Loss of a loved one: Things to know before handling an estate

USAA's Survivor Relations Team is charged with helping members take care of financial responsibilities after the death of a loved one.

Their jobs require a delicate balancing act. People who have recently experienced a loss are often still dealing with complex emotions. They're not always ready to move forward with settling financial affairs, even though they know it's necessary.

Regretfully, these representatives hear a common refrain from members: “I wish I'd known that beforehand.”

To help you be better prepared if — or when — you make the call here to USAA or to other financial institutions, members of the team got with USAA Advice Director Robert Steen to prepare some important things survivors may want to consider in advance of their loss or prior to contacting us.

Understand how property passes at death.

It's important to understand how property passes at death based on your own state's laws because this can determine the documents required by the financial institution to help settle the estate. You'll be required to provide documentation that you have the authority to communicate with a bank regarding the decedent's assets and liabilities. As an example, you may be asked to produce “letters testamentary,” which is proof from the probate court that you're able to serve as the executor for the deceased person's estate or “letters of administration,” which are issued when the deceased doesn't have a will. At death, property may be divided into two broad categories: Probate and non-probate.

Probate is the formal legal process determined by each state which guides the orderly administration of the decedent's estate. The probate court (or surrogate court) appoints the personal representative who is responsible for the payment of claims and debts from the assets of the estate before distributing any remaining assets to the intended beneficiaries.

If the decedent had a valid will, the court normally appoints the person or persons named as executor. If the decedent didn't have a will, the court will appoint an administrator of the estate. The executor or administrator will serve as the personal representative for the estate.

Not all estates will enter the probate process. Small estate affidavits may be used to disburse an account or transfer property when formal probate isn't required. The requirements of this process will vary by state.

Non-probate property and assets.

It's easier to identify property and assets not subject to probate first. Again, depending on the laws in your state, here are a few examples:

• Assets passing by state property law. An example could be a jointly held bank or brokerage account with rights of survivorship, often styled as JTWROS or tenancy by entirety.
• Assets passing by state contract law. Some asset examples are life insurance, pension plans, IRAs, retirement accounts, annuities, property titles as payable on death (POD) or transferable on death (TOD).
• Assets that pass by state trust law and trust terms. A revocable living trust (RLT) is an example of a trust that may not be subject to probate. Note that trusts created through a will can be subject to probate.

Probate property and assets.

Any other property and assets not included in the above categories may be subject to probate, whether the deceased had a will or not.

Be sure important documents are easily accessible in case of incapacity or death.

Keep in mind that until your institution receives certain documents, they may not be able to tell you much about the decedent's accounts or policies. Note that different financial institutions may ask for different documents. Sometimes larger organizations, such as USAA, offer products and services that include banking, property and casualty insurance, life insurance and annuities. Each of these departments may be subject to varying regulations. Therefore, they may require different documentation.

Depending on the nature of the deceased's assets, accounts and policies, their financial institution may ask for the following documents:

• Death certificate. Proof that the person has passed away.
• Last will and testament. Is the legal document stating how the decedent wanted their property or assets distributed to heirs after their death.
• Trust document. Required if the decedent set aside assets in trust for someone else. Sometimes family members take part in managing the trust or a third-party trustee, such as a bank trust department, can be involved.

Keep wills and trusts up to date with life events, such as marriage, divorce, births and the deaths of named beneficiaries. If you have a trust, it's important that you've acted to properly retitle all the accounts or assets intended to be held in the trust. Not doing so could lead to unwanted probate.

Identify your loved one's financial products, services or relationships with various institutions.

These might include bank accounts, certificates of deposit, property or auto insurance, life insurance policies, annuity contracts, or other investment or retirement accounts. Depending on the account type and styling, identify the list of documents you'll need to settle your loves ones' accounts.

Understand that permissions can change upon the death of your loved one.

Although contracts or accounts may stay the same after a loved one passes, at times, the deceased's death automatically triggers changes in account access and permissions. This is often true even in the case of jointly held accounts. Keep the following possibilities on your radar:

• If your loved one had a power of attorney naming you as their agent, that permission becomes void after the member has passed.
• Conservator or VA accounts can be frozen and become part of the deceased's estate after the owner dies. As a result, administrators are notable to manage the accounts as before.
• Although a POD account is meant to pass to the named beneficiary or beneficiaries upon the deceased's death, it's different from joint ownership of the account. Therefore, the ownership transition may not happen as smoothly as you might expect.

Don't overlook these items.

• Authorized user of credit cards. An authorized user may not continue to use the credit card of the decedent. Here at USAA, the decedent's credit card is closed as soon as we process the notification of death for the primary credit card holder.
  
  

  Note: USAA no longer offers secondary account holder credit cards. We recommend setting up an authorized user as an enhanced authorized user by the primary account holder on their USAA Credit Card accounts. This allows the authorized user to use their own log in ID and view account transactions and payment history.

  We also recommend all members who are authorized users on a USAA Credit Card account have at least one credit card under their own name, where they're the primary credit card holder. This can help ensure that they have an open credit card to use in case the other cards are closed.

• Updating signature cards. Sometimes, even joint bank accounts can be frozen if a signature card hasn't been returned to the financial institution prior to the decedent's passing.
• Property and casualty insurance policies. Insurance policies for your auto, boat, motorcycle, home, or other property may need to go through the underwriting process again upon the death of the co-insured. The survivor is responsible for updating all policies, and premiums may change as a result. Often, the primary insured survivor may forget to contact the insurer to remove the deceased person from the policies.
• Life insurance funeral assignment. Sometimes having sufficient funds on hand for the final expenses for a loved one can be difficult. A funeral assignment is an agreement signed by a beneficiary of a life insurance policy assigning all or a part of the life insurance benefits directly to the funeral home for funeral expenses. Upon approval of the death claim, payment for funeral expenses is paid directly to the funeral home, and any excess balance is sent to the beneficiary or beneficiaries.
• Updating beneficiaries on policies and accounts. As mentioned earlier, you normally would name who'll receive the proceeds from your life insurance policies, annuities and retirement accounts by naming the beneficiaries. But sometimes due to death or changes to circumstances, the named beneficiary on your policy or account is no longer appropriate. That's why it's important to make sure you periodically review and update beneficiary designations on your policies and accounts.

Make a to-do list.

It can be difficult to think strategically about next steps when you are dealing with the loss of a loved one. If you can prepare a checklist ahead of time, the process will increase your awareness of necessary obligations, and it will help you know what to do if the time comes.

8 steps to take on behalf of the deceased

1 Get professional help as soon as possible.

Involve your legal, tax, or financial professionals to provide needed guidance.

2 Inform your financial institution of your loved one's death.

This is often accomplishable online via a survivorship dashboard or by talking to a customer service representative.

3 Submit a death certificate.

You can usually upload it online, mail a copy, or fax it.

4 Let financial institutions know about the deceased's products and relationships.

If you don't know, the customer service group can help you identify them and inform you of specific documents needed to settle their accounts.

5 Update insurance policies.

Insurance policies for auto, boat, motorcycle, home, and other property usually must go through the underwriting process again upon the death of the co-insured. The survivor is responsible for updating all policies, and premiums may change as a result.

6 Check with the funeral home.

See if final arrangement expenses have been paid through an insurance policy.

7 Update automatic services, such as bill pay.

After you provide your bank with your loved one's death certificate, take the next steps your bank suggests updating any automatic services.

8 Submit court documents that help establish or identify the "estate executor."

Your institution may be able to send you a link via a text message to your cell phone to upload these documents or allow you to send them via fax or mail.

We hope this information has provided time-saving tips and peace of mind for what can be a difficult period in our lives.