7 Steps to Follow after Losing a Loved One

April 20, 2011

My neighbor Mr. P passed away several weeks ago, and now I find myself in the difficult position of having to help Mrs. P sort through all the financial details.  Mr. P took care of all the financial decisions in their household, so you can imagine how upset and confused Mrs. P is right now.  While there are many important financial decisions that need to be made, very few need to be made right away.  Here are some steps to take following the loss of a loved one:

Step One: Breathe

It sounds simple, but many forget that there is a grieving process we all must go through, and trying to make financial decisions without working through this process may cause us to make impulsive decisions.  Keep a notebook and jot down concerns as you have them.  That way you don’t have to worry about “forgetting” something.

Step Two: Solicit the help of friends

Making financial decisions under stress often leads to poor decisions, so take the burden off of your shoulders and let someone else guide you.  Having one or two close friends filter the information you receive may help make sure you do not get distracted with things that are not as important at the moment.  Share your notebook of concerns with them so that they can help you decide if you need to take any immediate action, or if you can come back to something later.

Step Three: Take inventory

Your spouse owned assets, had income from various sources, and perhaps owed money.  Now is the time to make a list of what they owned, how they owned it (e.g. individually, jointly, in trust), and where it is kept.  Make a separate list of income sources, such as paychecks, pension benefits, annuity payments, or Social Security benefits.  Finally, list your spouse’s creditors, how much was owed, and if the debt was individually or jointly held.  It’s okay if you don’t know the answer to all of these things right away.  Things will be discovered throughout this process.

Step Four: Review your budget

You may not know how much the light bill is, or when the car payment is due, but you will now be responsible for making sure all household payments are made on time.  Review bank statements and credit card statements for the last twelve months to see what kind of expenses are made throughout the year, when they are made, and how much they usually cost.  Allow friends and family to help you establish a system for paying bills in the future.

Step Five: Pay any immediate expenses

It may take two or three weeks for you to go through steps one through four, so there may be some bills and other expenses that should be taken care of right away.  You’ve already reviewed the budget, so many of these should look familiar to you.  There may be a few new ones in lieu of the events that have taken place, but many of these will be one-time expenses, and friends and family can help you to take care of these if needed.

Step Six: Start looking over the estate planning documents

Now is a good time to look for a will, a trust, a safe deposit box key, life insurance policies, or any other notes or instructions your loved one may have left for you.  If you have a family attorney, you may want to contact their office to see if they have any of these documents on file.  It’s okay if you don’t have a formal estate plan.  You and your spouse may have talked about your wishes, so write down what you remember in your notebook.

Step Seven: Hire professional help

Eventually you will have to close your spouse’s estate.  That may mean dealing with probate, re-titling assets, and any number of other legal actions.  A good estate planning attorney can help you work through this step.

If you inherit property or investments, or if you receive a large sum of money from a life insurance policy or settlement, you may want to work with a financial planner who can help you manage your wealth and plan around future needs.

Depending on what and how much you inherit, there may be income and estate tax issues to address.  A tax professional can help you sort through these issues and make sure that everything gets paid to the IRS on time.

Perhaps we all have a Mrs. P in our lives.  She may not be there yet, but eventually she will establish her financial footing.  You can use these steps as a guide to help you get your footing if and when the time comes.