To make the process a bit easier, here’s a checklist of the top eight money matters you must deal with — and mistakes to avoid — after someone you care aboutchecklist isn’t all-inclusive. But what follows is critical information that can save you precious time, money and energy, as well as help you avoid squabbles over assets or financial exploitation.
1. Get Multiple Copies of the Death Certificate
If you are the spouse or executor/executrix of the deceased person, the first order of business is to go to the city clerk’s office or your local vital statistics office and get certified copies of the death certificate. Obtain at least 10 copies; 20 copies would be even better.
Here’s why: A dizzying number of financial institutions, government agencies, creditors, unions, membership groups and other organizations won’t even talk to you about a loved one’s financial affairs — let alone take action, like closing an account — until you produce a death certificate. So you’ll need this valuable document before you start contacting banks, investment companies and other firms.
There’s another reason to immediately request multiple death certificates. “Nobody is going to pay you anything without them,” says insurance agent Al Canton, owner of A.N. Canton Insurance Services, in Fair Oaks, California.
The cost of getting a single certified copy of a death certificate typically ranges from about $5 to $20. But additional certified copies are often provided at a discount if you order them with your initial request. Also, many funeral homes will give you one or two certified copies of the death certificate free of charge.
2. Obtain Letters Testamentary or Letters of Administration
Before you can reach out to institutions that a deceased person was doing business with, you’ll have to provide those companies with proof that you have a right to wrap up the deceased’s financial affairs.
The proof you need is in the form of documents called letters testamentary, or letters of administration.
If you retain an attorney (more info on that below), he or she can secure these documents for you and help you navigate probate court, among other things. For those who decide to go it alone, here’s how you get the letters testamentary.
If the person who passed away had a will and you are the executor of the estate, you can obtain letters testamentary from the local courthouse or city hall in the county where the deceased was living when he or she died. You must take the official will to the court, along with a certified death certificate, and file a probate petition.
Once the court opens a probate file and validates the will, it gives you the authority (via the letters testamentary) to carry out the duties required to settle the estate and act on behalf of the deceased, in accordance with the person’s will. (As with death certificates, be sure to get multiple certified copies of letters testamentary).
If no will was left behind, the court can issue letters of administration to a surviving spouse or next of kin after a death certificate has been supplied. In this instance, the person to whom letters of administration are issued is deemed the administrator of the estate.
“Whomever is put in charge of the estate or trust should encourage open communication among the beneficiaries,” says legacy attorney Andrew Mayoras. Mayoras and his wife, Danielle, are estate planning specialists who co-wrote the book “Trial and Heirs: Famous Fortune Fights.”
Andrew says that most estate disputes can almost always be traced to a lack of communication. “Secrecy creates doubts,” he says, “and sometimes that turns into fights.”
3. Consult a Lawyer – Even if You Decide Not to Hire One
After a loved one dies, many heirs balk at hiring legal help because they worry about the cost.
But that’s often a penny wise and a pound foolish since advice from a qualified professional could save an estate many thousands of dollars, make the process of settling an estate much easier and help family members avoid potential liabilities.
“When you act as executor, there is fiduciary liability and exposure to you personally if you do not follow the terms of the will exactly,” notes estate attorney Rebecca Doane.
For instance, “executors can be surcharged [fined] if they distribute funds improperly,” says Doane, who is the founder of Doane & Doane, an estate planning firm based in North Palm Beach, Florida. A good lawyer will help you sidestep this pitfall.
Aside from wanting to understand possible liability issues, some people may simply be too emotionally overwhelmed do everything alone. “I’ve had adult children who’ve graduated from Ivy League business schools who are so grief-stricken that they come in and say ‘I can’t handle this,’ ” says Doane, adding that there’s no shame in asking for help. Seeking professional support is a good idea, even if only to get a free consultation about your family’s situation.
If you do retain an attorney, hire one who handles wills, trusts and estates exclusively. Avoid real estate lawyers, divorce lawyers, personal injury or criminal attorneys, and others who don’t specialize in estate planning. And only select a board-certified attorney. Ideally, try to work with a lawyer or firm that is AV rated. That indicates the attorney or firm has received the highest possible professional standards and ethics rankings.
4. Collect and Secure Pertinent Documents
One of the most time-consuming aspects of tending to the financial affairs of someone who has passed away is gathering the litany of documents that need to be assembled. For many families, this is a nightmare chore due to haphazard record-keeping, poor planning and a lack of knowledge about where critical documents are located.
“A lot of people think that estate planning is only for someone who’s old or who has lots of money. But that’s not true,” says attorney Danielle Mayoras, co-founder of The Center for Probate Litigation.
That’s why Mayoras and other experts suggest that while people are alive, they should create an inventory or list of all assets, accounts and property, put that list in a safe place, and then tell a trusted confidante where the list is kept.
After a person’s death, an executor of an estate should collect or order the following documents, at a minimum:
- Death certificate(s)
- Will or trust
- Insurance policies (life, homeowners, health, disability, auto, etc.)
- Last credit card statements
- Investment accounts (IRAs, 401(k) plans, mutual funds, pensions, etc.)
- Last checking and savings account statements (including CDs and money-market accounts)
- Last mortgage statement
- Last two years’ tax returns
- Marriage and birth certificates (of the deceased’s spouse and children)
- An up-to-date credit report of the deceased
All these documents will help you find accounts and assets, and assess outstanding debts, as well as submit claims for benefits and cash payments that may be due the deceased person’s beneficiaries and heirs.
