Question

My father passed away recently, and I am helping my mother sort out the finances. We are overwhelmed and don’t know where to start. There are debit orders going off at month-end. What documents do we need and what should we do first to make sure my mother can still pay her bills?

Answer

One of the hardest parts of losing a loved one is that practical life continues immediately while the family is still grieving. Debit orders continue running, bills still arrive and surviving spouses are often suddenly expected to deal with financial administration they may never previously have handled.

While it can feel overwhelming initially, taking things step-by-step makes it far more.

manageable.

Start with the death certificate

The first priority is obtaining the death certificate. Usually, the funeral home assists with this process and can help obtain a temporary death certificate fairly quickly. Later, the official death certificate is issued by the Department of Home Affairs.

Make several certified copies immediately because virtually every institution will request one.

This document will be needed by:

• banks;
• insurers;
• retirement funds; and
• investment companies.

Find the will

The next important step is locating the original signed will.  This document determines:

• who the executor is;
• how the estate will be administered; and
• who inherits the assets.

Many people keep their wills with their financial adviser, attorney, trust company or bank.

If no will can be found, the estate is dealt with according to intestate succession laws, which can create delays and complications.

Why bank accounts may be frozen

Families are often shocked to discover that bank accounts in the deceased’s sole name may become frozen once the bank is notified of the death. This happens because the deceased estate must now be administered formally.

Report the estate

The estate must then be reported to the Master of the High Court. This is the process that formally appoints the executor who will administer the estate.

The documents normally required include:

• the death certificate
• the will
• ID
• marriage certificate
• details of the deceased’s assets.

Depending on the size of the estate, either Letters of Authority or Letters of Executorship will be issued.

One important point to understand is that not all money is necessarily tied up in the estate process.  The following may often pay out relatively quickly:

• life policies with nominated beneficiaries;
• retirement fund death benefits;
• funeral policies; and
• some living annuities.

This is where proper financial planning becomes incredibly valuable. By keeping some of your investments in structures where you can attach a beneficiary, you can ensure that there is  cash flow within weeks while the estate administration process continues in the background.

Get organised early

I generally recommend creating a single file containing all important documents and financial information.  Families often lose valuable time repeatedly searching for paperwork during an already emotional period. I have a template for a life file that I will gladly email to you should you need one.

At a minimum, you should gather:

• IDs;
• the death certificate;
• banking details;
• policy numbers;
• investment statements; and
• the will.

Speak to the financial adviser

This is also the stage where a good financial adviser can be enormously helpful.  In many cases, the adviser already knows where the investments are held, what income streams exist and what liquidity may be available to support the surviving spouse in the short term.

They can also assist with claims, paperwork and coordinating with attorneys and executors.

The initial focus should simply be stabilising cash flow, ensuring that bills can be paid and understanding what assets and income streams are available.

If you are helping a surviving parent after the death of a spouse, focus first on the essentials:

• obtain the death certificate;
• find the will;
• identify immediate sources of cash flow; and
• begin the estate reporting process.

You do not need to solve the entire estate in the first week. The immediate goal is simply to create enough stability so that your mother can continue paying her monthly expenses while the estate administration process unfolds.

And perhaps the greatest lesson in all of this is that one of the kindest things we can do for our families is to organise our affairs properly before they ever need to deal with them.