Time for ‘The Talk'

Resolving finances after death “is a difficult topic to discuss, but it's an incredibly important one to be informed about,” said Leslie H. Tayne. She would know. The attorney founded Tayne Law Group, which helps manage debt and personal finances. Tayne is also an advocate, speaker, blogger and bestselling author of “Life & Debt: A Fresh Approach to Achieving Financial Wellness.” She looked at different aspects of death and finances with Rod Griffin, director of public education for Experian, a global information services company. Griffin is “passionate about helping people live credit smart.” Planning for eventual demise starts with a basic understanding of estate planning. “This is the process of deciding what will happen to your assets after your death,” Tayne said. “If you have large assets -- such as a home -- or are married or have children, you should estate plan.” Experian cited five critical financial items that need attention after a loved one dies. “Estate planning is preparing for your own death,” Griffin said. “It's essential to ensure your assets are properly dispersed and your benefactors are cared for. “You don't have to be fabulously wealthy to have an ‘estate,’” he said. “The term refers to your ‘stuff,’ property, investments and other assets. It defines what happens to those things when you die.” The whole process begins with reporting the death of a relative. That leads to the first financial steps to take after a loved one dies. “When that happens, it's best to try to find all of their financial information,” Tayne said. “The executor of their will is in charge of paying off debts through their estate. Loved ones will also need to notify financial institutions of the passing.” Planning sooner rather than later helps relieve burdens. “My wife and I already have our funeral arrangements made and paid for,” Griffin said. “Our family will need to follow those instructions, implement the estate plan and grieve -- or celebrate our passing. I hope a bit of both.”

Overruling creditors

Nothing is certain but death and taxes, although debt is not inherited. “Most of your debts are paid off by your estate when you die,” Tayne said. “For credit card debt, if your estate doesn't cover it, creditors are generally out of luck.” A Bankrate article looks at what happens to your money and debt when you die. “If you are a joint holder or cosigner and are contractually obligated to pay the debt, you might have to do so,” Griffin said. “Usually, debts are paid through proceeds from the estate. “If you live in a community property state, check the laws,” he said. “As a spouse, you may be legally considered responsible for payment of the debt. Laws can differ from state to state.” Beware of phone calls from those not consoling after a death. “If you get collection calls after a loved one dies, inform them of the person's passing,” Tayne said. “It's important to notify all relevant financial institutions of the death. You may be asked to send a copy of the death certificate.” A Get Out of Debt Guy article suggests ways to handle collection calls for a deceased person's debt. Tayne was adamant about the obligation for the deceased’s card balance. “An authorized user is not liable for debt after the primary cardholder has passed, but a joint account holder is,” she said. “Note the difference.” Again, Griffin referred to varying statutes. “Understand the contract with the lender, as well as laws that may apply,” he said. “Generally, an authorized user is not responsible for repayment of the debt, but death complicates things.” A deceased spouse’s credit report needs special attention. “If lenders have been notified of the person's death, the credit report will be flagged with a ‘deceased indicator,’” Tayne said. “Flagging the file instead of closing it completely reduces the chance of identity theft.” The Experian blog discusses what happens to a spouse's credit report when he or she dies.

History fades away

“The credit report will be updated through Social Security Administration records to show it is associated with a deceased individual to help protect against fraud,” Griffin said. “In time, the account information will be deleted, and the credit history will disappear.” If there is a need to obtain a credit report for a deceased person, the process is fairly simple. “A spouse or the deceased's executor can request a credit report from the credit agencies,” Tayne said. “Send a letter including the person's information and a copy of the death certificate.” The Experian blog looks at ways to obtain a deceased person's credit report. “The executor of the estate and spouse may request a copy of the deceased's report,” Griffin said. “They will need to provide a copy of the death certificate and court documents verifying they are the executor.” Speaking of taxes, they survive death. “A personal representative -- generally the executor or surviving spouse -- files taxes using Form 1040 and signs his or her own name,” Tayne said. Scammers will readily jump in to capitalize after the death of a loved one. “Identity theft using the deceased's information, debt collection calls claiming you owe money on the deceased's debt, and fake insurance calls saying you're entitled to money are common scams to watch out for,” Tayne said. The crooks are state of the art. “They use the deceased's identifying information in synthetic ID fraud -- combining it with other identifying information to create a fictional identity they use to commit crimes,” Griffin said. Even when there is no doubt, Tayne suggests seeking help from a pro. “Work with a professional if you're not sure what to do,” she said. “It's already a tough time, and having to deal with the financial matters can be unpleasant, particularly if you're unsure of how to proceed. A professional can help ease the stress.” Preparation -- as unpalatable as it seems -- will pay off in the end. “Help your loved ones by preparing for your own death well in advance,” Griffin said. “Having a will, estate plan and funeral plans in place can make this hard time a bit easier to get through.”