If you’ve recently lost a parent, financial logistics are probably one of the last things you want to think about. But be careful not to let this slip. Use this guide to help you through the process.
Losing a parent is always difficult. However, it can be especially hard if you suddenly find yourself having to get involved with your surviving parent’s finances.
That parent might not have played much of a role with the household finances. Now you have to be a detective to help your parent figure out what bills to pay, what accounts exist and how to access them. It’s not easy, to say the least, and it’s probably one of the last things you want to be thinking about during such a difficult time.
Unfortunately, a growing number of adult children might be finding themselves in this situation now as a result of the coronavirus pandemic, which has tragically affected so many families across the globe.
If you’re among those who have lost a parent recently and now must help your surviving parent with money matters, this step-by-step guide will hopefully make it a little easier to get through a difficult time.
Step 1: Don’t wait to get involved
After losing a spouse, your parent might be too overwhelmed with emotion to think about money matters. That’s why you should check in with your parent to see if she needs help getting on top of the household finances.
“Do it as soon as possible,” says Jeremy Nachtigall, a daily money manager who helps seniors manage their finances and owner of Daily Navigator. “It’s better to act now than to wait.” The longer you wait, the more overwhelming the task might become because bills could be piling up, late fees could be accruing, and your parent might be struggling to access accounts.
Tread lightly, though. You shouldn’t assume that your parent wants you to take over all money matters. It’s best to ask what sort of help your parent might need. If your parent resists your offer but you can see she’s struggling, check back in every week or so to see if she’s changed her mind and wants assistance.
Step 2: Help get the death certificate
Your surviving parent will need several copies of the deceased parent’s death certificate to provide to financial institutions. As the child, you likely will be able to request copies of your parent’s death certificate. So you could offer to handle this tedious task for your surviving parent.
You can order copies through the funeral home handling your parent’s final arrangements or through the state vital records office. Consider getting copies for yourself in case your surviving parent misplaces her copies or if you need them down the road.
Step 3: Make sure your parent has access to cash
As long as your parents had a joint bank account, your surviving parent should be able to access that account. The question, though, is whether your parent knows how to access the account.
If Dad managed all the money, you might need to wait for the monthly bank statement to arrive to identify where the account is. Then you and your mom can visit the bank to help her get access to cash with a debit card or checks. You might also need to ask the bank’s customer service representative to change online login credentials if Dad had set up online banking but Mom doesn’t know the username and password.
Mom may have more trouble accessing cash if the bank account was in your dad’s name only. The bank will need proof that her spouse has died, Nachtigall says. If it’s a payable on death account with Mom listed as the beneficiary, the account will become hers. If not, Nachtigall says she likely won’t be able to access the account until it’s gone through probate, which is the legal process of distributing property after someone dies.
Step 4: Make sure your parent has an income source
If your surviving parent wasn’t the primary breadwinner, make sure she has a way to support herself. Start by checking bank account statements to see what sources of income your parents had before one of them passed away. Possible sources could be a monthly Social Security benefit, pension payment or retirement account distributions if the parent who passed away already was retired.
If Dad managed all the money, you might need to wait for the monthly bank statement to arrive to identify where the account is.
If your surviving parent is at least 60 years old, she can qualify to receive Social Security survivors benefits based on the amount her spouse was receiving or was eligible to receive. She also will need to contact her late spouse’s pension plan or retirement savings plan administrator to notify it of her spouse’s death. If she is listed as the beneficiary of a pension, she may be entitled to continue receiving benefits. If she is the beneficiary of a retirement account such as an IRA, the account can be transferred to her. If she is not listed as a beneficiary, she may have to wait to get access to those funds until her spouse’s estate has gone through probate.
Another source of income could be a life insurance policy. If your parent isn’t sure whether her spouse had a policy, you’ll need to help her search through the late spouse’s files for an insurance contract. She’ll then need to contact the insurer to report her spouse’s death in order to claim the death benefit.
Step 5: Make sure bills are being paid
Ask your parent to collect all bills that come in so you can go through them together, Nachtigall says. If you can’t do this in person, you and your parent might need to have daily or weekly calls to discuss what bills have arrived.
Make a list of all the bills that must be paid and help your parent set up automatic payments for as many as possible. Be sure to create a list of usernames and passwords for all of the accounts. And cancel any subscriptions that no longer will be used.
If your parent who passed away already had created online accounts and opted for electronic statements, help your surviving parent check bank statements for recurring monthly payments. Then help that parent reach out to those service providers to notify them of her spouse’s death and to switch the accounts to her name.
Step 6: Find out what financial accounts exist
Clearly, earlier steps on this list require identifying what sort of financial accounts your parent had – such as bank accounts, retirement accounts and life insurance policies. However, if you’ve had trouble figuring out what accounts exist, start by going through your late parents’ files.
“Even if someone has an online account, it didn’t start as an online account,” Nachtigall says. “It didn’t start without signing something. There has to be something in Dad’s files.” Go through the desk, filing cabinet, storage boxes, home safe or safe deposit box to find your late parent’s financial documents. Check the attic, garage, closets, storage facility and even shoe boxes under the bed.
Copies of tax returns from years past can be a great source of information about your parent’s income, investments and property. You might also have to reach out to any financial professionals your parent worked with, such as an accountant, or former business partners to get information about what sort of accounts your parent had. “In order to find stuff we don’t know exists, we have to do some detective work,” Nachtigall says.
Step 7: Consolidate accounts
After your deceased parent’s estate has been settled and any debts owed have been paid by the estate, help your surviving parent review financial accounts to see what can be consolidated. With fewer accounts, it will make it easier for your surviving parent to manage them.
Copies of tax returns from years past can be a great source of information about your parent’s income, investments and property.
For example, transfer cash into one checking and one savings account. Then make sure all automatic bill payments and deposits are linked to that account. Investment and retirement accounts can be consolidated by filling out a Transfer Initiation Form with the brokerage to which you want to transfer your parent’s assets.
If your deceased parent only had a handful accounts and consolidation isn’t necessary, your surviving parent still should transfer accounts to her name once the estate has been settled.
Step 8: Create a filing system
Help your parent set up a filing system for financial documents. Label folders with headings such as banking, bills, credit cards, insurance, mortgage and taxes. This will help your parent (and you) keep track of accounts that are open, those that are closed, what bills have been paid and what money is owed.
Step 9: Discuss power of attorney
If your parent isn’t comfortable handling financial matters on her own, talk with her about naming you her power of attorney. As power of attorney, you would be able to make financial transactions and decisions for her. She could limit your powers to only certain types of transactions or give you broad powers that would take effect immediately.
The two of you should meet with an estate planning attorney or elder law attorney to discuss your options and to have a power of attorney document drafted. Also make sure that your parent has an updated will and advance directive that spells out what sort of end-of-life medical treatment she wants and that names a health care proxy to make medical decisions for her if she can’t.
Step 10: Get help
Helping a parent get his or her financial life in order after the loss of a spouse can be overwhelming. It can be especially stressful if your parent needs help but is reluctant to accept it. So bringing in a third-party professional can benefit everyone.
A daily money manager will charge by the hour and can help your parent with daily financial activities, Nachtigall says. You can find one in your area through the Association of Daily Money Managers.
For help with long-term financial planning, your parent can work with a Certified Financial Planner professional or fee-only financial planner. You can find one through the Financial Planning Association’s PlannerSearch or the National Association of Personal Financial Advisors.