Moneyzine
/Debt Consolidation/Financial Planning After a Death

Financial Planning After a Death

Moneyzine Editor
Author: 
Moneyzine Editor
4 mins
September 25th, 2023
Advertiser Disclosure

The loss of a loved one is never easy. Until that deep mourning is over, it's also not a good time to make decisions with long term implications. Eventually, clarity of thought will return and it may be necessary to do some financial planning after the death of a husband, wife, relative, or close friend. In this article, we'll be talking about some of the actions to take following a death in the family, or that of a close friend. As part of that discussion, we'll split this topic into two parts: Those action items requiring near-term follow-up, and those to consider over the long-term. The working assumption here will be the reader is the one asked to organize the estate or to help get the financial affairs in order.

Near Term Action Items

The most important thing to do in the weeks immediately following the death of a loved one is to avoid making a decision that has long term (greater than one year) implications. Emotions will cloud thoughts and there are individuals that will take advantage of these feelings. The most important action items in this timeframe involve gathering and organizing materials as well as applying for benefits.

Short-Term Financial Planning Checklist

While the list below is not intended to be comprehensive, it does provide direction on the types of activities to attend to, as well as processes that should be started. Once again, the point is to begin organizing materials and start exploring benefits available to the relatives of the deceased:

  • Locate and organize financial statements such as bank accounts in addition to stock and bond information appearing in brokerage account statements.

  • Contact the Social SecurityAdministration, inquiring about benefits that apply to family members such as a spouse or child.

  • Locate and organize retirement benefitinformation such as pension plans, 401(k) accounts, and annuities.

  • Begin contacting these financial institutions, asking them to update the names on statements, mailing addresses, and / or beneficiaries as appropriate.

  • Locate and organize medical benefit information, including those provided by former employers or government entities such as Medicare and Medicaid.

  • Locate and organize medical, home, automobile, life insurance policies, as well as Wills.

Longer-Term Financial Planning Action Items

Eventually, decisions need to be made that have long-term implications. Ideally, these activities would include preparing household budgets, statements of net worth (assets and liabilities), as well as household cash flows. Oftentimes, the death of a spouse will result in a significant decrease in the flow of money into a home.

planning after the death of a loved one

Evaluating the inflows and outflows of money is a great way to understand what actions need to take place over time. This can be achieved through the creation of a household budget. Net worth is calculated by taking the total of all assets, such as bank account balances, and subtracting loans, mortgages, and other obligations such as credit card debt. An understanding of net worth provides insights into the total money available to meet monthly obligations or to generate additional income through investments. Contacting a financial advisor is recommended if the estate is complex or there are significant assets to be distributed to heirs. Financial advisors can help determine the appropriate mix of growth versus income investments. Once again, they will do this by understanding net worth, sources of household income, and monthly living expenses. It's equally important to make sure adequate medical insurance exists. The death of a spouse may result in the termination or reduction of certain benefits provided by former employers. Increase coverage as necessary to fill in any insurance gaps. Finally, it's important to become intimately involved with financial decisions. While hiring an advisor can certainly help in the near term, it's important to understand how money is being invested or spent.


About the Author - Financial Planning After a Death


Related Content

  • What Can Help You Meet Your Budget While Shopping for Important Items?
    Budgeting while ensuring you don't compromise on quality can seem daunting. Whether filling your pantry, updating your wardrobe, or keeping up with the latest tech, smart shopping strategies are crucial for keeping your finances in check.
    April 2nd, 2024
  • How to Make a Million Dollars in 10 Years
    Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
    March 26th, 2024
  • How to Apply Maslow’s Hierarchy to Your Money This Year
    You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
    March 27th, 2024
  • How to Tackle Multiple Savings Goals
    When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
    March 22nd, 2024
  • The Countdown to Early Retirement: 10 Expenses to Eliminate
    Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
    March 22nd, 2024

Contributors

Moneyzine 2024. All Rights Reserved.