What To Do Next After a Family Member Has Passed and the Bills Come Rolling In
Loss of a loved one is an incredibly hard time. Right in the middle of this sorrowful experience, many people face other types of responsibilities, including paying off the bills, managing the accounts, and making financial decisions.
The common mistake is that everyone wants to pay off everything as soon as possible, not wanting to receive any penalties or collection calls. However, taking some steps in order to take care of your finances and your family members’ finances will help you much more.
First of all, think about what bills should be paid immediately and what is less urgent. Personal finance resources like MoneyFAQ.com could help your family handle this situation better.
Stop And Think About Every Bill You Receive
When receiving bills, it is natural to want to pay everything as soon as possible. However, not every bill needs to be taken care of immediately.
Think about:
- Mortgage payments or rent
- Utility bills
- Premiums of your insurance policy
- Related to healthcare expenses
- Credit card statements
- Bills for loans
An important fact that surprises many families is that a bill related to a relative’s debt is not automatically your personal debt. In many cases, debts are managed by the state or legal representatives of the deceased person’s estate.
See also: 4 Life Moments That Reveal Why Insurance Matters
Gather Your Financial Documents
Well-organized files will save you from unnecessary losses.
Prepare a folder with the following documents:
- Death certificates
- Estate or will documents
- Insurance policies
- Data about bank accounts
- Investment data
- Loan contracts
- Recent bills and statements
This will facilitate communication with banks, insurance agencies, creditors, and estate professionals.
Sort Bills by Importance
Not all bills should get the same amount of your attention. Prioritize those expenses which will make sure that the rest of your life goes smoothly and your assets will be preserved.
| Priority Level | Examples |
| High Priority | Mortgage, rent, utilities, health insurance |
| Medium Priority | Car loans, property insurance, essential subscriptions |
| Lower Priority | Unsecured credit cards, non-essential memberships |
This will help you to keep financial stability while you are assessing all of your finances.
Understand Which Debts May Need to Be Paid
Many people fear that they could become liable for a deceased person’s debt. In fact, most debts are settled using the deceased’s estate funds before distributing other assets to beneficiaries. One usually does not become liable for someone else’s debt except in some cases where you were already bound to the debt in some way, for example, through a joint account or a co-signed loan.
The instances where you might become liable for another person’s debt include:
- Joint credit accounts
- Co-signed loans
- Certain spouse liability under the law
When a creditor contacts you, always ask for proof that it is indeed necessary to settle the debt. Debt collectors are prohibited by consumer protection agencies from threatening you by implying that you are liable for debt when that is not true.
Create a Temporary Household Budget
The first several months following death usually bring some uncertainty in relation to money.
Create a basic budget that will include the following:
- Current household income
- Existing savings
- Essential monthly expenses
- Potential insurance payments
- Other financial commitments
For example, a surviving partner can decide to cancel the streaming services and put off any non-essential buying in order to concentrate on paying rent and covering transportation and health costs.
Creating a temporary budget will provide clarity and lower the chance of overspending during a hard emotional period.
Review Insurance Benefits and Available Support
Life insurance or survivors’ benefits can be an important source to keep finances stable.
Check for:
- Life insurance policies
- Employer benefits
- Any retirement accounts that have named beneficiaries
- Survivors aid programs
A lot of financial instruments that have named beneficiaries are directly transferred to those beneficiaries rather than being involved in the estate distribution process.
Having this information early can allow you to address important expenditures before the estate settlement issues are sorted out.
Build a 90-Day Financial Action Plan
Instead of trying to resolve everything within one week, start with small things.
In the first 90 days after the death of a person, make sure you:
- Notify all financial organizations
- Secure all important papers
- Record all bills that come
- Ensure all payments are made
- Check insurance claims
- Note all closed accounts
- Make notes of all conversations and payments
Many people find it helpful to use financial education materials available on MoneyFAQ.com to keep track of all necessary actions and decisions on budgeting, managing debt, and developing a financial plan.
Final Words
With the passing of a loved one comes the pressure of financial obligations. The important thing is not to rush. Prioritize payments that need to be made, get your paperwork in order, know what bills should actually be paid, and create a short-term budget. It is the process that counts. By moving ahead in small increments, you can take care of your finances and decrease stress levels.
