Key Financial Steps to Take After a Loved One Dies (2024)

“Here I am a trained lawyer and I couldn’t believe how little I knew about the details of settling my mother’s estate,” said Scott Taylor Smith, a San Francisco attorney and banker. “I made mistakes that cost money and time and couldn’t find resources that could help, so I wrote a book based on what I learned.”

Smith’s new book, When Someone Dies: The Practical Guide to the Logistics of Death, is a valuable resource for anyone dealing with the financial and personal consequences of a loved one’s death. I spoke with Smith about what he learned the hard way as executor of his mother’s estate and asked him to share his advice for others thrust into a similar position:

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Perhaps the hardest part of dealing with the financial details after a death is that you are still in mourning and neither your head nor your heart is ready to make these types of decisions. So where should someone begin?

First, determine if the deceased prepaid his or her funeral expenses to a funeral home. If there is no prepaid plan, the first thing you should do as the executor is open a checking account for the estate so you can use it to pay for the funeral or memorial service.

You will need a tax ID number for the estate to open this account and can get it by calling the Internal Revenue Service or going to the IRS website.

The next task is to find the person’s investment accounts and bank or credit union accounts. Death is not cheap and as executor, you will be faced with many expenses that must be paid right away. If you can access the person’s computer, you may find he or she used a financial program and everything will be listed there.

You recommend getting two to three dozen original copies of the death certificate from the county where the death occurred. Why?

When the woman at the funeral home asked me how many death certificates I wanted, I asked for one and I ended up needing about 25! You need one for every account you open or close relating to the estate and you even need one to forward the person’s mail from the post office.

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Most financial institutions require original certificates, not copies, to confirm the death really happened.

It’s also important to close the person’s checking accounts and credit cards, right?

Absolutely. You should also check to see if there are any automatic withdrawals that need to stop.

For example, my mother had directed that two charities receive money from her checking account each month until her death, but I didn’t notice that for six months. The sooner you close the account, the more cash will remain in the estate.

And don’t forget there may be automatic deposits that need to be stopped, like the monthly Social Security check.

If you fail to notify Social Security that the person has died and the Social Security checks continue to be deposited and cashed, you are criminally liable for repayment with penalties and interest.

What should you do to ensure all death benefits get paid out?

Most pensions terminate at the person’s death, though some have a one-time death benefit and a few continue to pay a spouse or survivor. Contact the pension program administrator.

In addition to Social Security's regular survivors benefits, Social Security also has a $255 lump-sum survivors benefit for the surviving spouse or the beneficiary on the person’s Social Security record, to help cover some funeral costs, so remember to ask for it.

There are also veteran’s death benefits of $7,000 to $10,000 if the deceased served in the military. You’ll want to inform the Veterans Administration about the death so the benefits are paid.

If the person who died had many debts, who’s responsible for paying them?

Death does not eliminate debts, but only a spouse is legally responsible for a partner’s debts, if they borrowed the money together.

The executor must pay all debts owed to the IRS and state taxing agencies. If possible, he or she should make the mortgage and car payments using money from the estate until the home and autos have been distributed to the heirs. After that, the recipients are responsible for those payments.

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Creditors, such as credit card companies, can only go after the estate, not the surviving relatives. So if someone who lived paycheck to paycheck dies owing more than his assets are worth, the creditors have to eat the loss.

Why do you suggest hiring an accountant to help with the estate?

An accountant is helpful because there are taxes that will need to be paid and other financial issues you may not be equipped to handle. Ideally, he or she will save you time, money and hassle.

For example, if the deceased had been employed at the time of death, you will need to collect the final paychecks and pay taxes on the portion of the year he or she worked before death.

You learned your lessons the hard way. What should people do to make things easier for their eventual survivors and heirs?

Everyone with assets should have a will, period.

Encourage family members to write one and to attach a list of their bank accounts, brokerage accounts and mortgage and other loan documents.

It is not necessary to tell others how much is in the accounts or who your beneficiaries are. Just be sure someone knows where these key estate-planning documents can be found.

Miriam Goodman is a San Francisco writer, public relations consultant and award-winning radio and television producer. She is the author of Too Much Togetherness: Surviving Retirement as a Couple.