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Money matters when a loved one passes

Dealing with the death of a loved one is stressful enough. But not knowing what to do with someone's finances after he/she has passed away adds additional burden on a grieving family. To make the process a bit easier, here's some critical information that can save you time, money and energy throughout the process.

Collect and secure pertinent documents

Gather the following documents to help you find accounts, assets and outstanding debts:

  • Death certificate(s) – at least 10 copies
  • 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

Consult a lawyer, even if you decide not to hire one

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.
 
Notify financial institutions, government agencies and others

Notify all the following places of the individual's death:
  • Social Security Administration
  • The deceased person's employer
  • Insurance companies
  • Credit bureaus
  • Credit card companies
  • Post office
  • Utility companies
  • Creditors

Cancel or transfer accounts, memberships and subscriptions

Immediately cancel subscriptions, memberships, services, 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.

Apply for benefits due to survivors

For many families, the largest lump sum payout following a loved one's death often comes from life insurance proceeds. Find out whether insurance premiums were paid on car loans, mortgages and credit cards. 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.

Pay final bills

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 CPA can file a final 1040 for the deceased individual and, if required, a Form 1041, an estate income tax return.

Guard against financial fraud

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 concise. 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.
  • 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. Just remember the more information people give away about their deceased relatives, the more information identity thieves will be getting.
  • 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.
  • Limit personal access to sensitive data. Avoid 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.

Going through all the personal items and economic affairs of someone who has died can leave you feeling 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 financials in order.
Courtesy of http://www.dailyfinance.com
 

 

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