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How to handle the finances of the recently deceased

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The loss of a family member is a difficult time. Dealing with the grief is stressful enough, but the challenges may not end there if there is a complicated financial situation to settle after someone has passed away. It is also not uncommon for estates to leave family members squabbling over who is owed what. A clear will helps, but it is not always drawn up in time – especially if bereavement is unexpected. However, a calm and planned approach to dealing with the finances of the deceased can make the process easier, and so can professional help.

Arranging and paying for a funeral

There are no specific laws dictating who should pay for the funeral of a loved one. In most cases, the estate of the deceased would pay for funeral or cremation services as a priority obligation before any other obligations are met. Sometimes, a funeral insurance policy would be in place that would pay out upon death, while some employers and pension funds also include benefits for arranging funeral services, so it is worth enquiring to see whether this benefit is available.

If the person who passed away has no assets and no insurance in place, family members may be required to spend their own funds to arrange the funeral they would like to see for their loved one. Regardless, the funeral director will look at the person who signed the initial contract for payment, whether it is the estate or an insurance policy that would be the ultimate source of funds.

 

Dealing with a will

Carrying out the wishes of the deceased, or executing their will, can start as soon as the will is filed with the probate court. The loved ones who remain behind need to appoint an executor of the estate, who will then file for probate. The process of winding down an estate can take many months, so it is important to appoint an executor sooner rather than later, and there are state-mandated deadlines for certain steps.

Once the initial grief associated with the loss has passed, family members may clash around the details of a will. There is a particularly high risk of this occurring if a will is not clearly written, and it is not uncommon for large, complex estates to be decided by the courts where family members cannot come to an agreement – human nature and lingering grief can make cooperating difficult. A clearly written will is the best way to prevent conflict.

Probate will last several months even in the simplest cases. The executor of the will needs to make an inventory of the deceased’s assets and pay any outstanding bills from creditors before beneficiaries can receive funds. However, state law has strict limits to how long each step can take – the executor must submit the inventory within a certain number of weeks, and creditors have only a limited time to submit a final bill of what is owed.

Debts owed by the deceased

Any creditors owed money, whether mortgage lenders or credit card providers, would need to be paid as a priority – before beneficiaries. If the assets owned by the deceased are less than their liabilities, the creditors will not be able to ask for payment from family members, unless an individual family member has signed as a guarantor for a loan or entered into a credit agreement in a joint fashion, as with a mortgage. It’s the job of the executor to pay any outstanding debts by using the assets of the deceased, but if the assets do not cover outstanding debts, creditors could be faced with writing off the amount owed.

Getting professional help

In some instances, a family member can realistically act as the executor and deal with the funeral and will of the deceased. However, considering the difficulty of copying with loss, it may be easier to get the help of a registered law firm. An attorney will help you with the steps involved in wrapping up a will, and while they will charge a fee, you may find that it is a price worth paying to remove the stressful aspects of dealing with a will.

Where an estate is large and complicated, it may be essential to seek professional help. Attorneys will provide unbiased advice and are skilled at negotiating with conflicting parties. An attorney may be able to steer an otherwise chaotic and conflicted settlement to a final solution that is satisfactory to all parties involved, while also respecting the final wishes of the deceased.

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