This guide is intended to help you prepare clients and assist with the unfinished paperwork and decisions that need to happen after the death of a loved one.
The information and suggestions within this article are designed to assist clients, but shouldn’t replace professional guidance that may be necessary from you, the financial advisor, their attorney, CPA, or other professionals. Also, note that this is a general overview and checklist, and it may not be complete depending on your situation.
Editor’s Note: This article’s content is also adjusted as a client-facing guide that you can offer clients during their time of grief. If you’re a FIG-partnered professional and want to share the guide, please log in to the FIG Agent Portal, head to Marketplace One, and search “A Client Guide to Unfinished Business.”
Encourage Clients to Do These Things Immediately
Prepare Funeral Costs
This goes without saying, but it’s important to discern a client’s loved one’s intentions and to follow through with their wishes regarding the funeral and burial plans, possible medical research donations, and even charitable donations in lieu of flowers.
Costs for a funeral can vary quite a bit, but sage advice recommends budgeting $10,000 to cover most traditional costs. You may be able to help your clients obtain that money if they had a life insurance policy, or you might be able to shift dollars around to help them cover the costs.
Obtain Multiple Copies of the Death Certificate
Clients will need a certified death certificate any time they need to provide proof of the death—which means any time they want to collect property that belonged to the deceased person or claim a benefit that results from the death. There are two types of certified copies of death certificates issued:
Cause-of-death-showing, typically required for:
- Life insurance
- Employee benefits (pension, 401(k)s, annuities)
- Auto insurance (if this was the cause of death)
- Personal records for the family to keep
Without-cause-of-death-showing, typically needed for:
- Social Security (if a spouse or minor child is to claim death benefit)
- Veteran Affairs (if eligible for death benefits)
- Title transfers (real estate, vehicles, boats, and more)
- Banking (checking accounts, money markets, credit cards, and more)
- Financial advisors
- Income tax
- Probate courts
- Homestead exemption
- Utility companies
Locate the Will & File with Probate
Some clients may be unsure if there’s a will or where it resides. Some people to ask are the deceased’s friends, family, or even their bank in case it resides in a safe deposit box.
They’ll need to contact the personal representative (executor) and possibly a probate attorney. A valid will must be filed with the probate court (in the county of residence) within ten days of the date of death. You can file in person or by mail.
Actions to Take Within 30 Days
Meet with You & Other Financial Representatives
It’s critical that clients involve all parties and that everyone understands the financial implications resulting from a death. When the time’s right, you’ll want to implore them to discuss investment options, account ownership changes, beneficiary designations, and tax responsibilities.
Keep a Phone Log & Notes of Conversations
After the death of a loved one, clients will have many conversations, and it’s important to remember who they talked with and what the outcome was. The log should include the date, the person’s name, and a summary of the conversation.
Settle Any Debts
As clients go through their loved one’s estate, encourage them to gather documents from every possible expense that may need to be paid or canceled. If there are significant debts, have them alert the will’s executor since they’ll typically handle all final affairs, including paying ongoing charges.
They should also pay any bills that may be delinquent or due within a few days, such as utility bills, secured loans, and car payments. Canceling subscriptions and memberships is also important, and they should check if a refund is possible for any payments made in advance.
Prepare & Send Acknowledgements
The passing of a loved one creates a hectic and grief-filled situation, and clients can find it challenging to keep track of who has done what in the days and weeks following the death of a loved one. To make sure that they don’t forget anyone during this chaotic time, encourage them to keep a notepad and pen handy at all times.
Sending out cards is an emotional process, but getting out acknowledgments is necessary for the giver as much as the receiver. It’s never too late on your end to send out cards for flowers, memorial donations, food, or spiritual remembrances.
Notify Insurance Companies & Providers
Encourage clients to request and file the appropriate forms for the following:
- Life insurance
- Health insurance
- Supplemental Medicare
- Prescription drug plans
- Disability insurance
- Travel and accident coverage
- Homeowner’s insurance
- Automobile insurance
Notify Sources of Any Retirement or Pension Benefits
In addition to the forms mentions above, it’s also advised to notify other retirement or pension benefits administrators by filing forms for previous employers’ workers’ compensation and Veterans Affairs.
