policies your loved one may have had. You will also need to remove them from auto and medical insurance policies they will no longer use.
Post office – While it may not be on the top of your list, making sure the post office is aware of the death is an essential step in notifying government authorities.
Credit bureaus – Notifying credit bureaus of your loved one’s death will help prevent fraudulent use of their name for credit.
Utility companies – The utility company will need to be called and changed into the name of someone who will be managing the property to prevent any difficulties with handling the account in the future.
Creditors – You should notify any lenders so you can begin the process of settling your loved one’s debts. If there are any policies regarding the loan as related to the event of death, it will go into effect.
Credit card companies – You will either want to cancel credit cards or remove your loved one’s name if it is a joint account. If there is only one account holder, you might want to check to see if they had a payoff policy in the event of the cardholder’s death.
Take Stock of Your Finances
After the death of a loved one, you may face serious medical bills, funeral costs, and potentially significant debt inherited from your loved one. This can wreak financial havoc if you aren’t prepared for those expenses or loss of income. You should do a cash flow analysis on your household’s income and expenses to ensure you won’t be overdrawing any accounts.
If you planned well, what you find out shouldn’t come as a surprise. By taking care of financial decisions after the death of a loved one, you will be able to make sure all of their final obligations are taken care of in alignment with their final wishes.
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