This year, more families than usual are finding themselves grappling with the challenge of managing the affairs of a loved one who has died. Handling these tasks while mourning is hard, and often families do not have time to prepare, says the article “How to manage a loved one’s finances after they die” from Business Insider. The following are some tips to help get through this difficult time.
Someone has to be in charge. If there is a will, there should be a person named who is responsible for administering the estate, usually called the executor or personal representative. If there is no will, it will be best if one person has the necessary skills to take the lead.
When one member of a married couple dies, the surviving spouse is the usual choice. Otherwise, a family member who lives closest to the deceased is the next best choice. That person will need to hire an experienced probate attorney to assist them with the legal process. Texas doesn’t allow people to represent themselves in Probate Court. There are numerous tasks, duties and responsibilities that the executor or administrator has. Mistakes can be made if you don’t get good legal counsel. Being physically nearby can make many tasks easier.
It is always better if these decisions are made before the person dies. Wills should be kept up to date, as should power of attorney documents, trusts and advance directives. When naming an executor or trustee, let them know what you are asking of them. For instance, don’t name someone who hates pets and children to be your children’s guardian or be responsible for your beloved dogs when you die.
Don’t delay. Grief is a powerful emotion, especially if the death was unexpected. It may be hard to get through the regular tasks of your day, never mind the additional work of managing an estate. However, there are risks to delaying, including becoming a target of scammers.
Get more death certificates than seems necessary. Make your life easier by getting at least a dozen certified copies, so you don’t have to keep going back to the source. Banks, brokerage houses, phone companies, utilities, credit card companies, etc., will all want to see the death certificate. While there are instances where a copy will be accepted, in many cases you will need an original, with a raised seal. In fact, in some states it is a crime to photocopy a death certificate.
Who to notify? Talk with an experienced probate attorney before getting started. One of the first call needs to be to the Social Security Administration. You may also want to send an email. If Social Security benefits continue to be paid, returning the money can turn into a time-consuming ordeal. If there are any other recurring payments, like VA benefits or a pension, those institutions need to be notified. The same is true when it comes to insurance companies, banks and credit card companies. Fraud on the credit cards of the deceased is quite common. When a notice of death is published, criminals look for the person’s credit card and Social Security numbers on the dark web. Act fast to prevent fraud.
Protect the physical property. Secure the home right away. Are there plants to be watered or pets that need care? Take pictures, create an inventory and consider changing locks. Take any valuables out of the house and place in a secure location. If the house is going to be empty, make sure to take care of the property to avoid any deterioration.
Paying the bills. Depending on the person’s level of organization, you’ll have to identify where the money is and if anything is being paid automatically. Old tax returns can be helpful to identify income sources. Figure out what accounts need payment, like utilities. This is another area where it is very important that you speak with an experienced probate attorney before paying bills. Every state has a legal code that outlines the rules of administering an estate, especially the rules of who gets paid and in what order.
Some accounts are distributed directly to beneficiaries, like transfer-on-death accounts like 401(k)s, IRAs and life insurance policies. Joint bank accounts and real property held in joint tenancy will pass directly to the joint owner. The executor’s role is to inform the institutions of the death, but not to distribute funds.
File tax returns. You’ll have to do the final taxes, due on April 15 of the year after death. If taxes weren’t filed for any prior years, the executor has to do those as well.
Consider getting help. As stated above, hiring an experienced probate or estate planning lawyer early in the process can drastically help with the administration of an estate. Regardless of who handles this process, expect the tasks to take anywhere from six months to two years, depending on the complexity of the estate.
Reference: Business Insider (May 2, 2020) “How to manage a loved one’s finances after they die”