Financial management tips for after a loved one dies
Carrying on includes paying the bills; reach out for help
When a loved one dies suddenly, you will most likely be flattened with grief and loss. Mundane chores such as money and credit management fall to wayside. And it can be a long time before you have the physical or emotional energy to spare for much of anything.
Yet bills will continue to flow in, from credit cards to car loans. Lights need to stay on and the mortgage must get paid.
Millions of individuals contend with personal tragedies every year. In the United States, homicides claim more than 12,000 lives, 35,000 die in vehicle crashes and nearly 43,000 commit suicide. Unexpected illnesses and accidents take countless more, leaving behind spouses, partners and family members to pick up the pieces and try to put their lives back together.
How do you stay afloat during times like these? Survivors and experts explain.
Expect everything to fall apart
The father of Tamica Back's children was her partner for nearly two decades. Back, a Detroit-based lab assistant, met him when she was just 18. They remained a couple until he died in a motorcycle accident. She was 36 and pregnant with their fourth child.
All bills were behind. Taxes, cars, mortgage, credit cards. I owed for the new furnace and air-conditioning we had installed. I just couldn't deal with any of it.
Detroit lab assistant
"I couldn't function after that," says Back. "My mind was basically gone. I would stay up all night crying, thinking it was a terrible dream and that I would wake up to him walking through the door."
Consumed with grief, Back stopped going to nursing school and took a leave of absence from her job. Because he had been their primary provider, her finances crashed. "I had been off work for over a year," she says. "All bills were behind. Taxes, cars, mortgage, credit cards. I owed for the new furnace and air-conditioning we had installed. I just couldn't deal with any of it."
Falling apart is normal in these circumstances. Some people break down immediately. For others, like Nancy Saltzman, there's a delay.
Saltzman is the author of "Radical Survivor," a book she wrote about losing her husband and two young sons in a small plane crash. At the time, she was an elementary school principal.
"I wanted to model for the kids that you have to keep up," says Saltzman. "I went back to work right away. While I was there, I could focus on work. Then I would go home, and I had two dogs that I had to feed and walk so I did that."
Unraveling, though, was inevitable. "Some people are not able to continue what they were doing," says Saltzman. "I understand being despondent, not wanting to go on and do those mundane things. I did shut down and had issues with the bills because I was not paying attention," she says. "Little things went by the wayside. All the light bulbs burned out. I just let them go until I was sitting in the dark. I just couldn't buy and replace them."
Yet, urgent financial tasks had to be addressed. When her husband was alive, he dealt with the mortgage. Says Saltzman: "I was lost and had to figure that out, and fast. I didn't want to. It was terrible."
Avoiding crucial bills and letting debt accrue is a typical response to such catastrophes, says personal finance expert Juliana Park. The author of "The Abundance Loop," Park specializes in the emotional side of money, including peoples' reactions to extreme negative events outside their control.
"Stress can trigger you to falling into unhealthy habits and reach for your drug of choice, whether it's food, alcohol, sex, drugs, shopping or even sleeping," says Park. "Anything that numbs the pain so you don't have to deal with the situation." Temporary escapes may soothe, but Park warns they may suck you into a downward spiral of avoidance that compounds problems.
How to maintain your finances in the worst of times
Personal finance writer Gina LaGuardia-Schrecker, of Staten Island, New York, understands both money and tragic loss. Her father's life was taken by a disgruntled citizen in a town hall meeting rampage. Yet somehow, she says, "Life does go on. It's not just dinners that have to get made and kids' homework that needs to get done, but bills need to be paid, and work still expects you to produce. You still need to earn a living and keep your head above water."
You do want to ultimately maintain control over your finances, especially during a time when you feel like life is spiraling out of control, so ask a friend to set up automatic online payments.
|-- Gina LaGuardia-Schrecker
Personal finance writer
While you may not feel up to the most basic of tasks, being evicted or losing your home to foreclosure will only make things worse. To avoid these problems:
- Connect with creditors. Odds are they will help, not hurt. LaGuardia-Schrecker listened to the calls her brother made to their father's cellphone credit card companies. "I learned from that experience that credit card companies, vendors, hoteliers (we were scheduled to take a trip with my parents a few weeks later), etc., are typically very understanding in these situations." When she missed her own credit card payment and called to explain why, the representative waived the late fee, even offering an additional 60-day grace period.
- Get budget and debt guidance. Melinda Opperman, spokeswoman for Springboard Nonprofit Consumer Credit Management, urges people reeling from financial problems associated with a tragedy to contact an accredited, nonprofit consumer credit counseling agency. "They can help for free or very low cost and many are HUD-certified, so can assist with mortgages, too." Counselors review income, expenses and liabilities -- then develop a plan of action so you can survive in the short and long run. They can also determine which of your deceased loved one's bills are and aren't your responsibility. (See "What happens to credit card debt after death.")
