Settling the estate
“Estate" refers to your deceased loved one’s assets and liabilities at the time of death. If you are the executor of your loved one's will or estate, you will be responsible for paying off debts, distributing property and otherwise settling the estate. Even if you are not the executor, you will likely be involved in the process. It’s also worth noting that there are special rules for the surviving spouse of the loved one that may apply.
This complex process can take a year to complete but, unfortunately, it needs to be started soon after your loss.
Take the critical first steps
Settling an estate involves collecting the assets and property owned by the deceased, paying off final expenses and taxes that may be due, and distributing the remaining assets to heirs and other people entitled to it.
Here are critical first steps for you or the executor to begin settling the estate:
- Collect important documents, including wills, trusts, deeds, insurance policies and account statements.
- Read the will to see if an executor is named and if there are any special provisions.
- Obtain 12 – 15 death certificates from the mortuary or local health department. You will need them to collect assets, close accounts and change ownership titles.
- You may need a separate bank account in the name of the estate (you’ll need to get a taxpayer identification number to do so), to be used to collect income and pay expenses.
- Consider contacting an attorney specializing in estate settlement/administration or probate.
Settle employer benefits
If your lost loved one was employed, notify the employer. Request final paychecks and confirm the benefits the employer provided to your loved one, including health insurance, group life insurance, retirement/401(k) plans, vacation/sick days, bonus pay and stock options. For life insurance and retirement accounts, here are the steps you need to take to determine what benefits are available and how to claim them.
Group life insurance
In the case of group life insurance, contact the benefit administrators at the employer. They will know the details of the policy, how to file a claim, and how much to expect and when.
Prior to releasing this information, you may be asked to provide certain identifying documentation such as a marriage certificate. The employer may file the claim for you and ask you to forward a death certificate or other required documentation.
If there’s substantial money left in your loved one’s employee benefit accounts, as with a 401(k) plan or profit sharing plan, you may face some delay accessing these accounts.
You’ll need help from the company to get a history of contributions, matching contributions, investment performance and any prior distributions.
Complications can arise because the IRS has strict rules about distributions from these plans, requiring distributions within certain time frames when the plan participant dies. Similar required distributions can apply to IRAs and non-qualified annuity contracts.
You’ll also want to talk to the employer to determine income of the deceased for the current year and the following year to estimate any tax payments that might be due for either the individual or the beneficiaries. Your financial advisor can help facilitate these conversations with employers.
Settle other benefits
Your loved one may have had a variety of additional benefits, such as Social Security or individual life insurance. Here are the steps you need to take to settle these additional benefits.
Social Security payments
If the deceased was receiving Social Security, check if you or other family members may be eligible for survivor benefits. Contact the Social Security Administration (SSA) to transfer or terminate benefit payments. Find SSA contact numbers at www.ssa.gov.
Individual life insurance policies
For individually owned term life and permanent life policies, contact the insurance company to find out how to file a claim. Typically, they will mail you a package of forms to fill out and return, and will definitely require a death certificate. Some companies allow you to request claim forms online or download them, so check the company’s website first.
Look into veterans' benefits
If your loved one was a U.S. war veteran, notify the Department of Veterans Affairs. The VA pays direct cash benefits of up to $2,000 to families of deceased veterans under certain circumstances. For more information, go to www.va.gov.
If you haven’t already, you and your spouse should complete the Ameriprise Legacy Planner with your financial advisor. From your digital assets to life insurance and your will, your personalized Legacy Planner addresses all of the information your family, and your advisor, will need to ensure your legacy is carried out as you wish.