Real Talk: Death of a loved one

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Death. Divorce. Job loss.Sometimes tough stuff happens. Unfortunately, these not-so-great milestonesoften 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 yourselfwith more debt than is comfortable? In our series, RealTalk for the Tough Stuff, we’ll tackle some of these situationshead-on with the honest financial advice you need to get through and get onwith life. 

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

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

We spoke with BethGilliss, from Beaubear Credit Union for some honest advice about how to dealfinancially when a loved one dies.

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

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

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

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

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

If combing through yourfinancial history with family is too uncomfortable, Gilliss suggestsencouraging your loved one to write a list identifying key details like bankinginformation and insurance policies. It’s also helpful to include importantdocuments like bank accounts, loan and credit card statements, mortgages, andinsurance information. This will make it easier to transfer assets and pay offdebt.

Next, notify yourloved one’s financial institution. It’s important to notify their financialinstitution early, as their bank or credit union will take care of cancellingthe 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 theestate are being settled. Money can still be releasedto pay certain outstanding expenses, but will often require supportingdocumentation. This will vary depending on the financial institution, so it’simportant to know the protocol. 

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

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

Of course, in an idealworld, everybody is prepared for the inevitable. But we all know that sometimesthings can happen very suddenly—so what happens when a loved one passes withouthaving all the proper paperwork in place? 

“If someone dies withouta will and they have no children, legally everything goes to the spouse”,explains Gilliss. “If there are children, the estate is split between thespouse and children. And barring that, the estate goes to siblings.” 

To work out thedivision of the estate, start by heading to probate court and filling out arequest to be the administrator of the estate. Talk to your family membersif more thanone person wants to fill this role, you should seek legal advice. Ultimately, this decision will be up to the court. 

“It’s an emotionaltime 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 makesure you’re checking the all of the boxes.”

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

While the death of aloved one isn’t something we might want to think about, the reality is it’sgoing 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 beable to get back to the important stuff like celebrating their life andspending time with those close to you a lot quicker.