Losing a loved one comes with many emotional, situational, and financial changes. As you know, navigating the complexities of grief is challenging in itself. But, unfortunately, we also have to ensure finances are in order during these unforeseen circumstances. Although we understand that financial matters may not be a priority to you at the moment, staying financially sound will give you peace of mind and, in turn, lessen your stress levels. Therefore, we outlined a step-by-step guide that explains how to organize your finances after the death of a loved one.
- 1. Take time to heal:
First and foremost, take the time necessary to grieve and heal. The state of your mental health will affect every other component of your life, including finances. Therefore, put work, hobbies, and other responsibilities on pause to ensure you have the clear-headedness to manage your finances.
- 2. Obtain multiple death certificate copies:
Once you feel mentally sound enough to start working on your finances, the first thing you should do is obtain a few copies of your loved one’s death certificate. When handling the assets and finances on behalf of your loved one, every financial institution will ask for a copy of the death certificate as legal proof. Additionally, a death certificate may be necessary to notify your loved one’s past employer, social security, banks, and insurance companies of their passing. Hence why having a few copies will come in handy.
- 3. Locate a will and financial documents:
If your loved one left a will before they passed, you must submit the document to a probate court to handle the distribution of assets. The court will ensure that the estate is distributed in the way your loved one intended.
- 4. File tax returns:
When tax season rolls around, someone will need to file in place of your loved one. Understandably, it can be confusing to file taxes for someone other than yourself. If you’re planning to file your loved one’s taxes on your own, the IRS has a questionnaire section on their website that will help you by providing individualized instructions on how to do so based on your circumstances.
- 5. Settle any debt:
According to the Consumer Financial Protection Bureau (2017), any debt your loved one had prior to their passing must be paid off. A portion of the deceased person’s estate will need to go towards the debt. For any loans that had a cosigner involved, the person continuing to inherit those assets will be responsible for paying off the debt.
- 6. Ask for help:
We understand that financial matters can become an afterthought during a time of grief. However, the death of a loved one causes many financial complexities that require attention to ensure their assets are allocated in the way they intended. Our trusted team of financial advisors at U-Vest® are here to assist you as you navigate through this challenging time. Call us today to keep your finances in check as you take this time to grieve and care for yourself.
This article is meant to be general in nature and is not intended, and should not be construed as personal advice of any kind. Please consult your financial advisor prior to making financial decisions. Dustin Johnson, CFP®, ChFC® is a Financial Advisor with U-Vest Financial®, a separate entity from LPL Financial and can be reached at (727) 343-4200. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/ SIPC.
Investing involves risk including the potential for loss of principal. (10/21)
- How do I file a deceased person's tax return? Internal Revenue Service. (n.d.). https://www.irs.gov/help/ita/how-do-i-file-a-deceased-persons-tax-return.
- If someone dies owing a debt, does the debt go away when they die? Consumer Financial Protection Bureau. (n.d.). https://www.consumerfinance.gov/ask-cfpb/if-someone-dies-owing-a-debt-does-the-debt-go-away-when-they-die-en-1463/.