When a loved one passes away

When it comes to final arrangements and managing your loved one’s estate, it’s important to understand what you can and can’t do. Your loved one’s estate documents and/or state law will dictate who is responsible for key tasks and decisions.

Keep in mind that different responsibilities may fall to different people. For example, the individual in charge of funeral arrangements might not be the same one who manages the estate. These roles could be assigned to family members, trusted loved ones or even professionals. Contacting your loved one’s estate-planning attorney can help you better understand who is allowed to do what.

You might know your loved one’s final wishes, or they might be written down somewhere (such as in a funeral directive). But if that’s not the case, do your best to get on the same page with key family members about funeral plans.

You might also need to discuss with others how to handle funeral costs, which can be expensive. The funeral service alone could cost close to $10,000,¹ and this doesn’t include other common expenses, such as securing a burial plot or organizing a reception after the service.

If you’re responsible for some or all of these expenses, keep in mind that you might have to pay for them before assets are distributed from your loved one’s estate. Your financial advisor can help you determine your options and explain their costs and trade-offs.

Order several copies of the death certificate, as you’ll likely need them later on. The funeral home will typically notify Social Security of your loved one’s death. But if they don’t, you should contact Social Security and report the death as soon as possible.

Your loved one’s death can have immediate financial consequences for you and your family. If that’s the case, make a plan to get through the next few weeks or months. Bear in mind it could take some time to receive assets from the estate, so work with your financial advisor and team of professionals to understand your options and work out a plan that accounts for any temporary change in your income and expenses.

If your income and assets are not enough to cover your costs, you might need to adjust your lifestyle, at least in the short term.

Reach out to your loved one’s financial advisor, insurance agents and tax professional to inform them of your loved one’s passing and ask them what the next steps should be. It’s also important that you notify financial institutions, government agencies and other parties to avoid receiving unnecessary charges and erroneous payments. It can also protect your loved one’s assets from fraudulent use. 

Among others, you should report your loved one’s death to: 

• Financial institutions and service providers, including banks, credit card companies, private health insurance, utilities, cellphone provider and subscription services
• Loved one’s employer and their benefits administrator
• Government agencies, including state motor vehicle office, Postal Service, local election office and Department of Veterans Affairs for those who served in the military
• Credit bureaus

The person who administers the estate will need legal and financial information from your loved one to perform their duties. This information should include legal and tax documents, as well as documents related to their assets, insurance and debts. Your financial advisor can share a list of documents we recommend collecting. These documents might also reveal unknown accounts and other records that can help you finish winding down your loved one’s financial presence.

If your loved one didn't leave organized records, some ways to uncover financial information can include monitoring your loved one's correspondence, contacting their most recent and past employers, and even searching unclaimed property databases² or the National Association of Insurance Commissioners’ Life Insurance Policy Locator.

An estate-planning attorney can explain the details, including:

• If there’s a duty to notify your loved one’s creditors
• The steps of the legal process used to distribute assets, known as probate
• Which assets go through probate and which are distributed to beneficiaries directly
• Rules for asset distribution, based on whether the distribution is according to a will, trust or state laws
• How oustanding debts will be paid out

Discuss with your tax professional which taxes need to be filed for the deceased and their estate. This might include a final income and gift tax return for your loved one as well as federal and/or state estate tax returns.

Additionally, understand the impact of your loved one’s death on your own taxes. For example, work with a tax professional to understand the tax consequences of any inherited assets, whether state inheritance taxes are due (as some states impose them) and any impact to your own income taxes (e.g., changes to filing status or ability to claim certain tax benefits).

Give yourself grace and time as you work through adjusting your finances and expectations. These adjustments may mean figuring out how to get by after the primary earner or caregiver in your household passed away. Or they may include trying to incorporate an inheritance and wondering how best to use it. You might also have to plan for managing new assets (such as real estate).

Whether your financial situation has improved or you relied on your loved one for income or support, your financial advisor can serve as a guide.

• Understanding the terms of the will and/or trust
• Gathering information on assets and liabilities to build a complete picture of the estate and/or trust
• Identifying beneficiaries and other interested parties and keeping them informed on the administration of the estate/trust
• Securing assets (e.g., change keys to home, maintain vehicle, etc.)
• Managing assets and liabilities of the estate/trust (e.g., pay bills and taxes, sell assets, etc.)
• Distributing assets to beneficiaries

Managing an estate can be complex and time-consuming, so you should have the skills, time and resources to perform the role. You can always get an attorney to help you, delegate some tasks to other professionals or decline to take on this role if you aren’t comfortable with it.

Any powers of attorney granted by your loved one will end with their death. After they pass away, only the designated individuals will be able to manage your loved one’s affairs. 

You can support those managing your loved one’s estate by, for example, helping them collect relevant information or notifying financial institutions and other parties of your loved one’s death.