5. Notify Financial Institutions, Government Agencies and Others
A key next step is to notify all the following places of the individual’s death. Each is important for different reasons.
- Social Security Administration
- The deceased person’s employer
- Insurance companies
- Credit bureaus
- Credit card companies
- Post office
- Utility companies
It’s not much, but Social Security does offer survivors a $255 one-time death benefit. More importantly, the spouse or children of someone who dies may be eligible for monthly survivor benefits from Social Security. To find out if you qualify, contact Social Security online or call 800-772-1213.
Another reason to notify Social Security is so the agency can put the deceased person on the Social Security Master Death Index. This prevents would-be fraudsters from collecting a dead person’s Social Security payments. It also helps stop identity thieves from opening accounts in the name of the deceased individual, because the person’s credit reports will be flagged.
“Every creditor also needs to know right away because the last thing you want is for bills to continue to run,” says Adam Levin, a former director of the New Jersey Division of Consumer Affairs. Prompt notification of the death to various businesses, adds Levin, “saves the estate money and protects the estate of the deceased.”
Levin also suggests contacting the Direct Marketing Association to opt the deceased person out of receiving credit solicitations. “You don’t want them getting pre-approved credit card offers or convenience checks tied to credit cards,” Levin notes.
The U.S. Postal Service doesn’t have to be told per se that the individual has died. Rather, you should file a change of address with the postal service, so that mail is rerouted to the executor of the estate or to a trusted family member.
6. Cancel or Transfer Accounts, Memberships and Subscriptions
Following someone’s death, you don’t want subscriptions, memberships or services they’ll no longer be using to stay in force. So cancel those immediately, along with credit card, insurance and financial accounts that will be inactive. “If the person was married, transfer the power, electricity and water bills that may be in their name to their surviving spouse,” says estate attorney Doane.
Additionally, Doane notes that some states, such as Florida, require home ownership also be transferred into the name of a living spouse in order for things like title insurance to remain in force.
Since every state has different mandates, be sure to check what type of legal filings, if any, are necessary in the state in which a family member has died, as well as any state where the individual owned property.
7. Apply for Benefits Due to Survivors
For all kinds of insurance policies, as well as financial contracts — including car loans, mortgages and credit cards agreements — find out whether insurance premiums were paid on the accounts. If so, cash benefits may be due to heirs.
Also, ask a lot of questions to find out if survivors are due pension benefits or income from the deceased person’s employer, union or maybe even the military. Employers may pay out 401(k) funds, along with unused vacation time, holiday time or bonuses already earned.
For many families, however, the largest lump sum payout following a loved one’s death often comes from life insurance proceeds. In dealing with insurers, experts say, the process should be fairly straight-forward.
“You get a claim form and submit it, along with a death certificate,” says Canton, the insurance agent. “In most cases, in four to five weeks, you’ll get a check.”
But Canton warns about the pitfalls of getting a huge life insurance payout — especially while family members are still grieving. “Sometimes the worst thing you can do is have an insurance company cut (a beneficiary) a check for $500,000,” he says, noting that many people blow the money, “just like many lottery winners.”
“The best advice I can give people is: Do nothing for six months. Just let the money stay with the insurer, and continue to collect interest,” Canton advises.
8. Pay Final Bills and Guard Against Financial Fraud
While paying the final bills for someone who’s died, don’t forget about things like property taxes or income taxes that may be due. A good CPA can file a final 1040 for the deceased individual and, if required, a Form 1041, an estate income tax return.
Carrying out the duties of an executor also means protecting the deceased person and his or her heirs against financial fraud and exploitation.
There are several ways to do this:
- Keep the obituary short and sweet. John Sileo, a nationally known speaker on identity theft and the author of “Privacy Means Profit,” says, “Share as little information about the person as necessary,” because obituaries are easy places for crooks to find a deceased person’s age, birth date and sometimes other data like an address or a mother’s maiden name Levin puts it bluntly: “The reality is, there are people that case obituaries like burglars case houses.”
- Be careful with social media. It’s tempting to go on Facebook or other social networking sites to post tributes, create online memorials and offer personal reflections about a loved one who has died. But experts caution against it. “The more information people give away about their deceased relatives, the more information that identity thieves will be getting,” warns Levin, who is also co-founder of Credit.com and Identity Theft 911. Also, don’t notify people of someone’s death via a social networking site. If you absolutely must use these networks to communicate a death notice, says Sileo, “send a direct message that the person has died and then shut down the account, just like you would financial accounts.”
- Don’t toss; shred. If you’re cleaning out a loved one’s home after their death, be mindful of dumpster divers and others who steal mail. Shred important documents instead of putting them in the trash, Sileo recommends.
- Limit personal access to sensitive data. Lastly, avoid the mistake of letting copies of the death certificate or personal records lay around unprotected, even in boxes. Take extra care to secure the financial documents of those who had been living in nursing homes or assisted living facilities.”When you’re dealing with a chronically-ill person or someone in a nursing home who has died, and the person was often sedated or sleeping, health care workers often have opportunity to rifle through the person’s mail and files,” Levin notes. “Unfortunately, that can lead to tragic financial events.”
Going through all the personal items and economic affairs of someone who has died is bound to be stressful. So do get professional and emotional support if you feel overwhelmed.
And if you’re tasked with carrying out what can be a gut-wrenching process, at least let it be a learning experience for you — and a wake up call to get your own financial house in order.
“You can avoid all sorts of headaches and misery for you and your heirs, and avoid probate and estate taxes too,” says Doane, “if you just plan properly before you die.”