Financial Steps to Take When Someone Dies

Losing a loved one can be an overwhelming experience. While grieving, you may need to plan the funeral, tend to final wishes, and manage their financial affairs. While that process can get a bit complicated, with some planning and a little research, you can navigate the process and their estate with assurance. This guide will give you basic steps for handling financial affairs, but remember that the probate process can vary from state to state, so it's best to check local laws to learn more. Remember that this is part of life, and representatives at any company or bank you may need to contact are there to help you.

Key Takeaways

• Gather all legal documents, including the will, trust documents, marriage certificate, divorce decree, military separation papers, driver's license and passport, vehicle titles, house deed, and citizenship papers
• Notify companies such as the bank, stockbroker, financial advisor, utility companies, insurance agencies, Department of Veterans Affairs, Social Security Administration, and other government departments
• Consider opening an estate account to deposit funds during the estate settlement process as you close, transfer, or sell assets (retirement or bank accounts, property, etc.) to prepare for final distribution of assets after any debts have been paid

Determine Your Role: What an Executor or Administrator Does

If you are named as the executor of a will or trustee of a trust, you are in charge of handling and settling your loved one's estate. You'll need to follow the terms stated in the will or trust agreement and, if needed, include the court system to help. If they do not leave a will or a trust or the will is found to be invalid, state laws will determine how the estate should be handled. You may need to apply to become what is called the administrator so you can legally settle the estate. The laws that apply in that situation are called intestacy laws and are different from state to state.

Get a Copy of the Death Certificate

Ordering multiple copies is recommended, as they will be used for just about everything as you close or transfer accounts, property, and much more. The funeral home that helped put your loved one to rest should be able to help with obtaining copies. If not, check with the vital statistics office where your loved one passed to obtain copies.

Locate the Will and Other Legal Documents and Begin the Probate Process

Your next step is to find the will or estate plan. That will tell you how assets are to be distributed and who is responsible, otherwise known as the executor. These documents are needed to verify the rightful responsibility and ownership of the deceased person's accounts and property whenever a beneficiary is not listed on an account. Other documents you may want to locate include funeral prepayment paperwork, if applicable.

Accounts that list a beneficiary or have a joint owner are generally not required to be part of the estate's probate process. The funds can be transferred to the beneficiary or joint owner once the death certificate has been submitted to the financial institution. To find out how to start the probate process, go to the county website where your loved one passed and search "probate court."

Secure the Estate and Find Important Documents

This might mean making sure their car or other valuables are safe, changing the locks on their home, forwarding mail, and generally how and who is keeping everything insured and maintained during the process of settling the estate. The estate settlement process can be even more stressful and complicated if insurance lapses or something preventable happens that you now have to deal with. One example is cleaning out the fridge before food spoils, or making arrangements to care for pets to prevent messes inside the home.

While you're at it, find and secure important documents such as a marriage certificate or divorce decree, driver's license, car registration and title, passport, military separation papers, citizenship, and retirement documents. If dependent children are left behind, find their birth certificates or adoption paperwork.

Notify Relevant Parties

Now that you have the death certificate and will or estate documents identifying you as the executor, it's time to notify various companies. You may need to notify these and other companies or government departments if applicable. This step is important as it prevents fraud and helps ensure you get the estate in order.

The list below includes just some of the ones that you may need to contact. Check with the funeral director to ask who they notify; often, they will inform the Social Security Administration and other government agencies. You may want to contact those agencies to ask if survivors' benefits apply.

• Their employer
• Insurance companies, such as those for health, auto, long-term care, and home policies
• Banks and other financial institutions, such as investment firms and pension administrators
• Utility companies and service providers
• Unions and professional, service, or fraternal organizations (they may provide survivors' benefits)
• Social Security Administration: 800-772-1213 or ssa.gov
• Department of Veterans Affairs: 800-827-1000 or va.gov
• Railroad Retirement Board: 877-772-5772 or rrb.gov
• Office of Personnel Management: 888-767-6738 or opm.gov
• Department of Motor Vehicles to cancel license and voter registration
• Post Office to forward any mail if needed
• Credit reporting agencies, including Equifax, Experian, and TransUnion, to prevent identity theft and fraud
• Debt companies, including those for credit cards, loans, and payday loans

For more information, see the U.S. General Services Administration's page on agencies to notify when someone dies. These steps are essential to prevent identity theft and fraud. Unfortunately, a common scam involves stealing the identity of a recently deceased person, so notifying credit reporting agencies and others listed above will help prevent this.

