What To Do When a Family Member Dies

The passing of a loved one is life changing. After a death, there is so much to do that addressing financial matters related to a family member’s passing may get put on hold. However, it needs to be done – and sooner rather than later.

Request copies of the death certificate. Depending on where you live, you may have a places to turn to for this document. You can contact your county clerk or your state’s vital records department (though it may take a little longer to get the document this way). In addition, cities maintain their own registrars of births and deaths.

Call advisors, executors, and business partners as applicable. With the goal of protecting family assets, carrying out your loved one’s bequests, and determining next steps, the deceased’s attorney and accountant should be quickly notified, along with any business partners and the executor of his or her estate.

Call your loved one’s current or former employer(s). Notify them even if he or she left the workforce years ago, as retirement savings or pension payments may be involved. During the conversation, ask about pertinent financial matters, such as 401(k) or 403(b) savings that will be inherited by a beneficiary or what will happen to unused vacation time and/or unpaid bonuses.

Money in a qualified retirement plan sponsored by an employer commonly goes to the primary beneficiary who has been named on the most recent beneficiary form completed by the account owner. However, certain rules and regulations can make things complicated.

As a general rule, if the late 401(k) or 403(b) account owner was your spouse, then you are the presumed beneficiary of the assets. Under the Employee Retirement Income Security Act (ERISA), workplace retirement plans must follow this rule. If someone else has been named as the primary beneficiary of the account, and you signed a waiver, then the assets will go to the named beneficiary.

If the late 401(k) or 403(b) account holder was single, the assets in the account will go to whoever is designated the primary beneficiary. The beneficiary designation will override any wishes stated in a will.

To arrange and confirm the transfer or distribution of such assets, the beneficiary form must be found. If you can’t locate it, the employer and/or the financial firm overseeing the retirement plan should provide access to a copy. You will be asked to provide:

• A certified copy of the account owner’s death certificate
• A notarized affidavit of domicile (a document certifying his or her place of residence at the time of death)

If the named beneficiary of the retirement plan assets is a minor, his or her birth certificate will be requested. If the named beneficiary is a trust, a W-9 form and a copy of the trust agreement will need to be provided.

As to what to do with the retirement plan assets, there are really only three courses of action: you can 1) transfer the assets into an IRA, 2) transfer them into an IRA you own if the account owner was your spouse, or 3) take the assets as a lump sum and pay the resulting income tax on that money, which could place you into a higher tax bracket.

The value of these assets will be included in the estate of the deceased, unless the named beneficiary is a spouse or a charity.

If you have been widowed, call Social Security. If you already receive benefits, you may now be eligible for additional benefits.

If your spouse received Social Security and you did not, you may now qualify for survivor benefits. You should let Social Security know as soon as possible, as these benefits may be paid out relative to your application date rather than the date of your loved one’s death.

To apply for survivors benefits, you may need to provide:

• Proof of death (death certificate, funeral home documentation)
• Your late spouse’s Social Security number
• His/her most recent W-2 forms or federal self-employment tax return
• Your own Social Security number and birth certificate
• Social Security numbers and birth certificates for any dependent children
• Your marriage certificate or divorce papers, as relevant
• The name of your bank and the number of your bank account for direct deposit purposes

Call the insurance company. Assuming your loved one had some form of life insurance, contact the insurance company’s policyholder services department to confirm what steps to take for claiming the death benefit. A claimant’s statement will have to be completed, signed and presented to the insurance company (one for each named beneficiary on the policy), and a certified copy of the death certificate must be attached to each statement. Some insurers also want you to fill out a W-9 form, which tells the IRS about any interest paid on the value of the policy.

It isn’t unusual for people to own multiple life insurance policies. The AARP, AAA, and many banks and non-profit groups sell group life insurance coverage to members/customers, and mortgage lenders and credit issuers often offer some form of life insurance for borrowers. Tracking all of this coverage down is the problem, and cancelled checks and bank records don’t always provide ready clues.

If the family member was a veteran, call the Veterans Administration. Your family may be entitled to funeral and burial benefits. In addition, the Veterans Administration offers Death Pensions and Aid & Attendance and Housebound Pensions to lower-income widows of deceased wartime veterans and their unmarried children.

Before filing a claim, it may be a good idea to contact a Veterans Services Officer, as he or she can be a big help during the process. You can find a Veterans Services Officer through your state’s veteran’s affairs department or through the VFW, the Order of the Purple Heart, the American Legion or the non-profit National Veterans Foundation.

A final individual income tax return may be required for the deceased. Contact your tax advisor for help in determining what you will need to do. Deductible expenses paid by the deceased before death can generally be claimed as deductions on such a return.

If you have been widowed, consider the future. When you are ready, you should review your financial strategy and your will, because your beneficiary designations and your estate plan may also need to be updated. The passing of your spouse may necessitate a new executor of your own estate. Any durable powers of attorney may also need to be revised.

A My Life & Wishes account not only helps you keep your contact and account information up-to-date and organized, it will become an invaluable resource for loved ones faced with settling your affairs upon your death.