What to do when someone dies
The death of a loved one takes an emotional toll. Most of us have been through it at some stage, and the impact really can’t be overstated. Unfortunately, there’s a lot of end of life administration that also needs to be taken care of when someone dies.
Alongside dealing with their grief, the executor of the deceased’s estate needs to gather important paperwork, including paying off debts, filing income taxes, and closing bank accounts. Other loose ends might include re-routing mail, cancelling subscriptions, and arranging for the adoption pets, and transfer of belongings.
Here are a few tips for getting through the tasks that need to be completed when someone dies, and how to get your own affairs in order ahead of time.
Organize important papers
In order to start settling the deceased’s affairs, you’ll need to get their documents together – this can happen before or after the funeral, whatever is most convenient.
One of the first things you’ll need is a copy of the death certificate, which can be obtained from your provincial vital statistics office. A death certificate is required to settle an estate, access insurance benefits, and access or cancel government services. You may need several copies of the death certificate to send to different institutions, and can order as many as needed.
You’ll also need to gather as many of the following documents as possible:
- Birth certificate
- Will
- Social insurance number
- Marriage certificate
- Birth certificates of any children
- Insurance policies
- Income tax forms
- Deeds and title to property
- Automobile title and registration
Where to find these documents will be dictated by you and your relationship with the deceased. Most of these documents are still issued in physical form, so will hopefully be found in a central location in the deceased’s home. For any documents you can’t find or are protected by a login, get in touch with the relevant company or agency. They may be able to give you access, or reissue the relevant document. Most organizations have a system in place for when a client passes away, and they’ll let you know what you need to do in each case.
Financial considerations
When someone dies, the executor of their estate is responsible for settling financial obligations, distributing assets according to the will, and notifying the deceased’s bank, insurance company, and various government agencies. If someone dies without a will (called dying “intestate”) it’s recommended to contact a lawyer – the estate will be administered according to provincial law, and every province is different. You should also look into hiring a lawyer if the will is complex.
To claim life insurance benefits, beneficiaries can submit a death claim with the deceased’s insurance company. The claim will need a certified copy of the death certificate and other supporting paperwork as required by the insurer’s claims process. The claim process should be started as possible, as many insurance companies have time limits on submitting claims, anywhere from 90 days to 12 months from the date of death.
If the deceased had guaranteed life insurance, which ensures coverage regardless of pre-existing health conditions, beneficiaries can use the death benefit to pay for funeral, burial or cremation costs, pay off debt, or to cover the costs of settling the estate.
Here are a few other financial responsibilities for the executor:
- Notify the deceased’s insurance company, bank and other financial institutions. If the deceased has a will, the proceeds from any bank accounts, TFSAs, RRSPs or GICs will be distributed to the beneficiary
- Cancel credit cards
- Pay final bills
- Take inventory of estate assets
- Contact federal and provincial offices to cancel benefits, such as the Canada Revenue Agency, Canada Pension Plan or provincial public assistance
- Return passport to Passport Canada, along with a copy of the death certificate
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Death and tax implications
The executor will have to inform the Canada Revenue Agency (CRA) and complete a final income tax return for the deceased. The Canada Revenue Agency has a guide on the responsibilities of executors or legal representatives, which includes ensuring all returns for the deceased are completed, all taxes owing are paid, and letting beneficiaries if the amounts they receive from the estate are taxable.
Canada doesn’t have an inheritance or estate tax – instead, the government treats the estate as if it sold all assets at fair market value on the date of death, then taxes the estate before any inheritance is doled out. That’s assuming there is no surviving spouse, who would be eligible for a spousal transfer. As a result of tax payable, the deceased’s final tax return may incur capital gains tax on a property or business that was owned, with the taxable amount based on increases in value.
The tax implications of death can be significant, especially when it comes to capital gains taxes on property. Having adequate life insuranace coverage is a big part of preparing for these taxes, so hopefully that’s in place. In either case, it’s a good idea to speak to a tax accountant to avoid any nasty surprises.
The little things
These tasks don’t need to be handled immediately, but once the big issues are handled, be sure to tie up these loose ends:
- If the deceased rented their home, inform the landlord to terminate the lease
- Contact gas, electric and water utility companies
- Cancel TV, phone and internet service
- Inform doctor, dentist, pharmacist, and other health care providers
- Set up mail forwarding
- Cancel newspaper and magazine subscriptions and any club memberships
- Arrange for the care or adoption of pets
- Inform charity and volunteer organizations
How to prepare for death (yours or someone elses)
Hopefully you appreciate how much easier dealing with death becomes when the deceased has things in order when they’re still alive. With that in mind, it’s a good idea to keep your affairs organized, just in case – think of it as paying it forward to your loved ones. Whether you’re 20 with no dependants, in your mid-30s with two kids, or 75 year sold with 27 grandchildren, there’s no excuse not to get these simple tasks done:
- Prepare a will: Some people resist preparing a will out of the fear of facing death, but the committment is very small, so there’s no reason not to make one up. Of course, once you have any major debt, assets, or dependants, a will is a must. Review your will about once every five years, or update it as needed – for example, if you buy a second property, start a business, have another child, or get married or divorced. If you’re legally savvy it is possible to make your own legal will, but getting assistance is recommended. Contact a lawyer, or use an online services like willful.co to make an affordable and legal will in under 20 minutes.
- Give power of attorney: If you become unable to look after your own finances or medical care (if you fell into a coma, for example) the having someone with power of attorney makes it easier for them to look after you and your affairs. Assigning power of attorney is a bit like appointing an executor of your estate, but for while you’re still alive. You must only give power of attorney to someone you really trust – read more about it here.
- Get life insurance: Life insurance is another essential part of financial planning, and protects the financial security of your spouse and family in the event of an accident, a fatal illness or sudden death. Life insurance benefits can be used to cover living expenses, pay the mortgage and car loans, provide university tuition or to leave an inheritance.
- Keep documents organized: Keep all important papers together (along with any passwords for online accounts) somewhere secure in your home, safety deposit box or with your lawyer. This includes bank account information, insurance policies, tax forms, safety deposit box information, investments, brokerage accounts and contact information for any lawyers or financial planners. Be sure to tell your spouse, children or designated executor where you’ve stored your documents.
The bottom line
The process of settling an estate can take a lot of time and patience, and may require several back-and-forth phone calls, follow ups, filling out forms, then sending and re-sending them. It’s an emotionally trying time, but being organized can save loved ones time, money and conflict.
Also read:
- How much life insurance do I need?
- 17 life insurance mistakes to avoid
- How to get happier as you get older
- What is life insurance fraud?