What to Expect After Banks and Other Financial Institutions Have Been Notified

Once financial companies have been notified, there are a few things to keep in mind. Ask if or when these things will be done, as it helps to prevent fraud on the account while you go through the process of settling the estate.

• Federal benefit payments for the deceased, such as Social Security, will be returned by the receiving bank to the agency as required by law; it's possible that beneficiaries or other parties are still entitled to benefits, and any transfer of benefits must be organized through the distributing agency
• Cancel debit and ATM cards
• Deactivate online banking access, including online payment methods such as Bill Pay and Zelle^®
• Place holds on single ownership accounts that do not list a beneficiary
• Applicable to existing loans and credit cards:
  • Block additional use of any open credit cards, personal lines of credit, or home equity lines of credit
  • Cancel automatic loan payments if all loan borrowers are deceased
• If the loan requires insurance coverage, like a mortgage, and that policy has expired, the bank will purchase and force-place insurance, which is more expensive than renewing the existing policy

Review Financial Accounts and Get Organized

Now that you know where they had accounts and all companies have been notified, it's time to get organized and review all assets and liabilities. This will help you pay what needs to be paid (do not pay with your own money unless you are listed as a joint owner or co-signer), transferred, or sold, and determine what will be left over to distribute. These include but are not limited to:

• Bank accounts
• Retirement accounts, such as 401k and IRA
• Credit card statements
• Mortgages and other loans
• Tax documents
• Investments and stock holdings

You'll also want to track down any additional assets your loved one may have had. Comb through tax returns, mail, email, filing cabinets, drawers, safes, safe deposit boxes, and anywhere you think they may have stashed documents. You can also bring the death certificate and any paperwork proving you are the executor or administrator and check with various companies where loved one may have had accounts.

Lastly, take time to plan for short-term expenses while you move through probate and the estate settlement process, which can take from months to years, depending on how complex the estate is. It's a good idea to find out the timeline for any expected benefits or payouts (more on that later) to help you plan how long you'll need to continue paying the mortgage or other obligations until you can transfer or sell them according to state law. Check with an estate or tax professional, but you should be able to reimburse yourself for any costs you incur as part of this process.

Work with an Attorney or Financial Advisor

While this isn't always necessary, an estate attorney can help you navigate probate and potentially assist you with various tasks related to and outside of the financial part of the process. They can also help you if the estate is being challenged.

• Paying estate taxes on the state and/or federal level
• Filing the final income tax return
• Transferring ownership of accounts
• Trust management, if applicable
• Any state or federal requirements, such as placing an obituary in the newspaper

Open an Estate Account

While you may not need to open an estate account, it's something to consider so you have one place to track funds from the estate and pay any debts or bills. This can be especially helpful during the probate process as you can easily track expenses, fees, and debts in one place. Once debts are paid and it is time to distribute the remaining funds, you can do so from the estate account.

Close or Transfer Accounts

Financial accounts can be closed to consolidate them into an estate account, which helps to make the final stage of settling the estate easier. You'll also want to consider digital assets, such as social media profiles, email accounts, cloud storage, and others. Different financial institutions may have different policies and specific requirements for closing or transferring accounts.

File Insurance Claims and Submit Requests to Claim Benefits

Call and file claims on any of the items listed below, if applicable. These claims often require a death certificate and proof of your relationship to the deceased, so you will need to have the death certificate and will or trust documents to send to the companies. They should be able to tell you what is needed to claim or transfer any assets or cancel policies.

