How a Loved One’s Death Could Impact You Financially

The loss of a loved one is a time for mourning, but it’s also a time for making difficult choices. One of those decisions is how to manage your loved one’s finances—both in terms of dealing with creditors and protecting the deceased’s assets from identity thieves.

Unfortunately, a person’s passing may actually intensify some lenders’ efforts to collect repayment. On top of that, criminals fraudulently use nearly 2.5 million deceased Americans’ identities every year to open false accounts (also known as “ghosting”), according to ID Analytics. If you should find yourself in the position of dealing with the aftermath of a loved one’s death, the following information may help prepare you to avoid some of the potential financial and legal pitfalls.

A Legal Matter

The deceased’s possessions are legally known as their “estate,” and the person handling those belongings is the “administrator.” If you’re the administrator—because you applied for it in court, your loved one designated it in a will, or through various other means—you will need to work within the legal system to handle any financial issues.

One primary issue you may need to resolve is managing the deceased’s debts. Laws vary from state to state, but, in general, you are not responsible for paying off a deceased loved one’s debt unless you were a co-signor or guarantor on any of their loans. If you stand to inherit part or all of the deceased’s estate, you should be aware that creditors usually receive priority over inheritors in terms of distributing the estate.

You may also have to deal with debt collectors, some of whom are notorious for aggressively demanding repayment. Make sure you consult the Fair Debt Collection Practices Act (FDCA) so you’re fully aware of your rights and protections in dealing with creditors and collectors.

Thwarting ID Theft

As an estate administrator, you will want to take precautions against identity theft. As unseemly as it sounds, a departed person’s Social Security number (SSN) and other personally identifiable information is rife for identity theft because criminals can take advantage of any lag between the time of death and the notification of the appropriate agencies and institutions. In order to prevent this ghosting, you will want to take the following steps:

1. Obtain a death certificate of the deceased.

2. Immediately notify the three credit reporting agencies of your loved one’s death and provide a certified copy of the death certificate as proof. Use the following contact information:

• Experian: www.experian.com
  Phone: 888-EXPERIAN or 888-397-3742


• TransUnion LLC: www.transunion.com 
  Phone: 877-322-8228
  
  
• Equifax: www.equifax.com
  Phone: 888-202-4025
  

3. Request multiple copies of your loved one’s credit reports from all three agencies. The credit reporting agencies should delete a deceased person’s account after about a year, so it’s best to access the credit reports sooner rather than later.

4. Using the information contained within the credit reports, contact any creditors with open accounts for the deceased and ask them to note your loved one’s death accordingly in their systems. You will need to provide them with a copy of the death certificate and proof that you are the administrator of estate.

5. Contact the Social Security Administration to ensure they’ve noted your loved one is now deceased in their files. The Social Security Administration will frequently also inform the credit reporting agencies of the deceased’s updated record, but it’s best to double-check.

By proactively following the above steps, you can hopefully avoid or limit any financial damages from the loss of a loved one. And now that you know a little more about the process, you may want to consider how to best organize your own finances and legal documents. Meeting with a financial advisor is a great place to start, and many are available for free or affordable consultations.

It’s also never too early to write a notarized will so that your own loved ones won’t suffer from unnecessary stress (make sure to tell someone you trust how to access and find your will). Understanding and acting on what you can control will help prepare you for the things you cannot control—and give you peace of mind.