Dealing with the passing of a loved one is stressful enough without having to worry about finances. However, knowing the state of your loved one’s financial affairs can help you avoid additional stress and reduce the burden on a grieving family. Families of hospice recipients may face a number of financial impacts after their loved one passes, such as funeral expenses. While financial coverage for hospice care services is widely available through the U.S., family members may be responsible for certain debts. There are several decisions you may need to make soon after the passing of a family member to prevent possible legal and financial troubles later on.
1. Funeral Arrangements
One of the first decisions you will need to make after the death of a loved one concerns funeral arrangements. Information regarding preferred funeral arrangements is rarely included in a will or revocable living trust as it can take family days or weeks to locate these documents. It’s ideal to have a separate document that details the desired funeral arrangements, but this isn’t always the case. As a family member, you will need to take responsibility for making decisions.
Many items can be arranged prior to death to lessen the emotional and financial strain on family members later on. If you choose, you can pre-arrange information for an obituary, a funeral director, cremation or burial, a cremation container or casket, as well as a grave marker and inscriptions. You can also make other decisions such as the location for the service, the type of service, flower arrangements, what the deceased will wear, and the memorial cards or register. If needed, you may also make plans for funeral cars or other form of transportation.
2. Important Documentation
Debts are not forgiven upon death. Any debt that you are a cosigner for, such as a joint credit card or mortgage, now becomes your responsibility. Other types of debt are usually paid out of the person’s estate. To ensure that these debts are finalized, it’s important to gather the proper documentation. If you are a spouse or the executor of a deceased person, you’ll want to first pick up certified copies of the death certificate from your city clerk’s office. Most financial institutions, creditors, and government agencies will not speak with you about your loved one’s financial affairs until you produce a certified death certificate.
You will need to make many financial decisions on how you will handle your loved one’s debts and insurance policies. These decisions will ultimately affect the estate settlement process and determine how the estate is distributed between family members and other priorities. You will likely need to locate a number of documents, such as:
- Last will and testament
- Revocable living trust
- Birth and death certificates
- Insurance policies
- Marriage license/divorce documents
- Trust agreements
- Financial statements
- Investment statements
- Bank statements
- Retirement plan information
- Tax returns
You may be able to find most of these documents in a safe deposit box. Some family members may store them in home safe or filing cabinet. In addition to having these essential documents, you’ll also want to have a complete list of all of your loved one’s property, including stocks, bonds, real estate, personal property, and savings accounts. If you’re having trouble finding certain documents, contact your loved one’s attorney to see if the original estate planning documents are available. Many attorneys retain their client’s original documents. Other people who may have these documents include family members, financial planners, and accountants.
3. Survivor Benefits
The next decision you’ll have to make is when to file claims for insurance policies and other forms of survivor benefits. Begin by contacting any insurers that may have issued policies to your deceased loved one. There are several types of insurance policies to consider, such as life insurance, accident insurance, mortgage or loan insurance, credit card insurance, and any insurance offered by the deceased person’s employer. Any proceeds from such insurance policies can typically be processed and paid directly to the named beneficiary on the document. It’s best to file claims as soon as possible, especially if you believe you’ll need these funds to help pay for the funeral and other expenses.
If your loved one was covered by Social Security after paying in for at least 40 quarters, you may be eligible for Social Security survivor benefits. Only certain family members are eligible for these benefits, including widows or widowers, unmarried children who are younger than 18 (or up to 19 if they are attending school full-time), and children of any age or were disabled before age 22 and remain disabled. Parents age 62 or older who received at least one-half of their support from the deceased may also receive benefits.
4. Wills and Probate
A will is a document that details the wishes of the deceased in terms of who will receive which assets at death. Wills are activated only by the death of the signer and after a court verifies that the will accurately details the decedent’s last wishes. Probate is the legal process of paying the debts of the deceased and distributing the estate to its stated heirs. If you are the personal representative named in the will you will need to make decisions regarding when to file a petition with the court and how assets will be distributed in accordance with the will or trust.
If you have an aging loved one currently in hospice care you may be preparing for the financial impacts of your family member’s death. While losing someone is physically, emotionally, and spiritually draining, it’s important to consider the legal, practical, and financial aspects of your loved one’s affairs with a clear head. With the knowledge on how to handle your loved one’s finances before their death, you can be become prepared to streamline the process once they’re gone. Be sure to make all major financial decisions responsibility. Take the time to consider all aspects of each situation before rushing to a decision you may regret later.