When someone dies, there are a number of family and personal issues to deal with
right away. The process begins with notifying family and friends, planning a funeral,
and simply managing to get through the first few days. At this difficult time, practical
issues related to money will also be present, and you will need to address a number
of financial items immediately. Here are some of the most urgent financial issues
brought about by a death.
Planning and Paying for a Funeral
Most funerals today cost about $5,000. This typically includes the casket, the services
of the funeral home, and transportation of the deceased. This does not include the
costs of a cemetery plot or other final resting place, which can run another $2,000
or so. (Source: National Funeral Directors Association.)
Dealing with Immediate Debts and Bills
All of the debts the deceased incurred will need to be paid. To make sure this happens,
check on all of the outstanding debts, including credit cards. Some of these may
offer insurance benefits that will erase the debts, but others will need to be paid.
If this is a problem, either because of logistics in receiving mail and identifying
debts or because of access to sufficient funds, be sure to notify all of the creditors
and ask for more time to pay the bills.
Death Benefits and Survivor Benefits
The first step is to pull together a complete list of all of the death and survivor
benefits. Include all life and casualty insurance policies, other death benefits
from trade or credit unions or other sources, and any veterans’ benefits. (See below
for more information on veterans’ benefits.) Be sure to also check with the decedent’s
former employer regarding any final settlement of salary and benefits due. Many
times there are employer-paid life insurance policies and other supplemental benefits
that can be of tremendous value. You will need to notify each entity of the death.
Be sure to check for any benefits offered to survivors as well.
Veterans’ Benefits
The U.S. Armed Forces offer veterans and their families a number of special funeral
and death benefits. These benefits include financial assistance, a military funeral,
and commemorations of the veteran’s service to the country.
To be eligible for veterans’ benefits, you must be either a veteran honorably discharged
or separated from active duty, or a current member of the U.S. Armed Forces who
dies on active duty. The spouses and dependent children of qualifying veterans or
U.S. Armed Forces members may also be eligible for these benefits.
For more information about these benefits, contact the Veteran’s Administration
at 800-827-1000.
Wages, Social Security and other Income
Notify employers and other sources of income such as Social Security. Call the Social
Security Administration (SSA) at 800-772-1213. Do not cash any checks received for
the month of death, as these funds will need to be returned to the SSA. If Social
Security checks are deposited directly to a bank account, let the bank know to return
the funds to the SSA. The Social Security Administration provides a $255 one-time
death benefit to surviving spouses if the spouse was living with the deceased or
receiving benefits on the beneficiary’s earnings record.
Managing Current Cash Flow
It will be very important to ensure that there is enough money available to provide
for any immediate expenses. Assets and bank accounts may be unavailable or frozen
for a short period of time while the will is being processed and until any taxes
are paid. To be sure that both spouses have some cash available in the event of
a death, put both names on all bank and investment accounts, or establish separate
accounts for each spouse. It may be wise for each spouse to have his or her own
credit card as well.