This article isn’t meant to scare you, but rather to spare you from some of the unfortunate things that can happen when someone dies. Death sucks and then life adds further injury by requiring you to do lots of paperwork within a short period of time after death — or else! Unfortunately, this article is a bit scary. It just is. But that’s why we need to keep talking about this stuff. For I believe we must tackle head on the things that scare us.
Here’s the good news! The 5 gotchas below can be avoided! The best way to avoid these 5 gotchas is to have an open and honest conversation with your spouse and parents about finances ahead of time. And it’s critical to have key information/passwords written down and a copy given to the people who need it. See the Recommended Action section at the end.
This article is primarily written for surviving spouses, their families, and estate executors, but is something anyone can benefit from knowing.
The 5 Gotchas of Death
- You could lose your health insurance. If your husband/wife dies and they were the primary holder on your health insurance, you will need to find new health coverage within 60 days. This article breaks down the various options available.
- You could lose the deceased’s car. Sadly, the company that gave the car loan can repossess the car if payments stop. To ensure this doesn’t happen, notify the loan company of the death right away and begin taking necessary steps to continue payments. This is why knowing what loan payments exist, who the loan is with, and when they get paid is critical to know before the death. Use this helpful tool to map that out.
- You could lose your home. If you are unable to make mortgage payments, the lender is legally allowed to evict you. It is best to call sooner rather than later and ideally before missing the first payment. For tips on negotiating with your lendor, see here.
- Creditors may come after you for missed payments. Here is a list of what creditors can take and what they can’t for missing payments.
- You may have to pay a lot of taxes. It may be tempting to pull out all the deceased’s money right away as there will be lots of costs in the days following the death. However, before pulling out all the deceased’s money out of their IRA/other retirement accounts, consult a financial advisor! This may seem an unnecessary expense, but it can save you a ton of money later! One survivor did this when her mother passed and it bumped her up into a higher tax bracket and resulted in lots of additional taxes at year end! Remember, when you pull money out and close accounts, you may be taxed on that amount.
Recommended Action: Take 45 minutes this weekend and map things out once and for all for your spouse and/or parents! Feel free to use the tool I used with my own parents.
Lost someone and need help? Survivor Resources provides step-by-step guides for navigating the logistics of death and help for wrapping up your loved one’s life.