Financial Accounts When Getting Affairs In Order

If you are a designated beneficiary on a loved one’s bank account — often called a Payable on Death (POD) or Transferable on Death (TOD) account — the bank will release the remaining funds to you upon learning of their death. If you are a joint account holder with someone who has died, typically you will be able to access the funds as normal, though you should confirm with the bank, as different rules may apply.

If there are no beneficiaries or joint account holders, funds in a loved one’s bank account become the property of the estate, to be managed by the executor. These funds are generally used to pay any outstanding expenses and then are divided according to the person’s will. 

In the case that there is no executor and no will, the state will appoint an executor according to local laws. The appointed executor will then use the funds to pay any estate creditors and then distribute any remaining money based on local inheritance laws. In the majority of states, funds are released to the spouse and children of the person who died. 

Sources

“What happens to a bank account when someone dies?” Bankrate. https://www.bankrate.com/banking/what-happens-to-your-bank-account-after-death/

Ensure that any bills for the person who died are forwarded to the executor of the loved one’s estate, as the estate is responsible for payment. Keep in mind that in the majority of cases, relatives and even spouses are not responsible for the personal debts of someone who died. If you are the executor, pay any outstanding bills out of the value of the estate (this is part of the probate process in which an estate’s assets are distributed). If the estate lacks the necessary funds, bills can typically go unpaid. 

Canceling accounts & services after someone dies

Continuing services, such as cell phone, cable and subscription services like Netflix, utilities (if no one else continues to live at the address), etc., should be canceled as soon as possible. Outstanding bills may be paid by the estate or can generally be ignored if they are only in the name of the person who died. To cancel these services, contact the customer service department of the particular servicer to notify them of the death. The process for each company tends to differ; many require copies of the death certificate for cancellation.

Typically, you should continue to pay bills associated with assets, like a home mortgage or car payment, to avoid the risk of foreclosure or repossession. If someone is remaining in the deceased loved one’s home, continue paying utility bills to avoid service suspension as well. It is also prudent to move the accounts to the name of the current occupant of the home.

Sources

“Probate: What It Is and How It Works, With and Without a Will”. Investopedia. https://www.investopedia.com/terms/p/probate.asp

“Bills and Services to Cancel—and Keep—When a Loved One Dies”. McCreary Law Office. https://mccrearylawoffice.com/bills-and-services-to-cancel-and-keep-when-a-loved-one-dies/

Generally, if a debt was in your spouse’s name alone, you are not responsible for paying it — their estate is. However, if you are a joint account holder on a credit card or a co-signer on a loan, and those accounts have debt remaining, you are responsible for paying it. Also, if you live in a state with a doctrine of necessaries in effect (this typically relates to expenses “necessary” to your spouse’s health or well-being), you may be accountable for those payments. Certain states also have community property laws, in which a spouse may be responsible for paying any debts incurred as a result of purchases that benefited both spouses, aka “community property.” These types of items can include things like furniture for the home or a shared car.

If necessaries statutes or community property laws aren’t in play, and your spouse’s estate does not have the necessary funds to pay off their individual debts, those will typically go unpaid. Keep in mind that federal law prevents debt collectors from hinting or asserting that you are responsible for a spouse’s personal debts. If you are being harassed by debt collectors for spousal debt you believe is not your responsibility, you may request details about the debt in writing to better assess the situation, or you may wish to speak with a lawyer to determine the best course of action.

Sources

“Am I responsible for my spouse’s debts after they die?” Consumer Finance Protection Bureau. https://www.consumerfinance.gov/ask-cfpb/am-i-responsible-for-my-spouses-debts-after-they-die-en-1467

“Doctrine of Necessaries”. Bills.com. https://www.bills.com/learn/debt/doctrine-of-necessaries

“Community Property Debt”. Bills.com. https://www.bills.com/learn/debt/community-property-debt

If you’re the spouse or executor of your loved one’s estate, you can report their death to any one of the three major credit reporting agencies (Equifax, Experian, or TransUnion) by writing a letter. In the letter, you’ll need to include your loved one’s personal information so the agency can locate their report — full legal name, Social Security number, birthdate and location of birth, and death date — along with a certified copy of the death certificate and proof that you have legal authority to manage their accounts.

