Three Big Financial Decisions You’ll Need to Make After a Death in the Family

When imagining the death of a spouse or other close family member, you think about how hard it will be to live without them and how best to honor their memory. What most people don’t think about is how a death in the family affects their finances. But you should.

 

Death is a financial matter as much as it is an emotional one. Not only must surviving family wrap up their loved one’s estate, they also face big bills and big decisions about their financial future.

How to Handle Medical Bills

Depending on the nature of your loved one’s passing, they may have left behind substantial medical debt. If the deceased’s estate is large enough, the estate pays outstanding debts before distributing assets to beneficiaries. If the debt is larger than the estate, you’re not responsible for outstanding debts unless the deceased was your spouse and you live in a community property state. If a creditor is contacting you about debts you’re not responsible for, the Federal Trade Commission explains how to stop it.

How to Pay for a Funeral

The cost of a burial and funeral takes many families by surprise. A traditional funeral runs $7,000-$10,000. If you’re not prepared for the expense, you may discover you can’t afford the send-off your loved one deserves.

 

This is why it’s so important to discuss funeral plans while alive, including what type of funeral you want and how to fund it. Funeral costs are commonly paid out of life insurance policies or less expensive burial insurance policies. Sometimes called final expense insurance, burial insurance provides small sums to cover funeral costs. In some cases, the death benefit is high enough to get rid of outstanding debts as well.

 

If your loved one died without money for a funeral, consider cremation, which is significantly cheaper than a traditional burial.

What to Do with the House

If the deceased was a breadwinner in your household, you may realize you can no longer afford your home. Moving in the wake of a loss is scary: Not only do you have to sell your house and buy a new one in your budget, you also have to pack up a lifetime of memories and start over in a new place.

 

Moving is stressful, but it has its benefits too. You’ll gain long-term financial security by buying a home you can afford and the opportunity to move closer to your support system.

 

It’s hard to stay organized and make little decisions while grieving, so finding a great real estate agent is crucial for home buying and selling. Your agent will help you understand your goals for the move and find the right home, as well as sell your old home quickly so you’re not stuck in financial limbo.

 

The hardest part of moving will be sorting through your loved one’s things. Hire packing help for general household goods so you can focus on this emotionally-demanding task. Get rid of the obvious things first, like half-used cosmetics and old mail. Aim to pare clothing, books, and other collections down to select favorites, but don’t push it if you’re struggling to let go. You can revisit the task when you’ve had more time to heal.

 

While you shouldn’t rush into big decisions after the death of a loved one, you can’t afford to wait too long to take action. Take a good look at your financial status after your family member’s passing. By assessing where you stand and where you need to end up, you can start planning the steps to secure your financial future.

 

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