Losing a Parent: A Checklist and Timeline of the Financial Aspects to Address

FinanceWealth-Building

  • Author Michelle Francis
  • Published August 20, 2023
  • Word count 1,452

The Overwhelm of Losing a Parent

Dealing with the death of a parent is profound, emotional, and overwhelming. It can feel like your list of things to do, from notifying friends and family to making end-of-life arrangements and figuring out what to do with all their stuff is endless. Dealing with these types of practicalities is even more challenging when you’re trying your best to honor them and find time for yourself to grieve.

How and When to Deal with the Financial Aspects of Losing a Parent

While you don’t necessarily need to take immediate action on the various decisions you’ll be faced with related to their estate and finances, it’s important not to put their financial matters on hold for too long, either. This can help you alleviate potential complications in the future.

Here are some ideas for where to start so that you can keep moving things forward while still honoring your parent's memory.

What to do Within the First Week of Losing a Parent

  1. Contact an Attorney or Estate Planner

If they worked with someone, notify them so they can help guide you through the legal process of settling your parent's estate. They can help with probate, distribution of assets, and what to do about any outstanding debts. If they didn’t have someone, consider getting some legal help from an estate attorney to make sure you don’t miss anything and understand the probate process.

  1. Secure Their Home, Assets and Important Documents

Change the locks on their home if you think it’s necessary, and make sure to locate and safeguard their important documents, such as their will, trust documents, property and ownership deeds for real estate, vehicles or valuable assets and financial statements.

You should also start collecting their mail and compile a list of accounts, outstanding debts and companies that you’ll need to address.

  1. Obtain Their Death Certificate

Obtain multiple copies of the death certificate from the county or state in which they resided as you'll need to provide a copy to the list of companies you put together.

The information required to get one varies by location, but most will ask for the following information:

Full, legal name, including maiden name (if applicable)

Social Security number

Birth and death date

Cause of death

Gender at birth

Marital status, including divorce decree (if applicable)

City and state of birth

Where their father and mother were born and died

Military veterans will also need their branch of service, dates of service and separation, and their rank

What to do Within the First Month of Losing a Parent

  1. Notify Relevant Government and Financial Institutions

Contact the following to inform them of your parent's passing once you receive copies of their death certificate.

Banks and financial institutions: Notify the banks and financial institutions where your parent held accounts, including checking, savings, investment, and retirement accounts.

Insurance companies: Contact any life insurance, health insurance, or other insurance providers your parent had policies with.

Social Security Administration: Report the death to the Social Security Administration to stop any benefit payments and address potential survivor benefits.

Medicare and health care providers: If your parent was enrolled in Medicare or had other health care coverage, notify them to cancel coverage and prevent any fraudulent activity.

Veterans Affairs: If your parent was a veteran, inform the Veterans Affairs office to terminate any benefits or address potential survivor benefits.

  1. Review and Settle Their Financial Accounts

Be prepared to provide copies of your parent’s death certificate to complete each of these activities.

Close credit card accounts: Contact the credit card companies to close your parent's credit card accounts and prevent any unauthorized charges.

Settle outstanding bills: Arrange for the payment of any outstanding bills or debts your parent may have had.

File tax returns: File a final tax return on behalf of your parent. You should consult a tax professional to ensure compliance with tax laws and regulations and to determine if there are any estate tax obligations you’ll need to cover.

  1. Decide What to do with Their Property and Assets

If your parent owned property or assets, you should plan to work with an attorney to transfer ownership before hiring a real estate to sell a property. You might also consider hiring an estate sale company to sell any items your and your family don’t want and that weren’t distributed according to your parent's wishes or applicable laws.

  1. Review Their Beneficiary Designations

Check the beneficiary designations on your parent's financial accounts, including their life insurance policies, retirement plans and investment accounts. You can work with their financial advisor or hire one of your own to help you determine what you need to do with investment accounts and retirement plans.

What to do Within Six Months of Losing a Parent

If you received a sizable inheritance from an insurance payout, home sale or investment assets, it’s important to take your time and come up with a plan to make this sudden wealth event work for you.

  1. Decide Where to Save the Proceeds in the Short-Term

It’s so important not to make rash decisions about your inheritance, especially when you’re already feeling overwhelmed by your grief and your to do list. When you’re feeling vulnerable, unsavory advisors may try to influence you to do something with your money that’s not in your best interest.

That’s why I think it’s best to temporarily save any financial proceeds in a save and easy-to-access account like a savings or money market account. This will allow you to preserve the value of the inheritance while you take the time necessary to consider your options.

  1. Hire a Financial Professional

Consulting with a financial advisor who is a fiduciary can help you navigate the complexities of managing your inheritance. They can help you develop a comprehensive financial plan that takes into account your goals, tax implications, risk tolerance and personal circumstances. A financial advisor should be able to help with the following:

Assess your financial situation: Take stock of your current financial position, including your income, savings, and existing debts. Consider whether you have any immediate financial needs or outstanding obligations that should be addressed first.

Help you establish an emergency fund: If you don't have one already, consider establishing or bolstering your emergency fund. Aim to save three to six months' worth of living expenses in a liquid and easily accessible account. This fund can provide a financial safety net in case of unexpected expenses or a job loss.

Determine how to pay off your debts: If you have high-interest debts, such as credit card balances or loans, it may be wise to use some of the inheritance money to pay them off. Reducing or eliminating debt can improve your financial security and save you money in interest payments over time.

Share options for investing for yours and your family’s future: Depending on your financial goals and time horizon, you may choose to invest a portion of the inheritance money. Consult with a financial advisor to determine the best investment options that align with your risk tolerance, investment knowledge, and long-term goals. Consider diversifying your investments across various asset classes to manage risk.

Establish or maintain your retirement savings: If you have not already done so, consider contributing to retirement accounts such as an Individual Retirement Account (IRA) or an employer-sponsored retirement plan like a 401(k). Maximizing your contributions to tax-advantaged retirement accounts can help secure your financial future. Note: There are specific rules you must follow when you inherit your parent’s retirement savings because distributions are required when you’re not a spouse.

Help you reach your education or career development goals: If you or your children have educational aspirations, you may consider using some of the inheritance to fund tuition, books, or career development opportunities. Investing in education can provide long-term benefits and enhance earning potential.

Because everyone's financial situation and goals are unique, it's important to consider your specific circumstances when deciding what to do with your inheritance money.

In Summary

Losing a parent is a deeply emotional and overwhelming experience. Hopefully, taking a step-by-step approach to managing these final affairs will help you alleviate some of the overwhelm so you can find the time to deal with your feelings of loss and grief.

While this timeline and financial checklist provide general guidance, it’s crucial to consult with legal and financial experts who can offer personalized advice based on yours and your parent's specific circumstances. By navigating these practical matters with care, you can honor your parent's legacy while ensuring a smooth transition for the financial aspects of their passing.

Michelle Francis is the owner of Life Story Financial and offers financial planning, retirement planning and investment management services locally in Metro Denver and virtually across the U.S. Find her online at https://www.lifestoryfp.com or via email at michelle@lifestoryfp.com.

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