Notify Social Security
Clients should also let the Social Security Administration know of the death as soon as possible, so they don’t have to repay the government. If checks are a direct deposit, have them notify the bank of the death.
Social Security is paid in arrears–the check you get for this month is for last month. A $255 death benefit is payable to a surviving spouse or a minor child only. Other follow up may be necessary to change or apply for benefits.
Related: 7 Tips for Protecting Client Information [Infographic]
Client Actions Within 60-90 Days
Notify Banks & Investment Accounts
If clients have investment accounts through you, then this step should become simpler.
With proof of death, they should be able to transfer necessary accounts to the appropriate beneficiary. Certain accounts are set up as “payable on death,” which means the assets transfer directly to the beneficiary outside of the probate process. Once someone passes away their Social Security number loses its effective purpose.
As a result, a new tax ID number must be obtained from the IRS in order to authorize activities on behalf of the estate. Now’s also the time to make sure clients change ownership and tax identification number, if necessary. Also, leave one joint checking account open for at least one year to handle any payments owed to the deceased.
Savings, checking, money marketing, and CD accounts should be reviewed to:
- Inquire about mortgage loans, installment loans, and credit card accounts. Each lending institution may have a policy regarding changes due to death. Make sure clients check these accounts for any possible credit life insurance policy that may exist to pay off the balance.
- Review who the authorized parties are on safe deposit boxes and make necessary changes.
- Cancel any direct deposit transactions.
- Review IRA accounts and their beneficiaries.
Make Sure Clients Notify all Credit Card Companies
A public posting of a notice to creditors is the formal process necessary to keep creditors from surfacing later in life and demanding payments. Local laws determine the format and frequency of publishing these notices to ensure effectiveness.
You’ll want to have clients cancel cards or transfer the account to the survivor if possible. Have them look at the monthly statement. The first
name on each statement is the person who has the credit. The second name on the statement is an authorized user of the first person’s credit.
If there’s a second name, call the institution and tell them the first person passed away. There’s a chance they’ll cancel the account and not give the credit to the second person. Clients should also inquire about credit life insurance coverage on unpaid balances and their procedure for a jointly held account.
Real Estate Holdings & Jointly-Held Assets
Non-probate assets include assets owned jointly with the right of survivorship. They include any type of asset that bears a beneficiary designation to transfer it after the owner dies. (Sole-ownership probate assets must go through a court-supervised probate process after the owner dies because this is the only way to get the asset out of the deceased owner’s name and into the names of the beneficiaries). As a client or their family member becomes the new owner, make sure they understand they still need to “clear the title” by filling out and submitting the proper paperwork.
Forward Mail & Register on the “Do Not Call” Registry
This process can be tremendously helpful for surfacing any unpaid bills, active subscriptions, or accounts that should be closed. Encourage clients to take a moment to register for the National Do Not Call Registry to minimize the risk of future identity theft or fraud abuse.
Client Actions to Take Within 6 Months
Cancel Passport, Driver’s Licenses, & Voter Registration
Identity thieves often use techniques like “ghosting” to strike victims after death, causing a nightmare of problems for surviving family members.
Notify Account or Tax Preparer & File Taxes
Generally, after a death, a client will need to fill out Form 1040 for individual tax returns to be filed for the portion of year covering January 1 until the date of passing.
Additionally, an IRS Form 1041 for estate and trust tax returns needs to be filed covering the remaining portion of the year from the date of death until December 31, and annually thereafter until the estate is closed. Depending on the primary residence of the individual, state income tax returns may also be required for the individual and for the estate. It’s important to make sure your clients are aware that other death taxes exist and should be considered, such as estate tax or inheritance tax.
Here are some helpful items to point clients towards to make this easier:
- Federal estate tax return Form 706
- Estate or inheritance tax applicable in deceased’s state of residence
- Gather all income documents (1099, W2, charitable contributions, medical payment receipts
- Get IRS Publication 559, “Information for Survivors, Executors, and Administrators”
Final Point
The hope is to have this happen very rarely (if ever) to your clients. But when death does occur, it can mean the world to them if you’re prepared and actively assisting them during their time of grief. Let them know that you’ll be there for them at any juncture and for any reason. A family death is a solemn time, but it does offer a chance to deepen relationships and build lasting connections with.
Keep Reading: 3 Easy Ways You Can Reconnect with Your Clients
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