Coping with the death of a family member is overwhelming. It can be difficult to put one foot in front of the other while in a state of shock, but there are often actions you need to take to settle your loved one’s financial affairs.
You may need to do more — or less — depending on your situation and relationship to the deceased. While a legal professional or financial planner can clarify your roles and responsibilities, you can also use this guide to identify the next steps you may need to take.
1. Get Copies of the Family Member’s Death Certificate
One of the most important documents you’ll need as next of kin or executor is the death certificate. To avoid procedural delays, order 20 or more certified copies through the funeral home or, later, from the city clerk or vital statistics office. To finalize the deceased’s financial affairs, a copy will need to be provided to organizations including:
- Financial institutions
- Government agencies
- Creditors
- Insurers
If the estate goes through probate court, the executor will also need letters testamentary from the probate proving he or she has the legal authority to handle the affairs of the estate.
2. Gather Other Paperwork Related to the Family Member’s Death
In addition to the death certificate, you may need other documents to manage your loved one’s estate. These can include:
- The deceased’s will
- Life insurance policies and other death benefits
- Cemetery plot deed and prepaid funeral arrangements
- Automobile titles and property deeds
- Checking, savings, and investment account statements
- Credit card statements
- Mortgage and loan documents
3. Assemble an Advisory Team
Enlist the help of the deceased’s advisors (and your own advisors, as necessary) to make sure all the details are covered. This team could include the following:
- Estate lawyer: to assist with probate issues
- Accountant or tax preparer: to determine whether an estate tax return or final income tax return must be filed
- Insurance agents: to facilitate the claims process
Keep in mind that these advisors will need to get paid, and depending on the circumstances, you or the estate will need to foot the bill. Funeral homes can help out with these types of practical matters, as well.
4. Notify Financial Institutions and Government Agencies
In addition to advisors, notify a number of organizations including:
- Social Security Administration (and other government benefits): Stop payments if applicable, and ask about monthly survivor benefits and the $255 one-time death benefit. Failure to stop automatic deposits of Social Security checks may result in liability for any amounts paid — with penalties and interest.
- The deceased’s employer: If the deceased was still working, contact his or her employer about any unpaid wages and/or bonuses, accrued but unused vacation time, life insurance benefits, and 401(k) funds. Income taxes may need to be paid for the portion of the year the deceased worked.
- Creditors, credit card Issuers, and credit bureaus: Call the customer service number on each card or statement for instructions on closing the accounts or — if the accounts were held jointly — putting them in your name only. But be sure you understand the potential effects of doing so. Contact all three credit bureaus right away, as well, to prevent fraud.
5. Pay the Deceased’s Final Bills and Taxes
- An executor can open a checking account for the estate to settle debts after death and pay for the funeral. To do so, a tax ID number is needed from the IRS for the estate.
- Determine whether a Form 1041 tax return should be filed for the estate. This is not the same as the federal gift/estate tax, which only applies to estates valued at more than $5.34 million. Although property left to spouses is inherited tax-free, a surviving spouse might file an estate tax return to maximize estate tax exemptions down the line via the American Taxpayer Relief Act’s “portability” rule. Talk to your tax professional to discuss what makes the most sense for your family.
- Coping with the loss of a family member is emotionally exhausting, but understanding the next steps you need to take can help ease the stress — and provide the peace of mind your family needs during this difficult time.
After a death in the family, it’s crucial to know what must be handled next financially. Use this after-death financial checklist from Regions as a guide.