• Social Security survivors' benefits (not always applicable)
• Employer benefits and employer-sponsored life insurance
• Pension administrators
• Annuity companies
• Retirement plans
• Self-paid life insurance policies
• Stocks or bonds
• Veterans' benefits
• Health, auto, and mortgage insurance policies
  • If an insurance policy is needed to maintain certain assets while the estate is being settled, you may need to renew policies and confirm coverage requirements

Settle Debts and Final Bills

Before you can distribute assets, make sure all legitimate debts are paid and there are no liens on any properties. This can include credit cards, medical bills, funeral expenses, utilities, loans such as home equity line of credit, service contracts, and others. One important thing to remember is that you do not pay debts from your own money unless you're a co-signer or otherwise legally responsible.

Distribute Remaining Assets

After debts are settled and the estate is clear, you can distribute the remaining assets in accordance with the will or state law. This distribution includes monetary assets, real estate, and personal belongings, among others.

Things to Remember

Settling an estate can be emotional and long, so remember to take care of yourself and schedule breaks if needed. Below are just a few other points to keep in mind during this process.

• Once a person is removed from an account, checks made payable to the deceased can no longer be deposited, so consider opening an estate account
• If authorized to do so as the executor, you may need to request your own access to online banking so you can review bill payments, pending payments, recurring payments, and other automatic activity on the account
• You may need a notary public to notarize documents as part of the estate settlement process
• A medallion signature guarantee may be needed to authorize the transfer of securities such as stocks
• Subscriptions and ongoing deliveries may need to be canceled by contacting the service provider
  • In many cases, closing the debit card does not stop the subscription payment from being withdrawn and does not cancel a payment agreement
• The Federal Deposit Insurance Corporation (FDIC) provides a 6-month grace period from the date of death before deposit insurance coverage is reduced
• Any Power of Attorney agreements automatically terminate upon the death of the principal

Prepare Your Own Finances

This process may lead you to think about who will manage and deal with your own finances. Consider preparing a will or trust, updating your beneficiaries on bank or retirement accounts, life insurance policies, and other accounts, and finally, meeting with a financial advisor. Any steps you take to get things in order while you can is helpful. For help with setting up these and other accounts and processes, speak with a legal or tax advisor.

Once your loved one's estate has been settled, consider meeting with a financial advisor to discuss what to do with your share if there are assets left after all bills and debts have been paid. It may be best to wait for a later date while you're grieving and give yourself time to consider the possibilities. If you aren't sure, there's no harm in waiting. Just a few options include saving, investing, and paying off your personal debt.

Glossary

• Beneficiary: A person or entity entitled to receive assets or proceeds from the deceased's estate or specific financial products like insurance or POD accounts
• Certification of Trustee: A legal document, also known as a Certificate of Trust or Trust Certificate, that verifies the existence of a trust and the authority of the trustee to act on its behalf
• Death Certificate: An official document issued by the government confirming the date and cause of death—required by banks to initiate deceased account procedures
• Deceased Account: An account held by an individual who has passed away, typically frozen upon notification of death until legal processes are completed
• Estate Account: A temporary bank account set up in the name of the estate to consolidate and manage the deceased's assets during the probate process
• Estate Affidavit: This legal document allows heirs to collect assets from a deceased person's estate without going through the full probate process; it is generally used for smaller estates where the value is below a certain threshold which differs from state to state
• Estate: All of the assets and liabilities of the deceased person, including bank accounts, property, investments, and debts
• Executor: The individual named in the deceased's will who is responsible for managing the estate, including settling debts and distributing assets
• Intestacy Laws: State laws that detail what happens to the estate when a will or trust is not established prior to someone passing away, or named executors are not willing to act
• Notification of Death: The formal process of informing the bank of a customer's death, typically initiated by a relative, executor, or solicitor
• Payable on Death (POD) Account: A bank account that automatically passes to a named beneficiary upon the death of the account holder without going through probate
• Power of Attorney: A legal document granting an individual (agent or attorney-in-fact) the authority to act on behalf of another person (the principal) in legal and financial matters
• Probate Document: Legal documents required to administer a deceased person's estate; they are essential to prove the validity of a will
• Probate: The legal process of validating a will and authorizing the executor to administer the estate

WaFd Bank is Here to Help

Our friendly and knowledgeable bankers are here for any questions big and small. With WaFd Bank, you also have access to tools and services to help you manage your finances and get the most from your money. Visit us at your neighborhood branch, give us a call at 800-324-9375, or check out what WaFd online banking has to offer.