Losing a loved one, unfortunately, comes with more than just heartbreak. There are a series of financial struggles that surviving loved ones will have to face, many which can have severe consequences if not handled properly. Fortunately, with the proper advice and guidance, you can mitigate or even avoid these financial struggles.
One of your top priorities should be getting familiar with your resources and routine expenses. To get a handle on your resources, make a list of all your saving and investment accounts. Next, list your expenses so you are aware of your financial commitments and where your money is typically being spent.
It is also important to know that this first year may not be routine. You may have some one-time expenses that require you to set aside some additional savings. The following list of common death related expenses comes from my new book “Death’s Red Tape.”
Purchase the book on Amazon to learn more about the financial struggles and how to best handle them.
Immediate Unexpected Financial Burdens After a Loved One Passes Away
After a loved one passes away, there will be some immediate unexpected financial burdens that will need to be paid for.
- Funeral expenses
Most funeral homes and cemeteries require payment before the service. Some funeral homes may accept life insurance assignments but may charge an added fee for it. There are ways to possibly have the expenses paid such as deducting them from the descendant’s federal estate tax return. Therefore, keep all proof of payment so that you can be reimbursed when the time comes.
- Buying a burial plot
When a loved one passes away and didn’t previously purchase a burial plot, it will now be your responsibility to purchase it. The cemetery may offer a discount if you purchase more than one at a time.
- Urn or casket
You will also have to decide on an urn or casket for the deceased. Make sure to check if they had requested one or the other before making a final decision.
- Death certificate
Some creditors and other places may require a death certificate to cancel an account. Depending on the state you live in, a single copy of a death certificate usually costs about $25.
Critical Financial Decisions Within the First Year
Within the first year of a loved one passing away, you will likely face some big money decisions.
- The house
When a loved one passes away, we recommend waiting to make any major financial decisions such as selling the house until six months to a year after your loved one has passed away. It’s best not to make an emotional or illogical decision.
- Bills and credit cards
It may be tempting to use your personal money to pay off the deceased’s bills. But in many cases, you should pay them last. First, pay for the funeral and attorneys with the estate. Then you can pay the creditors with the estate – and if the estate runs out before all the creditors are paid, you still may not have to pay them. Discuss this with your attorney to decide the best course of action and the chances that the creditors’ bills will be dropped.
- The vehicle
If the deceased was leasing a car, early termination of the lease may have penalty fees unless the lessor has a death clause. If they own the car, you can use it until the registration runs up, then decide if you want to keep it or sell it.
- Outstanding loans
The deceased may have outstanding personal loans or student loans. You can talk with your accountant and attorney about how they should be paid for and if there is a way for the estate to pay for them or have them be forgiven. There also could be ways to escape this debt, so read the fine print and ask for forgiveness options.
Pay for Professional Advice
Handling these big decisions by yourself can be confusing and overwhelming. Rather than tackle everything alone or relying on a friendly family member, seek help from professionals.
- Hiring a financial advisor
If you don’t have a trusted financial advisor, find one. Often, they play an important role coordinating your team of other advisors, organizing your finances, and advising you on big money decisions.
- Hiring an attorney
It’s important to hire an attorney to help you sort through the estate and any benefits you may be liable to receive. Attorneys will charge by the hour, a flat fee, or a percentage of the value of the estate. Ask about the division of labor and the related costs. You can also see how much the paralegal alone would cost since they may do all the paperwork and be cheaper than the attorney.
- Hiring an accountant
The deceased may have tax returns due, estimated taxes to pay, or other items that need to be taken care of. An accountant will help you make sure everything gets paid correctly. I recommend having a meeting with your attorney and accountant. It will be well worth the expense to have them work together.With the proper professional help, you can make intelligent money decisions. Additionally, “Death’s Red Tape” offers clear step-by-step advice so that you are not blindsided after a loved one passes away. Use it as a guide as you navigate the unfamiliar and begin your healing journey.