Checklist for Handling Financial Matters After a Loved One Dies
Losing a loved one is overwhelming, and managing financial and legal responsibilities during grief can feel like too much. Every situation is different, but this checklist can help guide you through the essential financial steps after a loved one’s passing.
Immediate Steps
1. Obtain Multiple Copies of the Death Certificate
Banks, government agencies, and insurance companies need a death certificate to process claims, close accounts, and transfer assets. Funeral homes usually help with this step.
2. Gather Important Documents
Find the will, trust documents, insurance policies, and financial statements to help manage affairs and distribute assets.
Collect Social Security, pension, and military service records to apply for any benefits.
3. Take Stock of Assets and Debts
Make a list of bank accounts, investments, real estate, and personal belongings.
Use a prior-year tax return to help identify assets—Schedules B and D can be particularly useful for listing interest, dividends, and capital gains.
Identify outstanding debts, including credit cards, loans, and medical bills.
Run a credit report to identify any open accounts that may need to be closed or addressed.
Use this list to guide decisions about settling debts and distributing assets.
4. Notify Key Institutions
Contact the Social Security Administration to stop payments and ask about survivor benefits.
Inform banks, credit card companies, mortgage lenders, and utility providers based on your inventory.
Reach out to insurance companies (life, health, auto, and home) to start claims or adjust policies.
Settling the Estate
5. Start the Probate Process (if needed)
If there’s a will, the executor will need to submit it to probate court.
Some assets, like those in a trust or with named beneficiaries (e.g., life insurance, retirement accounts), do not go through probate.
For trust assets, the trustee will need to provide a death certificate to financial institutions and follow the trust’s instructions for distribution.
Beneficiaries of accounts with designated beneficiaries must contact the financial institution, complete the required forms, and provide identification to claim assets.
6. Determine Asset Values for Taxes
Some assets may qualify for a step-up in cost basis, reducing capital gains taxes if they are sold. This applies to investments, real estate, and other holdings.
An appraisal may be needed to determine the fair market value of certain assets at the time of death.
7. Settle the Estate and Distribute Assets
The executor or administrator will work through the legal steps to settle debts and distribute assets according to the will or state laws.
Debts and taxes generally must be paid before any assets are given to heirs. Consider holding back a portion of estate assets until you are certain all expenses are settled. Unexpected costs, such as final tax return preparation or attorney fees, can arise. It is often difficult to request money back from heirs if assets are distributed too quickly.
The probate court may require filings, hearings, and approvals before the estate can be fully settled.
Once everything is resolved, the remaining assets are distributed to beneficiaries.
Financial and Tax Considerations
8. File Necessary Tax Returns
A final income tax return must be filed for the deceased.
If the estate earns income, an estate tax return may be required.
A tax professional can help navigate estate or inheritance tax requirements.
9. Transfer Financial Accounts
Joint accounts may automatically go to the surviving owner.
Beneficiaries need to file claims for retirement accounts [401(k), IRA] and life insurance policies.
Brokerage and bank accounts with payable-on-death (POD) or transfer-on-death (TOD) instructions can be transferred directly to beneficiaries.
Looking Ahead
10. Review Your Own Estate Plan
If you inherit assets, consider updating your own will and beneficiary designations.
You may want to talk to a fiduciary financial professional about how your situation has changed.
11. Take Care of Yourself and Your Family
Financial matters can be stressful, and emotions may run high. Open communication can help prevent misunderstandings.
Grief affects decision-making, so don’t rush big financial choices.
This checklist provides a general roadmap, but every situation is unique. Legal and financial professionals can help guide you through the process. By taking these steps, you can bring clarity to a difficult time and help honor your loved one’s wishes.
Schedule a complimentary, 15-minute chat with a fee-only, fiduciary financial advisor today to discuss your personal situation.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.
Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor with offices in Granite Bay and Folsom, CA, and Lehi and Logan, UT. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.