Planning the future for your loved ones

Settle the Estate

Once all the previous tasks have been completed, it is time to begin settling the remaining estate. As previously mentioned, your loved one’s private assets will be tied up until this is done, and you will need these assets to move on with your and your family’s lives.

The first step will be to contact everyone that will be involved, which may include your attorney and/or accountant and the executor and/or trustee of your loved one’s estate. The executor of their will or trustee of any trusts are the only one authorized to carry out these steps. If there is no will, the probate court will appoint an administrator, which may be you.

Most of these steps require a copy of your loved one’s death certificate. This can give you an idea of how many you may need just for this process.

Keep records of everything and notify the executor of the estate, if it is not you, about the accounts you close, outstanding debts, and withdrawals of cash from any accounts.

Manage any trusts

Trusts are handled without involvement of the probate court and can be attended to by your attorney and the trustee working together. You can start the process as soon as you are ready.

Begin the probate process

You or the executor named in the will and the attorney should file a petition for probate with the probate court along with a copy of your loved one’s will. While you can file the petition as soon as you are ready, the approval takes a while. States have a waiting period before the probate process can begin, usually one month. Despite this, you should meet with a probate attorney as soon as possible.

  • The executor should choose the attorney, usually after getting recommendations from family or friends. An online search may also be an efficient way to find one. 
  • Probate can be a complex and time-consuming process, and their advice and experience can save a lot of time, frustration, and money when it is. 

If there isn’t a will, the probate court judge will name an administrator in place of an executor.

The probate process starts with an inventory of all their personal/unshared assets, such as property, bank accounts, house, car, brokerage account, personal property, furniture, jewelry, and animals, which will need to be filed in the probate court. Trusts, shared, jointly-owned, and transfer-on-death assets are not included.


Deal with your loved one’s debt

Before discussing who to contact about your loved one’s finances and paying bills, it’s important to understand what happens to their debt after they die. There are some important points to keep in mind.

As discussed in the Estate Planning section, it is important to know the difference between assets considered part of the estate and those that are not. In addition, you must know which jointly-owned assets are protected from creditors.

  • Every asset in your loved one’s will is part of the estate, while most assets that are transferred directly to you or another beneficiary upon your loved one’s death are not.
  • If you are married, any assets that are strictly yours are not part of your loved one’s estate.
  • Any jointly-owned assets without rights of survivorship are transferred in the will, and therefore considered part of the estate, whereas, jointly-owned assets with rights of survivorship are not.
  • Community property, in the 10 states that have this, is different. Even though it is transferred to you after your loved one’s death, it is available to creditors for any debts accumulated during your marriage.
  • Accounts with beneficiaries, like IRAs, 401(k)s, life insurance, pension plans, and brokerage accounts are no longer part of their estate and not accessible to creditors.
  • Any assets in an irrevocable trust are also unavailable to creditors.

Debtors are first in line to get any money owed to them from available assets and beneficiaries will only be entitled to the remainder. If the debt exceeds the value of the estate, heirs/beneficiaries are not responsible to pay the remainder and the creditors will take a loss.

  • Don’t use any of your own money to pay off debts.
  • Ignore tactics such as notices or debt collection calls. 
  • If persistent, an attorney can help put a stop to it.

If you receive any property with a debt, like a home mortgage or a car loan, the debt comes with the property.

  • The responsibility of paying off this debt falls to you.
  • You can continue to pay the loan by taking over the payments, refinance the debt or sell the property to pay the loan, depending on your preference.
  • If the property is worth less than the debt, the estate assets will be used to pay the balance. If there are not enough other assets to do this, the property will be sold to offset the debt.

Your loved one’s student loans will be forgiven.

Notify any banks and mortgage companies

In addition to accounts in a bank, your loved one may have long-term debts such as home mortgages, bank line of credit, leases, car loans, and student loans, from banks and/or mortgage companies.

If authorized as the designated agent (usually the executor), ask about any debts, loans, or other money owed to the institution and arrange to have them paid. Debtors are only entitled to payment from your loved one’s estate, unless you are their spouse or co-signer of a loan or mortgage.

Your options for paying off a mortgage depend on your situation.

  • If you co-signed the mortgage, you are legally responsible for paying it after your loved one has died.
  • If you are not a co-signer, you can take over the mortgage (even if it is in your loved one’s name) without having to immediately pay it off. You must qualify for the mortgage before you can continue making payments.
  • Unless you co-signed the loan, you will have to refinance any home equity line of credit. In either case, you will then be responsible for the loan.
  • If you cannot assume or pay off the mortgage, the estate assets will be used to do this, including selling the home if necessary.

Change ownership of joint bank accounts.

  • Do this even if you have the right of survivorship, since the bank needs to know about it before they can do it. 
  • Even before you notify them, you should still be able to use the money.

