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WalletPrep worksheet · Life events

What to do with money when someone dies

Name ____________________ Date __________

Key ideas

  1. Most money tasks can wait a few weeks. Get death certificates and keep the home, mail and bills safe. Bigger decisions about accounts and property can come later.
  2. Debts are paid by the estate. Family usually doesn't pay from their own money unless they cosigned, held a joint account, or state law makes them responsible.
  3. Accounts with beneficiaries skip the estate. Life insurance, retirement accounts and payable-on-death accounts usually go straight to the named beneficiary, not through probate.

Vocabulary

Executor
The person named in a will to settle an estate: file the will, pay debts and taxes, and hand out property.
Assets
Things you own that have money value, like cash, savings, retirement accounts, investments, a home or a car.
Probate
The court process that confirms a will, pays an estate's debts and hands out what is left to the heirs.
Credit union
A not-for-profit financial cooperative owned by its members, offering checking, savings and loans much like a bank.
Credit bureau
A company that collects your credit history and sells reports to lenders. The three nationwide bureaus are Equifax, Experian and TransUnion.
Credit report
A record of your credit accounts, payments, balances and some public records, kept by each of the three credit bureaus.

Work it out

Ana is executor for her father, Ray, who left a checking account and a paid-off car. He also had a funeral bill and a credit card balance.

  1. Checking account
  2. Car (sale value)
  3. Estate assets
  4. Funeral bill
  5. Credit card
  6. Left for heirs
  7. Life insurance to Ana

Check yourself

  1. An estate has $10,000 in assets and $13,500 in debts. Nobody cosigned. How much goes unpaid?

    • A. $0
    • B. $13,500
    • C. $3,500
    • D. $23,500

  2. Who usually reports a death to Social Security?

    • A. The funeral home
    • B. The bank
    • C. The IRS
    • D. The credit bureaus

  3. Which of these usually goes straight to a named person instead of through probate?

    • A. A car in the person's name only
    • B. Furniture in the home
    • C. A life insurance policy with a named beneficiary
    • D. A checking account in the person's name only

Your turn

If you're handling this now, ask the funeral home for 10 to 12 certified death certificates and start one notebook for every call. If not, write down where your own will, insurance and account information are kept, and tell one person you trust.

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Answer key

What to do with money when someone dies

Work it out

  1. Checking account$6,200
  2. Car (sale value)$8,500
  3. Estate assets= $14,700
  4. Funeral bill− $7,800
  5. Credit card− $5,100
  6. Left for heirs= $1,800
  7. Life insurance to Ana$40,000
  1. Ray's estate holds $6,200 + $8,500 = $14,700. Following her state's rules, Ana pays the $7,800 funeral bill and the $5,100 card from it, leaving $1,800 for the heirs.
  2. If the card had been $9,000, the estate would only have $6,900 for it. The other $2,100 would usually go unpaid, and Ana wouldn't owe it herself.
  3. Ray's $40,000 life insurance names Ana as beneficiary, so it goes to her directly and isn't used for his card.

Check yourself

  1. C. $3,500 The estate can pay $10,000. $13,500 − $10,000 = $3,500 usually goes unpaid, and family members don't owe it from their own money.
  2. A. The funeral home Funeral homes generally report deaths to Social Security. If no funeral home is involved, family should call Social Security.
  3. C. A life insurance policy with a named beneficiary Accounts with a named beneficiary, like life insurance and retirement plans, usually pass directly to that person.