Financial Steps to Take After Losing a ParentWhen people talk about losing someone close to them, they often talk about their emotions and grieving. That aspect of loss is important, but rarely do they mention another aspect that’s also critical: the work. The work of making calls, filling out forms and settling affairs that can take months, or even years before you finish everything. It can be an incredibly daunting task, especially in the wake of losing a parent, which is why we wrote an overview of the steps you and your family need to take in order to get your parent’s finances in order after they pass away. It should be noted that the steps below are ones you’ll want to take if both of your parents are deceased, assuming they’re married. That’s because if there’s a living spouse, they can likely take care of everything, but they may need some extra help.

Ask for help

This first step is often ignored, but incredibly necessary: ask for help. Losing a parent is already incredibly painful, so don’t think you have to handle everything yourself just because you’re the closest next of kin. Ask trusted family members and friends to take some of the responsibilities off your plate, such as contacting your parent’s friends and searching for documents. If your parent belonged to any kind of organization, like a church, club or even the military, you can ask them for help, as well. They may be willing to lend you assistance, or pay out a death benefit, which is the case with the VA. If you’re a college student, inform your school’s financial aid office, as it may be willing to increase your aid package, and inquire about campus counseling services. In the event that you act as the executor of your parent’s estate, you should strongly consider hiring an estate attorney to assist you, and possibly a tax professional if the estate is large or split into a lot of different pieces. Handling an estate can be complicated, and mismanaging it can result in harsh financial penalties, so having some professionals guide you through the process can save you from costly mistakes.

Hold a funeral

Within the first few days of your parent’s passing, your family will need to organize a funeral. It’s possible that your parent wrote down their funerary preferences somewhere, such as in their wills, or made funeral arrangements in advance. If your parent left no funeral instructions, it’s up to the family to decide what they would have wanted. Try to make this decision in advance of going to a funeral home, as funeral homes can sometimes make pricing confusing and aggressively upsell you while you’re still vulnerable from losing a loved one. Funerals tend to be expensive, though they can be paid for by your parent’s estate, assuming there’s enough money. That said, estates are often not immediately available to disburse funds, so if you need money for funeral expenses immediately, you or a relative can pay and claim reimbursement from the estate later.

Open a probate case

In most cases, estates are handled with the oversight of a state probate court, and to open a case with the probate court, you have to submit a list of the estate’s assets and debts. In order to thoroughly settle your parent’s affairs, you will essentially have to reconstruct their financial lives through whatever paperwork you can find. Tax returns, investment records, insurance policies, credit reports and billing statements are especially helpful, but there’s a long list of documents you should look out for. If your parent worked with a particular attorney to create their will, contacting them is a good idea, as your parent may have tasked them with keeping important information. You will also need to get a death certificate, which will be necessary when dealing with the government, financial institutions and creditors on your parent’s behalf. You can order them from the state vital records office, the county clerk’s office local to your parent or, if you’re working with one, a funeral director. Get more than you think you’ll need, as many as two or three dozen, because many organizations only accept original death certificates, and some death certificates have security measures that make them unable to be copied at all.

Of course, you’ll also need to locate any wills your parent left, which are typically stored in lockboxes, safety deposit boxes, held by attorneys or occasionally filed with the office of the county recorder. Whether your parent left a will or not will change the probate process a bit.

If your parent left a will

Finding a will makes estate probate smoother, as your parent’s wishes are clearly expressed, so the court doesn’t have to determine things on its own. Wills usually name an executor, who is responsible for carrying out the wishes of the deceased and managing their estate, and if there’s no living spouse, that duty often falls to adult children. An executor receives a probate order from the court that lets them act as the estate’s legal representative. However, note that if the will points to a living revocable trust that your parent used to hold and manage their assets, or the total value of the estate is low enough to fall into your state’s small estate category, you may be able to avoid probate court or go through a simplified process.

Also know that, just because a will names you as the executor, it doesn’t mean you have to take the position. Serving as an executor is often a lot of work, requiring you to manage the estate, distribute inheritances and pay debts and taxes. If all of that is too overwhelming for you after losing your parent, you always have the option to resign and let someone else handle it.

If your parent didn’t leave a will

If losing your parent was unexpected, it’s entirely possible that they never put their wishes on paper, which, unfortunately, means they are “intestate” and makes the probate process longer. Normally, a will names an executor who carries out its instructions, but without a will, the probate court instead determines who will act as the estate’s administrator according to state law. Administrators largely have the same duties and powers as an executor, just with a different title. Family members can petition the probate court to be chosen as the estate’s administrator, with preference typically going first to any surviving spouse, and then to adult children of the deceased. When a court chooses you to be an administrator, it also gives you a probate order that names you as the estate’s legal representative.

Inheritance is also determined based on state law, which can vary quite a bit, depending on where you live. In general, though, state laws are based on the Uniform Probate Code, which gives priority of inheritance first to the surviving spouse, then to descendants (children and grandchildren), then to parents and then to descendants of parents (siblings, nieces and nephews) before branching out to more distant relatives. If your parent was taking care of a minor when they died with no will, the probate court also takes care of that, gathering as much information as it can about the family and the parent’s wishes to assign the best guardian possible for the child.

Settle affairs

Assuming you’re the executor or administrator, this is where your work really begins. You are responsible for managing the estate, which begins with finding, gathering and appraising all of the estate’s assets according to the date of death value, which may involve hiring an appraiser. This is important not only to make sure all of the beneficiaries receive the correct amount of inheritance, but also because the estate may be subject to taxation. There’s a federal estate tax on estates worth more than $5.49 million as of 2017, 14 states plus the District of Columbia have additional estate taxes, and six states have inheritance taxes.

Before the estate can pay inheritances, though, it must first settle its debts. In general, you are not responsible for paying your parent’s debts, unless you are a joint holder of the account with the debt, or you cosigned on the debt with them. Some unscrupulous debt collectors may try to convince you that isn’t the case and ask you to pay up, though you should only have to deal with this if you are the executor, as it is otherwise illegal for debt collectors to discuss debts with a deceased person’s children. If the debt is greater than the cash in the estate, the executor may need to sell some assets, like vehicles or real estate, in order to begin fulfilling inheritance claims. It typically takes at least several months for an inheritance to pay out, and possibly more if the estate is especially complicated. Inheriting an asset, such as a house, means inheriting any payments left on that asset, for instance the house’s mortgage and property taxes, so if you aren’t going to use the asset, you may want to consider selling it.

While you’re paying debts, you’ll also want to work on the arduous task of informing creditors, financial institutions and the government about your parent’s passing so they can cancel accounts or put them under your name. You need to contact your parent’s banks to get balances transferred to an estate account, the Social Security Administration to stop them from disbursing checks to your parent, the postal service so it can forward their mail to prevent identity theft and any companies your parent did business, including their social media or email accounts, with so you can cancel their services. You’ll likely need to mail an original death certificate and proof that you’re the estate’s executor or administrator to each organization before it’ll comply with your requests.

However, there is some good news. If your parent had life insurance policies or retirement accounts that listed you as a beneficiary, or had money in an account you jointly held with them, that money bypasses the estate and goes directly to you. It also pays out much faster than an inheritance, which is important if you’re one of the many adult children who still relied on their parents for financial support. If the policies and accounts list no beneficiary, though, then the payment gets lumped into the estate.

Losing your parent and then immediately having to resolve their estates is a long and difficult task, but if you know what steps to take after they pass, you can allow yourself ample time to grieve. To learn more about managing your own finances, follow our personal finance blog.