- Automate payments. To prevent delinquencies, have payments deducted from a checking account and paid to accounts you owe monthly, such as credit cards, loans and utility companies. If you can't concentrate enough to do it, ask for help. "You do want to ultimately maintain control over your finances, especially during a time when you feel like life is spiraling out of control, so ask a friend to set up automatic online payments," says LaGuardia-Schrecker. Once done, you'll be relieved of trying to remember who gets paid, how much and when.
- Accept financial assistance. If income has been slashed or bills are too large to pay, reach out to reliable financial resources in your area, says Kathleen Moakler, director of case management for Tragedy Assistance Program for Survivors, which provides care to those grieving the death of a loved one who served in the armed forces. "There are so many wonderful charities and agencies that help the bereaved with financial assistance." says Moakler. "The Salvation Army, Red Cross, your county's services. Call them, that's why they're there."
- Consult with a financial planner regarding assets. Conversely, death may bring money into your life and that, too, needs attention. Don't and you risk making costly mistakes. For example, says Park, "If you're the beneficiary of the deceased's 401(k), you don't want to say, 'Send me the check,' as you'll be hit with a severe tax consequences." Contact the Financial Planning Association to hire a fee-only, certified financial planner who will help with investments, insurance, taxes and estate paperwork, and provide advice on how to safely extract cash from IRAs and other retirement plans, should you need it.
Beware scam artists
Will you make uncharacteristically flawed choices choices while bereaving? Probably, says Back. "Trust me, your life will be in an uproar. I was a zombie. You become nonexistent in your own self." So when Back's debt and credit troubles became overwhelming, she reached out for help. And got scammed.
"I went to a personal finance person to negotiate my debts, maneuver my credit, write dispute letters to the credit bureaus, " says Back. "All those things I needed help with. But the next thing I knew he took $900, didn't do any of it, and closed his office. He was gone and so was my money."
That's not surprising, says Robert Siciliano, a credit scam expert and founder of BestIDTheftCompanys.com. "When people fall on hard times and face adversity, they are vulnerable in a number of different ways -- physically, emotionally, and spiritually," says Siciliano. "Their scam radar is way down."
The moment an unknown entity offers assistance, be highly suspicious, especially if money is requested upfront. "It's best to do your own research," says Siciliano. "But if you can't because of what's going on, bring in a trusted person who will be a second pair of eyes." A brief Internet search is not sufficient. At a minimum, he says, the company or agency needs to be highly rated by the Better Business Bureau.
In retrospect, Back wishes she had sold her home and downsized early on, advice she might have received from a reputable credit counseling agency. Instead, she tried to manage on her own, but eventually declared Chapter 7 bankruptcy, and then a Chapter 13 for what she couldn't discharge.
Let loved ones assist
For Saltzman's mortgage issue, she eventually contacted a friend who was also a lawyer, and together they sorted the mess out. "I was not in my right mind, so I needed to get help," Saltzman says. In fact, it's what she advocates to others. Find allies; open up.
Back, though, says pride was her downfall. She had been self-sufficient since the age of 17. "I couldn't see myself asking my mother, or my uncle who had a lot of money and could have helped. I should have." Today her advice to others is to not allow ego get in the way. "You're going through something so awful, but you still have to live. If someone offers real help, take it."
Park agrees: "Think of the friends and people who can support you. Many people love the opportunity to help, so be willing to receive their generosity, their offers to help babysit, drive your kids to activities, cook you meals, provide guidance or simply be with you." Let them. You might not have the wherewithal to contact supportive organizations, set up meetings with financial advisers or tap into what your religious organization may have to offer, but your friends and relatives may.
Finally, if you know someone who is going through a similar personal tragedy, don't wait for that person to come to you, as it could be too late. Pay one of their bills, take up a collection or organize a fundraiser, suggests Back: "Send $10, $5 -- anything is better than nothing. You will lift a burden, more than you can possibly imagine."
- 5 steps to make sure your cards' credit limits are vacation-ready – Heading out of town? Make sure your credit limits are high enough to cover any surprises and costs while traveling ...
- Should you use a credit card as your emergency fund? – Credit cards come with myriad benefits, such as rewards and consumer protections, and can be a financial lifeline on rare occasions ...
- Credit card limit decreased? Why it happens, and what to do about it – A credit limit decrease can happen because your spending habits changed, or if your good credit is mixed up with someone else's bad credit ...