The agency you report the death to will inform the other two. All three will flag the person’s credit report with “deceased – do not issue credit” to prevent further activity or new accounts being opened under their name. It’s a good idea to make and keep copies of all the documentation you’re sending, and send the necessary documents via Certified Mail.

Each bureau may have slightly different requirements, or it may be possible to report the death online (including uploading the death certificate). Select any from the list below for specific information, along with their mailing address.

Equifax Information Services LLC
PO Box 105139
Atlanta, GA 30348-5139

Experian
PO Box 4500
Allen, TX 75013

TransUnion
PO Box 2000
Chester, PA 19016

Sources

“How to protect your deceased loved one’s credit after death”. Bankrate. https://www.bankrate.com/personal-finance/credit/how-to-protect-your-deceased-loved-ones-credit/

“Certified Mail Guidebook.” USPS. https://postalpro.usps.com/certified-mail-guidebook

A spouse or estate executor of the person who died should contact one of the three major credit reporting agencies — Equifax, Experian, or TransUnion — to report the death. Whichever agency you report the death to will inform the other two bureaus, and all three will flag the person’s credit report with “deceased – do not issue credit” to prevent any further activity or any new accounts being opened under their name. You will typically need to send a copy of the death certificate, information about the loved one (full name, Social Security number, birthdate and location of birth, death date) and proof that you have legal authority to manage their accounts. It’s a good idea to make and keep copies of all the documentation you’re sending, and send the necessary documents via Certified Mail.

Notify One of the Three Major Credit Bureaus

Each bureau may have slightly different requirements or the ability to report the death online. Select from the list below for specific information.

• Equifax
• Experian
• TransUnion
  

Request a Credit Report

Get a copy of the loved one’s credit report from each of the three credit bureaus (again, you will likely need to provide a death certificate, their information and proof you’re authorized to handle their estate). It’s important to request a report from all three bureaus as some may contain different information. The report will allow you to review all open accounts, loans and credit lines so you can alert each creditor. It will also show you if any fraudulent accounts have been opened after the loved one’s date of death.

NOTE: The IRS recommends avoiding putting too much personal information in the loved one’s obituary, as this can be fodder for identity thieves. Information to avoid includes the person’s address, birthday, mother’s maiden name or other personal information.

Contact Creditors and Banks

Notify each credit card company, bank or other financial institution where your loved one had accounts. If they had a joint account with someone still living, inform that person that they will now be solely responsible for the account. You can call each credit card company and ask to connect with “Deceased Account Services” or possibly the “Estate Unit,” or check their website, to find out what is required to cancel the account. 

• Any outstanding balances will typically need to be resolved through the loved one’s estate.

Cancel Recurring Payments

If your loved one had set up recurring payments using their credit card for services like utility bills, subscriptions or other accounts, you’ll need to cancel each separately. Simply canceling the credit card may not stop these payments from being processed. Review any statements or paperwork left behind for recurring charges, such as cell phone, internet and streaming services, then contact each service provider directly to cancel automatic payments tied to the credit card.

Dispose of the Card

After you’ve received confirmation from the issuer that the credit account is closed, destroy the card by shredding it or cutting it into pieces.

Monitor for Fraud

Even after you’ve notified all the proper institutions, continue to monitor your loved one’s accounts and credit reports for several months. Occasionally, fraudsters may attempt to use a deceased person’s identity long after their death.

Keep Documentation

Throughout this process, keep detailed records of your communication with creditors, credit bureaus and other institutions, including cancellation confirmations. This is helpful in case any disputes arise later.

By taking these steps, you can help secure your loved one’s credit and prevent fraud, and start the process of settling their financial affairs.

Sources

“Identity theft guide for individuals”. Internal Revenue Service. https://www.irs.gov/identity-theft-central/identity-theft-guide-for-individuals

“Certified Mail Guidebook.” USPS. https://postalpro.usps.com/certified-mail-guidebook

“Credit and Debt After Death: What You Need to Know”. Equifax. https://www.equifax.com/personal/education/life-stages/articles/-/learn/credit-accounts-after-death/

“How to cancel credit cards for someone who is deceased”. Bankrate. https://www.bankrate.com/credit-cards/advice/how-to-cancel-a-credit-card-after-death/