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How to Handle Finances When a Close Relative Dies

Make sure to get the proper information before settling financial issues

When a close relative dies, consider the following when it comes to handling finances, property titles, debts and more.

  •     Take your time. Widows and widowers, especially, should not make any major financial decisions unless they absolutely have to. If you receive an insurance settlement or other payment, place it in a bank certificate of deposit (CD) or money market mutual fund until you have time to explore longer-term investment alternatives and/or educate yourself about personal finance.
  •     Make sure dependents are covered by health insurance. Call the deceased person’s employer to find out details about continuing coverage for up to 36 months under the federal COBRA law (dependents must apply within 60 days and pay the premiums). COBRA coverage is available to employees of companies with 20 or more workers and their dependents who lose coverage due to a worker’s death.
  •     Retitle a deceased person’s assets or jointly held assets (such as bank accounts, credit cards, auto titles, and the deed to the family house) into the survivor’s name. Expect minor hassles such as the need for a death certificate and a signature guarantee from a bank officer for some documents.
  •     Don’t pay any large debts that a deceased person incurred until you check with a lawyer. Debts owed by the deceased are generally the responsibility of the estate and should be forwarded to the executor for payment. Many creditors will simply need to wait until the estate is settled. If survivors pay bills out-of-pocket or with savings, they could leave themselves short of cash, both for living expenses and a financial emergency.
  •     Identify and secure resources. Some examples include life insurance policy proceeds (both individual and employer-provided coverage), employee benefits such as a deceased spouse’s 401(k) plan and veteran’s benefits, including burial in a national cemetery. If the deceased person was employed, contact his or her employer regarding benefits due to survivors. For example, the estate may be due a final paycheck or payment for vacation and sick leave.
  •     Seek professional advice when needed. Attorneys can help with estate tax returns or a financial planner with investment decisions. Ask questions about anything that you don’t understand or feel comfortable with. There are no “dumb” questions when your future financial security is at stake.

This material is provided by SmartAboutMoney.org, a site from the National Endowment for Financial Education (NEFE) that helps people make sound decisions throughout all of life's financial challenges.

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