Coping with the loss of a spouse or another loved one is terribly difficult. Often, the last thing anyone wants to think or talk about is the financial issues that inevitably arise after someone dies. And yet, these issues cannot be ignored. We hope the following steps may be helpful in guiding you or someone you know in what to do when a loved one dies.
1. Gather documents � The first step is to locate the will, trust documents, life insurance contracts and statements of accounts. You will also need to obtain death certificates. The most common way is through the funeral director. Request multiple copies (10-25); you will need one for each asset held by the deceased and each institution you contact.
2. Contact life insurance companies � After you call the insurance company to let them know what has happened, they will send you a claim form. Upon receiving the claim form and death certificate, an insurance company is usually quick to pay the benefits. Often they will do this by establishing a checking account in your name, depositing the death benefit to the account, and sending you a checkbook, which you can use to draw on the funds. You do not have to leave the money in this account. But it may be a good holding place until you determine how the funds will be used or invested. It�s important during this time of transition to have cash on hand. So leave about six months worth of expenses in cash reserves.
3. Contact the deceased�s employer � If the deceased was still working, you should receive a check for wages earned, unused sick leave, and vacation pay. There may also be life insurance benefits, survivor pension benefits, and retirement account balances. If you are the surviving spouse, you can roll retirement account balances into your own IRA, which is the wise thing to do in most cases. If you will need to tap into these funds prior to age 591/2, you should contact a financial advisor before rolling them over to make sure you do not get hit with early withdrawal penalties. Due to the tax consequences of withdrawing money from a retirement account, other sources of funds should be considered first.
If the family�s health insurance was through the deceased�s employer, you will have to speak to Human Resources about what happens to your benefits. At a minimum, you should be able to extend your current insurance for 18 months through COBRA. However, you will pay significantly more for this coverage, because you will be responsible for the full premium (both the employee and employer portions), and there is usually a surcharge or administrative fee on top of that. If possible, look for other, less expensive, alternatives.
If the deceased had vested employee stock options, usually there is a period of time in which the family must exercise them or they will be lost. Contact a financial advisor with expertise in this area to help you determine the best course of action.
4. Contact Social Security and Veterans Affairs � Surviving families with children under the age of 18 may qualify for benefits through Social Security. Or, if you are a surviving spouse over the age of 60, you may be eligible to receive retirement benefits. Contact your local Social Security office or call (800) 772-1213 to apply. If your loved one was already receiving Social Security benefits, your call will stop benefit payments. You will have to return the check for the month of death. To learn more, go to www.ssa.gov. If the deceased was a veteran, you should also contact Veterans Affairs to learn of possible benefits.
5. Begin settlement of the estate � If the estate is complex, particularly if there are heirs outside of the deceased�s family, contact an estate attorney to help you settle the estate. Otherwise, you may be able to handle the settlement without the use and expense of an attorney. We can help you evaluate the complexity of the estate and determine which way will be most cost effective.
It takes tremendous courage to move forward after losing a loved one. But you don�t have to do it alone. Allowing friends and family members to help can relieve some of the burden. Having a trusted financial advisor can also be a source of comfort.