Real Talk: Death of a loved one

Death. Divorce. Job loss.Sometimes tough stuff happens. Unfortunately, these not-so-great milestones often come with a financial impact. So, what do you do if you have to get adivorce? Or if a loved one suddenly passes away? Or if you find yourself with more debt than is comfortable? In our series, RealTalk for the Tough Stuff, we’ll tackle some of these situations head-on with the honest financial advice you need to get through and get on with life. 

Next up, RealTalk for the Tough Stuff: Death of a Loved One Edition.

There’s no question—dealing with the death of a parent or loved one is emotional and stressful. Unfortunately, it’s also something most of us will experience at some point in our lives. And whether it’s expected or not, figuring out the financial aftermath can be overwhelming. 

We spoke with Beth Gilliss, from Beaubear Credit Union for some honest advice about how to deal financially when a loved one dies.

Note: this isn’t everything involved in settling an estate, but gives a general overview of some of the main steps that are often involved. No two estate situations are the same and there are many individual factors that can impact how an estate is settled and the steps involved.

Managing an estate is the last thing most people want to think about when they’re grieving. And while major financial decisions don’t need to be made immediately, there are a few critical steps and paperwork that should be taken care of as soon as possible. 

Obtain the death certificate and will

First up, you’ll want to obtain copies of the death certificate from the funeral home and locate the will. If your loved one prepared a will, this makes your next steps a little less complicated because a will lays out the deceased’s wishes and names the will executor—the person responsible for distributing the deceased’s assets, property, and settling debts. The executor—we’re assuming it’s you—is the person who will take care of most of the following details.

Contact the beneficiaries

Your next task will be to contact the beneficiaries(those who will be receiving a portion of the deceased’s assets) named in the will. It’s a good idea to keep the lines of communication open to keep them up-to-date as you settle the estate.

“In an ideal scenario, the person writing the will sits down with their executor before they pass away to talk about the responsibility, answer questions, and outline their assets and liabilities,” says Gilliss. “Talking about money is never easy, but it’s incredibly helpful to review the basics. Do they have outstanding loans? Is there a mortgage on their property? Do they have a pension plan that needs to be dissolved?” Having the answers to some of the basics can go a long way toward helping you sort things out when the times comes.

If combing through your financial history with family is too uncomfortable, Gilliss suggests encouraging your loved one to write a list identifying key details like banking information and insurance policies. It’s also helpful to include important documents like bank accounts, loan and credit card statements, mortgages, and insurance information. This will make it easier to transfer assets and pay off debt.

Notify their financial institution

Next, notify your loved one’s financial institution. It’s important to notify their financial institution early, as their bank or credit union will take care of cancelling the deceased’s cards and put a hold on their account to prevent money going in(or being taken out) which will keep their assets safe while details of the estate are being settled. Money can still be released to pay certain outstanding expenses, but will often require supporting documentation. This will vary depending on the financial institution, so it’s important to know the protocol. 

Contact service providers

This is also a good time to notify service providers and benefits providers. If the deceased was receiving government benefits or pension payments, it’s really important to let these providers know as well. A lot of this information can be found using statements, old bills, etc. This is also the time to cancel phone plans, driver’s license, SIN card through Service Canada, social media profiles, email addresses, notify utilities companies, and any other service providers who will need to stop services.

Gather funds

Once these steps are taken care of, it’s a good idea to get a handle of assets and debts and start to gather those funds in one place (usually in an estate account). In very simple terms, once all the assets are pooled in one place and taxes are taken care of, then it’s time to pay off any outstanding debts. Whatever amount is remaining is the amount that would be distributed as per the wishes of the will.

What happens if they pass unexpectedly

Of course, in an ideal world, everybody is prepared for the inevitable. But we all know that sometimes things can happen very suddenly—so what happens when a loved one passes without having all the proper paperwork in place? 

“If someone dies without a will and they have no children, legally everything goes to the spouse”,explains Gilliss. “If there are children, the estate is split between the spouse and children. And barring that, the estate goes to siblings.”

To work out the division of the estate, start by heading to probate court and filling out a request to be the administrator of the estate. Talk to your family members—if more than one person wants to fill this role, you should seek legal advice. Ultimately, this decision will be up to the court. 

“It’s an emotional time and it helps to have someone that’s done this before walk you through it,”says Gilliss. “A financial expert can help ease some of the stress, and make sure you’re checking the all of the boxes.”

Credit unions can help you

No two estate situations are the same. Ultimately, individual family dynamics, circumstances, and financial situations will all impact how to best manage settling an estate. Having trusted experts on your side to help you navigate tough times can be invaluable. Not only can they help take the headache out of things, but they can also offer a rational perspective during an extremely emotional time.

While the death of a loved one isn’t something we might want to think about, the reality is it’s going to happen to all of us eventually. By taking the time to be prepared now,when the day does come (hopefully many, many, many years from now) you’ll be able to get back to the important stuff like celebrating their life and spending time with those close to you a lot quicker.