If you were not a joint owner or co-signer, you cannot access your loved one’s bank account.

  • A Personal Representative, who is approved by the court, will need to authorize you to access the accounts to pay any bills.
  • If you’re unsure of what accounts your loved one held, use their mail and any online accounts you have access to in order to identify their active accounts. 

You must take copies of the death certificate to each bank to change ownership of the accounts or ask questions about a deceased loved one. 

You may need a court order to open and inventory a safe deposit box if a key or password isn’t readily available. Most probate courts have administrative rules about steps to access the box of any decedent.

Look into employee benefits

If your loved one was working and you haven’t already, contact the employer for information about pension plans or retirement annuities, credit union death and other benefits, and company insurance policies.

  • Ask if you are entitled to any of these benefits. You will need a death certificate for each claim you are entitled to.
  • If you are not, the payment received for the month of their death will need to be returned, after which will then send a new payment adjusted to account for their date of death

Contact credit card companies

The dual purpose of contacting these companies is to ask about your loved one’s credit card debt and to cancel the cards. As long as your loved one’s cards are active, the account is vulnerable to identity fraud and theft.

  • Examine your loved one’s mail, wallet, and any online accounts you have access to in order to identify open credit card accounts. 
  • For each card, call the customer service phone number on the card, monthly statement, or issuer’s website.
  • Ask about any payments due on the card and, if the charges are valid, make arrangements to have them paid.
    • Like other forms of debt, the money is paid out to the credit card companies from the estate before the beneficiaries get their share. If there isn’t enough money in the estate to pay the debt, the credit card company has to write it off.
    • Unless you were a co-signer or joint owner of the account, you are not responsible to pay any debts with your personal money. Those who were authorized owners only are also not responsible for paying off the credit card debt, since they didn’t sign the application.
  • Tell the agent that you would like to close the account of a deceased relative. A death certificate will be requested, which you can either email, mail, or fax a copy of to the agent. It may even be safer to send the death certificate by registered mail with return receipt requested. 
  • Once the company receives the death certificate, it will close the account as of the date of your loved one’s death. 
  • If an agent doesn’t offer to waive interest or fees after that date, be sure to ask. 

Identify and pay other important bills

After you have contacted the banks and credit card companies, you may have a good idea how much debt your loved one had, but there are many other possible debts.

You should also notify federal, state and local officials, landlords, rental agencies, utility companies, and administration offices for assisted living or nursing homes as soon as possible. You may need to discuss debts, rental payments and lease or rental agreements, ongoing expenses for services, and outstanding taxes.

  • Make a list of bills that are likely to be due. Some will need to be paid off, some may only be due for the last month of your loved one’s life, and others will continue if you still need the residence, item, or service being provided.
  • You may be able to track them down via your loved one’s mail and online accounts, files on their computer, or stored paper documents.
  • There are many types to look for:
    • Utility bills may include electricity, heating, telephone and/or cable TV, internet/Wi-Fi, cell phones,and water/sewer/garbage;
    • Rental payments may still need to be paid for the month your loved one died on their home, apartment, assisted living facility, or nursing home; and/or
    • Property taxes, if paid separately and not included in home mortgage.
  • If it is not you, share the list with the executor or estate administrator so that bills can be paid promptly.
  • Set up a plan to ensure these bills will be or will continue to be paid on time. 

Notify life and other insurance companies

Your loved one may have had many types of insurance that will help you out financially once they are settled. They may be life insurance or annuities that will pay a benefit to you as the beneficiary or mortgages, credit cards or other loan insurance that might pay for the debts directly.

  • Make sure you check all of their records, since these institutions may not know to notify you about the benefits.
  • Fill out each claim form for all of these insurance policies, although it will probably take time to process them. Each claim form will require a copy of the death certificate.
  • If your loved one was listed as a beneficiary on any of your policies, arrange to have their name removed. Also, suggest that friends and family who may have listed your loved one on their own life insurance policies update theirs.

There will also be many insurance policies that your loved one no longer needs.

  • This could include health and dental insurance, car or other vehicle insurance, homeowners or property insurance, disability insurance, or any other accident insurance. 
  • Depending on the policy, reach out to either the insurance company or your loved one’s employer to stop coverage. 
  • Cancel them and ask for any unused premium to be returned to you, unless they owed the insurance company for late premiums or services.
  • Insurance bills may still need to be paid for the month your loved one died, this may even include the life insurance premium before you get any settlement.
  • A copy of the death certificate will be needed to cancel each one.

Contact the Social Security office

As mentioned previously, your loved one becomes ineligible for Social Security benefits as soon as they die.

