Estate Planning: 8 Steps To Resolving Finances After A Death In The Family

How does one know what finances are left to close once someone you love passes? Dealing with finances after a person dies can add another level of stress to an already stressful time.


These eight steps will hopefully help lead you into the direction of taking on the responsibility of what's to come.


1. Don’t rush into anything


Making emotional decisions under emotional stress can cause anyone to make rash decisions they later regret. Someone who loses a spouse may want to sell their home but may fall victim to wicked salespeople. Try not to make any wholesale changes with your investments until you're emotionally ready to do so. Wait anywhere from around 6-8 months to act.


2. It's OK to ask for some help


Look to see if your family member had a financial adviser that can handle finances -- including tracking down financial accounts or coordinating with estate attorneys -- while you deal with your emotions. Trying to do everything yourself can become overwhelming so it is best to enlist the help of other family members who wouldn't mind lending a helping hand in a time of need.


3. Get multiple copies of the death certificate


The funeral home handling arrangements can typically assist in requesting copies of the death certificate. Ask for help estimating how many and the type you'll need -- whether certified, long or short form, etc. -- because people often underestimate. Order about 20 copies to hand over to the many financial institutions, insurance providers and other companies who will need this sort of documentation.


4. Get in touch with the employer


Before they passed, were they employed? If so, call the human resources department to notify the employer of their death. Ask whether benefits coverage will continue for family members, whether there's a life insurance policy and the name of the company that administers the retirement plan.


5. Locate the original will and trust


If the deceased had a will or a trust or even both, these documents will help serve as an imminent guide for many financial decisions to come. There's a legal process known as probate that will likely ensue for distributing property and assets, unless the estate is small or the trust is all encompassing. This process may seem daunting if you're not really familiar with how it works. It's best to work side by side with a financial adviser, if you have one, or hiring a probate attorney to avoid probate court, if possible, because it can turn into a long and expensive process. If you are named the executor of the estate, keep track of expenses related to the family member's death (including final medical bills). You may need this information later when you file the person's final tax return.


6. Gather necessary financial documents


Luckily, if the person who passed left you with an organized list of all their accounts, you're in luck. But not many people think to do this before it becomes to late. It then becomes your job to become an investigator. Plan to sort through the person's mail for at least 3 month to find missing information, including non-recurring bill. This list of possible documents isn't final but definitely a starting place:

  • Bank and investment accounts

  • Retirement accounts

  • Mortgage and other loan statements

  • Insurance policies

  • Tax returns

  • Bills -- including services, utilities, credit cards, property taxes


7. Prepare to file tax returns


Collecting all the information needed for this will make the process easier the following year when you must prepare a final tax return for the deceased. In addition, you may need to file an estate tax return if the estate is more than $11.2 million.


8. Every moment is a learning experience


After doing this for someone, it may have you thinking, "What can I do now to help my family in this process when I am gone?" No one wants to think about dying but if you talk about it in advance and have a plan ready, it's so much easier on the survivors.