The two things that are inevitable, death and taxes, are also the most administratively frustrating with all the paperwork and legalize. So many steps to take, in a particular order. This is an incredibly devastating time and you can’t think. You can have a team of financial experts on your side, but the crucial deciding point is you. So I wanted to lay things out for you, point form, so you don’t need to figure this out on your own. Here are the Top 10 Financial Things To Do When A Spouse Dies.
Top 10 Financial Things To Do When A Spouse Dies
You’re Not Alone
You will need to find a funeral home to take care of the transportation of the body to their establishment.. Funeral Directors are champions of being calm, professional, and empathetic which you will need at this stage of bewilderment. They will walk you through what is absolutely required, and then offer options on top of that.
All funeral homes must offer an inexpensive service known as ‘direct disposition’. Transfer Services are companies that may only offer the ‘direct disposition’ option. This option includes the removal of the deceased from the place of death, the placement of the body in a container or casket, the delivery of the body to the cemetery or crematorium and the filing of necessary documentation. It does not include visitation or services with the body present. Funeral directors can help you make all the arrangements for funerals. Funeral, Burial and Cremation Services Act, 2002
There are always “upgrade” options: different woods for the caskets, jewelry or other keepsakes to contain some ashes, unique urns, flowers, amongst other choices. They are not a requirement, and you should not feel compelled to upgrade during this emotional time. If you decide that cremation and caskets are not for you, there are plenty of natural burials options available through third party companies.
Recruit A Financial Team
You’re going to need a team behind you: an estate attorney, CPA, financial consultant, and tax specialist to help with financial and legal matters related to the estate, if any.
An estate attorney can determine if probate is needed and can help with legal filings and letters testamentary, which are needed to close out the deceased’s business dealings.
Your financial consultant can help with the transfer of assets and closing of accounts; if applicable, you should also contact your loved one’s financial advisor to assist with asset transfers.
If your beloved had life insurance, their agent can help with claim forms to ensure you are paid any death benefits that may be due to you. You should also check your own insurance, as they might be covered there as well.
A tax specialist will be able to help you maneuver through the difficulties of filing their last taxes, and whether there are any tax liabilities on the estate or inherited assets. This is important stuff that is pretty specific, and you’re probably not in the right frame of mind to think about it. Yet another reason why I wanted to gather up all the things to do when someone dies into a checklist. Like seriously, the list of forms you have to go through is unreadable when sober!
In the US, these tax returns must be filed by April 15 of the year following your beloved’s death. In Canada, your beloved’s last tax return is known as a T3. You have one year to submit this, as it may take some time to finalize all sales of assets. If they didn’t have any assets, then it’s pretty easy.
Government Benefits CPP, Survivor and Children Benefits
If you were legally married or common-law, and they paid into the Canadian Pension Plan, then you can apply for several benefits.
There is a one-time payment called The Death Benefit which is paid out to the estate. As of 2020, this is a flat rate of $2500 which is intended to help pay for funeral expenses. If you were eligible for the Ontario Works benefit, this is on top of that.
You also may be eligible for the survivor’s pension: every month, an installment from the money they were saving for their retirement will be transferred into your account. You are entitled to this until you remarry, at which point payments will cease.
If you had children with the deceased and they are under 18, you can also apply for the Children’s Benefit for any dependents of the deceased CPP contributor. If you are their legal guardian, you will receive this benefit on their behalf until they come of age, when it will transfer to them directly.
File Life Insurance Claims
If you’re beloved had any life insurance, get in touch with their broker now to start your claims. You’ll need the Death Certificate, the Policy Document, and the Claim Form. If you don’t have the last two, the insurance company can help you out.
Also check in with your employer to see whether your individual policy had a death benefit available to claim for your spouse. You will be entitled to that as well.
It could take 30-60 days for a claim to be processed, but usually it comes much quicker than that as insurance companies want to pay out as soon as possible to avoid interest charge. It’s also good to know that this money is non-taxable.