  • If your loved one was receiving benefits, they must stop because overpayments will require repayment.
    • The payment received for the month of their death will need to be returned.
    • Social Security will then send a new payment adjusted to account for the date of death. 
  • Your funeral director may have already notified them, so find out if this is the case.
  • You should also contact Social Security yourself anyway. You can reach them by phone at 1-800-772-1213.
  • You may be able to apply to Social Security for survivor benefits.
    • As a surviving spouse, with or without dependents, you should ask about your eligibility for increased personal benefits.
    • Also ask about a one-time payment of a $255 survivor benefit. 
Visit the Social Security website to learn more about their process and find any forms that you may be required to fill out.

Reach out to any financial advisors or brokers

In attempting to find all of your loved one’s assets, you may have to find and speak with any financial professionals they have used to identify any additional financial and investment accounts that they held. They will go over these accounts with you and can help you manage them. 

  • Determine the beneficiary listed on these accounts. 
  • Work with each advisor to transfer ownership of the accounts they manage to the beneficiary. 
  • Depending on the type of asset, it may not need to be part of the probate process.
    • The beneficiary would get access to the account or its benefits by simply filling out appropriate forms and providing a copy of the death certificate. 
    • The executor may not need to be involved, unless there are complications.

File your loved one’s final tax return

They say the only certain things in life are death and taxes. This even includes taxes after death. You and/or the executor must file a final tax return for the year your loved one dies.

  • You’ll need to file a return for both your loved one, based on their income over that time, and the estate.
  • In addition to all of the other records needed to complete a tax return, you will need the monthly bank statements on all individual and joint accounts showing the account balances on the day of your loved one’s death.

Deal with your loved one’s possessions

Probably the last part of the estate that will be dealt with is your loved one’s possessions. It can be a very emotionally taxing task. Everything you see can evoke a memory, some of which may be painful. Some may cause guilt when you discard them, even though the item will not be useful to anyone.

It can be time consuming and will most likely take multiple sessions to complete. It may be better to do the task with another family member to reduce your workload, support you, and help you make decisions about items.

Like everything else in this section, it is better if you planned ahead. Not only will you know what items need to be taken into account, you may even know where your loved one wants them to go and get a headstart on distributing them.

There are many options for each item, depending on whether your loved one wanted to hand it down to a specific person, how valuable the item may be to you, each item’s meaning to the family or friends, or the situation you find yourself in after their death.

Although a daunting task, there are ways to approach it in a less chaotic manner. 

Start with a quick scan of the items to determine the scale of your project. Look for any that need to be prioritized, such as houseplants or very expensive items that should not be left in an empty house.

Then do an inventory of the remaining items, along with their location. You may be able to do this more gradually and at your own pace with these items, unless there is a reason to hurry, such as a lease running out. However, in this case you can move everything and still be able to go at your own pace.

You should decide on some organized approach, such as by room or item description such as food, clothes, books, art, etc. Keep a list as you go to prevent sorting items more than once.

During this inventory evaluate each item and tentatively decide on which of the above categories they go in and start to plan how to follow through.

  • This can sometimes be determined by conversations with your loved one, family, and friends, and the financial and sentimental value,
  • You may want appraisals and pictures of valuable items, and copies of valuable documents. 
  • Get all the help you need to do this, including professional appraisers.

Evaluate the condition of each item.

  • Put any that don’t work, are in poor shape, or too old in the throw away pile.
  • Bring enough trash bags to hold it all and get rid of it as soon as you can.

Look at your own residence and talk to family about how much can realistically be taken and used.

  • Move the item soon after determining who will keep it.
  • There is no need to make space or purchase storage to keep items that you or your family will never use.

Trust your gut feeling about the sentimental value of each item and whether that alone is a reason to keep it.

  • If so, set it aside. If you want to give it to family, pass along the story behind the item.
  • If not, consider whether it is valuable for other reasons. Items of little to no intrinsic value can be discarded.
  • If you’re not sure, you can put it aside for a time or have someone else help you decide.
  • You may be satisfied by taking a picture to preserve the memory and getting rid of the item.

Try to assess the overall usefulness of each item and predict its possible use to anyone. Consider whether you want to keep it, give it away to family/friends or charity, or sell it.

Other items may have aesthetic value, like a painting or jewelry, or be valuable for other reasons, such as antique furniture or a coin collection. Many antiques and art items may not have a lot of intrinsic value. Sometimes a professional appraiser can help.

Consider giving items to an organization that will find someone who could use the item if:

  • No one in the family will have use for it;
  • There is no space to put it; and/or
  • There are a number of these items and you can only use a few.

Whether you want to sell or donate these items is usually based on preference or need. 

  • Consider selling items if you need the money, selling only expensive items and donating the rest, or donating everything if you can afford to or there are not expensive items.
  • Options on selling include an estate sale, eBay or similar site, dealers, or organizations that specialize in this.
  • There are many options for donations, many of which depend on what you are donating and what causes you support.
  • Dealing with Stuff (literally): sorting through a loved ones belongings has information on a number of resources to look at.
General References