There is no way to fully prepare for the emotional turmoil and grief that accompanies the loss of a parent. Losing a parent forces us to face some difficult realities whether we are ready to or not, and financial “next steps” may not be ones we want to face right away.
It may be tempting to let money matters fall by the wayside, especially if financial “next steps” weren’t discussed before your parent’s passing. However, it is important to keep in mind that delaying certain responsibilities may eventually complicate matters that could have been avoided if action had been taken sooner.
After a death, there is much to attend to, but you don’t have to tackle it alone, which is why the first step in our checklist is to enlist support.
1. Enlist Support: Support comes in many forms and none is any less important than another. Some supports help us to cope emotionally, while others assist us in navigating new legal and financial territory.
- Friends and Family: Lean on your friends and family to assist you in completing daily tasks such as transporting the kids to and from school, picking up prescriptions, or bringing you a meal. Having a good support system in place can help ease the burdens of this transitional period.
- Financial Advisors, CPAs, and Attorneys: The financial advisors, CPAs, and attorneys of the deceased should be notified of the individual’s death immediately. The deceased’s estate planning attorney will have the latest copy of the deceased’s will and the financial advisor and CPA will have working knowledge of his or her assets, debts, account locations, and business dealings.
This team of professionals will be able to walk you through the complex process of settling the estate, filling out important paperwork, updating legal forms, and closing out the deceased’s accounts (when necessary), hopefully easing the burden of these important, but potentially overwhelming tasks.
Contacting your own team of professionals will be equally important, especially if you are positioned to receive any type of inheritance from the deceased parent. Your team can help you to manage your sudden influx of money, mitigate the tax burdens on that money, and set up an estate plan of your own.
2. Request Copies of the Death Certificate: As you work through the various financial matters of the deceased, you will encounter at least a dozen people and institutions that will request this document to legally declare proof of death. This will be required for closing out credit cards, transferring pension plan benefits, accessing safety deposit boxes, dealing with car notes, and much more. Go ahead and request a few dozen copies to begin so as not to slow progression in the estate settling process.
The process for obtaining a death certificate will vary from region to region, state to state, but can generally be obtained from the office of the county recorder, the office of the county clerk, or your state’s vital records department or department of health.
3. Gather Important Documents: Your team of professionals will need access to as much information regarding the deceased’s financial affairs as possible in order to help you settle the estate in a reasonable time frame. In order to expedite the process, you’ll need to gather a host of important documents including, but not limited to, utility bills, tax documents, loan documents, bank statements, life insurance policies, vehicle titles and registrations, and existing business valuations.
4. Check for Life Insurance Policies: Life insurance policies are a very common asset for individuals to hold as a way to monetarily protect surviving relatives in the deceased’s absence. In the event the insured passes, the life insurance company needs to be contacted immediately to begin the claims and payout process.
If you are the beneficiary, you’ll need to contact the insurer to confirm their claiming process. While the requirements vary from company to company, the basic process consists of filling out, signing, and returning a claim form along with a certified copy of the deceased’s death certificate in order to begin.
Claims are generally paid out after the state-sanctioned 30-day investigatory period and will most likely be offered as a lump sum. However, some payout options include installments, annuities, and retained asset accounts. You’ll want to consult with your financial advisor and/or CPA to ensure you make the most tax-efficient choice, should you have one.
5. Guard Against Identity Theft: As unscrupulous as it may sound, financial criminals prey on the identities of the recently deceased. According to a 2012 study, 2.5 million deceased individuals are the unknowing victims of identity theft each year. Not only is personal information stolen online, but can also be taken by individuals who have access to your parent’s sensitive information, such as nursing home assistants or household help.
Any unpaid debt run up by an identity theft in the deceased’s name could later be filed as a claim against the estate, potentially depleting any leftover assets and catalyzing a costly and painful legal headache.
In order to safeguard your deceased parent’s identity, consider changing online account passwords and gathering sensitive paper documents as quickly as possible after your parent’s passing. Again, this type of shocking robbery might not be the first thing on your mind in the immediate wake of loss, but being abreast of the possibility and taking action could potentially save you a great deal of additional suffering in the end.
6. Be Prepared to Wait: The process of settling an estate can be slow and tedious. It can often feel like taking one step forward and two steps back. The more complex the deceased’s financial life, the longer the process may take simply due to the nature of the process. Creditors will claim stakes to monies owed to them, the IRS will collect on their end, and your parent’s team of professionals will need to be compensated for their time. The transfer of assets and property certainly doesn’t happen overnight.
The passing of a parent will be one of the most significant losses you will ever experience. Since you may not be in the best position to make major, life-altering financial decisions at this time, we recommend seeking the support and help of those closest to you, whether that be in coping day to day or in working out long-term legal and financial matters.
At Harbor West, we recognize that making sound financial decisions in the wake of loss may be difficult and are here to offer assistance in both short-term cash flow management as well as long-term financial planning. If you have suffered a loss, we offer our sincere condolences and a helping hand. Contact us today to discuss how we may help smooth this tumultuous transition with you.
This information is provided for general purposes and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the information, please consult your Financial Advisor for individual financial advice based on your personal circumstances. Neither Harbor West nor Geneos Wealth Management, Inc. provide tax or legal advice. Harbor West is a division of NorthEast Community Bank. Securities and advisory Services offered through Geneos Wealth Management, Inc. FINRA/SIPC Investment Advisory and Financial Planning Services offered through Geneos Wealth Management, Inc. Investments are not FDIC Insured. Investments are not deposits of the financial institution and are not guaranteed by the financial institution. Investments are subject to risks including loss of principal.