Reconciling your own bank account alongside your loved one’s bank account after they pass away can be a challenging but important step in managing their estate. Here’s a detailed guide to help you through the process:
1. Obtain Legal Authority
Before you can manage your loved one’s finances, you need to have the legal authority to access and reconcile their bank accounts. This typically requires:
- Being named the executor of their estate through their will.
- If there is no will, being appointed as the administrator of the estate by the probate court.
- If your loved one granted you financial power of attorney before they passed, it usually expires upon their death. You will need to transition to an executor or administrator role.
2. Notify the Bank of Your Loved One’s Passing
Once you have legal authority, notify the bank of your loved one’s death by providing a death certificate. Here’s what typically happens:
- Joint accounts: If you and your loved one shared a joint account, you can usually continue using it as normal, but you should inform the bank of the death to remove their name.
- Individual accounts: The bank will freeze individual accounts until they receive legal documents, such as probate letters or a court order, allowing the executor to access the account.
3. Collect Financial Statements
Gather all bank statements for both your own and your loved one’s accounts, including:
- Recent monthly or quarterly statements.
- Pending transactions that occurred around the time of death (checks that haven’t cleared, automatic payments, etc.).
- Records of any joint accounts, savings accounts, or investment accounts tied to their bank.
4. Identify and Stop Automatic Payments and Subscriptions
Review your loved one’s accounts to identify any recurring automatic payments, such as:
- Utility bills, credit cards, insurance, subscriptions, or loans. Once identified, either cancel unnecessary subscriptions or notify creditors and service providers of your loved one’s passing. This prevents overpayments or unnecessary charges. If payments need to continue (e.g., mortgage or utility bills for a property), ensure the estate has sufficient funds to cover them.
- Note that your Loved One may have also attached a budget to their FamilySafeBox. That may be worth searching for and it should list all recurring fees (beside those related strictly to your financial institutions)
5. Track Outstanding Checks or Pending Deposits
Identify any outstanding checks your loved one may have written or any pending deposits (such as salary, pensions, or benefits). You may need to:
- Notify the check recipients of your loved one’s passing if the check cannot be cashed.
- Ensure pending deposits are directed to the estate or an appropriate beneficiary.
6. Reconcile the Account
Begin the reconciliation process by comparing the bank statements with the checkbook register or online transaction records for both your own account and your loved one’s account:
- Match the beginning balance on the statement with the register.
- Compare each transaction in the statement with what is listed in the check register.
- Check for any uncleared checks or pending transactions.
- If there are errors or fraudulent activity (especially for your loved one’s account after they passed), report them to the bank immediately.
7. Close or Transfer Accounts
Once the estate is settled, you’ll need to close or transfer your loved one’s accounts:
- Joint accounts: Typically, you’ll remove your loved one’s name and continue using the account.
- Individual accounts: Close the account and transfer the remaining funds to the estate or to beneficiaries as dictated by the will or state law.
- For Payable on Death (POD) accounts, the funds will transfer directly to the named beneficiaries without going through probate. Ensure these funds are distributed accordingly.
8. Handle Taxes and Final Expenses
Use the reconciled accounts to pay for any final expenses, such as funeral costs, medical bills, or outstanding debts. Keep careful records of all transactions as these will be needed for:
- Filing final taxes for your loved one.
- Providing a clear financial report to any beneficiaries or the probate court.
9. Seek Professional Assistance if Needed
Managing finances after a loved one’s death can be overwhelming, especially if you’re dealing with complex accounts, investments, or debt. It may be helpful to work with:
- A probate attorney to guide you through legal procedures.
- A financial advisor or accountant to help you reconcile accounts and manage estate taxes.
- Your bank’s estate settlement department, which can assist with transitioning accounts.
10. Keep Detailed Records
Ensure that you keep detailed records of all transactions, payments, and communications related to both your loved one’s and your own bank accounts. This will be crucial for:
- Ensuring transparency with beneficiaries.
- Avoiding any legal complications related to the estate.
- Filing the final accounting for the probate court (if necessary).
By following these steps, you can effectively reconcile your loved one’s bank accounts and manage your own during this challenging time. Clear organization and proactive communication with the bank will make the process smoother and help ensure that all financial matters are handled properly.