Before you close out any joint accounts, make sure that you transfer any money available to your own personal accounts. The bank will freeze the money once you tell them that your beloved is dead, and you’ll need that money available in the coming months.
Call every bank that your loved one had accounts with and get them to close the accounts immediately. You need to be careful of fraudsters. They will take full opportunity to get your loved one’s account, or to scam a new widow. Close them out now.
Close All Of Their Accounts
Now comes the horrible part – calling up all of their creditors to close their accounts. Cell phone, utilities, credit cards…whatever was in their name will have to be closed. Most companies accept the Proof of Death certificate in order to close these out.
IMPORTANT: if the account is in their name, and their name only, and there is no money available in the estate, you are not responsible for remitting any outstanding balance!! Read the story about my experience with that here. Make sure you comb through all their accounts, and close every last one of them. It’s painful, obviously for administrative reasons, but every time an account closes it’s another stark declaration that they’re not coming back.
Close Out Pension Plans, Old Age Security, SSN Benefits
Close out their CPP/OAS plans – they’re not going to need them anymore. However, good news! Now if you are next of kin, you can apply for them (that’s coming up later). Payback from the grave. Note that in order to cancel them, you need the deceased SIN and they really prefer the official Death Certificate that you obtained already. It has to be the original or a certified copy – I’d recommend the latter as I’ve personally lost a few official documents in the mail.
In the US, Social Security pays a one-time lump-sum death payment of $255 can be paid to the surviving spouse if he or she was living with the deceased; or, if living apart, was receiving certain Social Security benefits on the deceased’s record.
Your family members may receive survivors benefits if you die. If you are working and paying into Social Security, some of those taxes you pay are for survivors benefits. Your spouse, children, and parents could be eligible for benefits based on your earnings.
You may receive survivors benefits when a family member dies. You and your family could be eligible for benefits based on the earnings of a worker who died. The deceased person must have worked long enough to qualify for benefits.
For more information, please read How Social Security Can Help You When a Family Member Dies.
Review Your Mortgage
In Canada, the mortgage stays with the home, not the person. So if your beloved is the sole owner of the property and they die, then the mortgage doesn’t go with them to the grave, nor is it forgiven. It must be paid for from their estate.
If you bought the home with your spouse and they die, then more than likely you as their spouse will be the person who takes on the mortgage. Whether or not your you end up keeping the house depends on a lot of factors, such as their income and personal desires, and whether or not you have to qualify for a new loan depends largely on the lender. If the mortgage is in the middle of the term and the other parties on the mortgage continue making payments, then more than likely the lender will continue with business as usual until the end of the term.
If you’re looking ahead, click here to use this form to leave your Nevada real estate without probate.
Create A Will
Now that your beloved has died, you should take this opportunity to create your own will. Especially if you have children.
A will is a legal document that says how you want your estate to be divided once you die. Your estate includes what you own (called assets) and what you owe (called liabilities). An up-to-date will can help your estate representative deal with your estate when you die. Provinces and territories set the laws for estates.
If you don’t have a will, the State or Province will determine how your estate will be divided up. Keep it up to date, and review it often to ensure it matches your current plans. Please be aware that if you remarry, it could cancel your will.
There are free templates out there that you can use, but I would highly recommend that you find a qualified lawyer who can contribute to your personal situation.
Get Life Insurance For Your Kids
Now that you know how delicate life is, I would recommend that you look into life insurance for your kids. At this point in their lives, it could be a good idea to look into Whole Life Insurance. It covers them for whatever unforeseen medical problems they could have, and it has the added bonus of locking them into a lower rate now before problems potentially come up.
In addition to the benefits of establishing insurance at an early age and locking in rates, it can also be a great way to save for your children’s future. Some companies give you the option of topping up the premiums each month with extra money that goes into an accumulating fund.
Am I forgetting anything important? Let me know.
Comment below with what helped, and what you’d like more of.