There is no doubt about it; coping with the death of a loved one can be hard. Unfortunately, your emotional suffering may not be the only thing that you have to cope with; financial hardship is usually right around the corner, especially if the deceased did not plan accordingly.
It is important that you get a certified copy of the death certificate as soon as you can. You will need this document to take care of the rest of the financial responsibilities on your plate.
It is never easy to go through a death, but there can be consolation in knowing you took the right financial steps to make sure you have taken care of everything on your end.
How to Cope with the Death of a Loved One Financially
1. Gather the correct documents.
The most important document you will need when coping with the death of a loved one is the death certificate. Many companies will require you to provide them with a certified copy of the death certificate before they will help you further.
You may be wondering where you can get your hands on the death certificate and when. It can take a bit of time before you have the official document in hand.
The county health department or funeral director can help you get certified copies of the death certificate for a small fee. It is worth the money to have that copy readily available. It is recommended you get at least 10 copies of the death certificate. You will be glad you did.
Other documents you will need to have readily available include all insurance policies, social security numbers, military discharge papers, birth certificates of children, marriage certificate if the deceased is your spouse, a list of assets, and the will.
The social security number should be provided on the death certificate. You can obtain military documents from the Department of Defense at the National Personnel Record Center. The will should be located at the office of your family member’s attorney.
Most people keep the rest of the documentation in a safe or safe deposit box at the bank. These documents will come in handy as you deal with the death of a loved one.
2. Know the benefits that will apply.
Insurance is a big issue that comes up once the death of a family member has taken place. You will need to know the location and status of the following information regarding the insurance policies of your loved one:
- Credit card insurance
- Auto and/or motorcycle insurance
- Mortgage and/or loan insurance
- Accident insurance
- Employer insurance
- Life insurance
If you are the named beneficiary, the proceeds from insurance policies can be paid directly to you once you have a death certificate.
Often, the death of a loved one can add financial burdens on family members. If this is the case for you, consider filing claims for insurance as soon as you have the death certificate so that funds will be readily available.
When deciding how you would like to be paid, it is recommended that you speak to a qualified financial planner, especially if you plan to donate a portion of the funds to a charitable organization.
Besides insurance, you might be eligible for social security benefits. If your loved one was receiving checks from Social Security, make sure you do not cash any checks until speaking with their office to determine if you are eligible for benefits.
3. Understand the will.
If your loved one had a valid will, obtain a copy of it from the family attorney or safe deposit box. Since safe deposit boxes are often sealed at the time of death, it is not recommended that you keep your wills in this location unless you have no better option.
If there was no will to execute, the family member’s estate would need to be divided according to the state’s intestacy law. Consult an attorney when in doubt about the execution of a will.
Also, if there was no will, the process of the execution of the will may be decided by the use of probate, which is the legal process used to pay the deceased’s debts off and decide who is the rightful heir to the estate.
4. Know your taxes.
Many taxes will need to be paid upon the death of a loved one. Estate taxes are usually not an issue in small estates. If the property was worth over 11 million dollars, you might have to pay estate taxes. It’s best to speak to a tax professional about this.
Death taxes and inheritance taxes vary by state and may not be due depending on the circumstances. For example, most states do not require that you pay an inheritance tax.
Federal and state income taxes are only due in the year of the death of the loved one. If you ask for a tax extension, you will be given additional time to file your taxes.
Seeking the advice of a tax professional when you are dealing with the death of a loved one’s taxes is highly recommended as it can get complicated! Ask for a tax consultation to go over the pertinent details.
5. Change ownership where necessary.
There are many companies, agencies, and documents that will need to be changed after the death of a loved one. For example, insurance policies, automobile titles, safe deposit boxes, bank accounts, cellular phone plans, stocks, and bonds will need to include the name of the person now in charge of these things rather than the deceased.
While coping with the death of a loved one is never easy, there are steps you can take to make things easier when the time comes. If you are in doubt about what to do, speak to a lawyer or financial expert.
At Borshoff Consulting, we know what you are going through and will gladly help you with any tax or business concerns that we can. We would like nothing more than to ease your suffering by making the process easier in any way possible.
For any tax considerations, look to Indiana’s tax expert, Sherry Borshoff. Contact us today for a free tax consultation!