Ask the expert: Unexpectedly responsible for managing money

Grieving the loss of a loved one is difficult enough on its own. Add to this the need to become adept at managing money quickly, and anyone would be overwhelmed. Sadly, this is the scenario our reader, Francis, has found herself in unexpectedly. Read along as personal finance author Clifton guides Francis through how to navigate this difficult situation.

The question

Dear experts,
My mother died suddenly a couple of weeks ago. My Dad’s been out of the picture since I was little. I’m 24 now. We never talked about managing money, so I’m completely lost. I have no idea what papers to look for, or what to do about bills or accounts. Where do I start? Who should I talk to? I’m scared that everything’s gonna fall apart and I’ll get kicked out of the house.
Francis O.,
Hamilton, On

The answer

Experiencing any loss is traumatic. Before dealing with the managing money aspect of things, it’s important to grieve in your own way. Make sure to take care of your mental health, just as you’ll take care of the finances in the coming months.

First, take a breath or two or three. Managing our finances is always a marathon, never a sprint. The added challenges of managing money with the loss of a loved one only make this more complicated, but you can do this. Just take it step by step.

Even though it’s tough, there are some common steps everyone should take in this situation. Those steps almost always start with getting documents. You need to get:

A death certificate. (Tip: Get multiple copies since you may need original copies for many of the steps you will be taking).
Your mother’s will (if there is one).

Financial documents:

Chequing and savings accounts
Retirement accounts (RRSP)
Credit card statements
Insurance policies
Utility bills
Mortgage/rent agreements
Tax documents
Any other debts or loans

You can find these documents in filing cabinets, email accounts, mail, or online portals. Obtaining these documents is your first step to winding down your mother’s estate and focusing on your own financial health.

Secure your living situation

Once you have all the documents, you can start securing your situation.

Since it seems like you were living with your mother, you need to determine if your home is owned or rented. If rented, ensure that you have a copy of the lease to better understand your rights. Each area has different rules and regulations regarding leases. A quick search should clarify your rights. To be safe, ensure that the rent is paid promptly.

If your mother owned your home, you must determine if there’s a mortgage, how payments are made, and at what frequency. While you might assume the mortgage is paid monthly, some people choose to pay more frequently to save money.

Either way, contact the landlord or mortgage company to explain the situation. They will likely request a copy of the death certificate and be able to discuss the next steps with you.

Understand the immediate bills

Pay the rent/mortgage first, but don’t forget about the other bills. Paying bills is a big part of managing money. You will need to pay for electricity, gas, insurance, and the internet, to name a few.

Look through the documents you’ve collected. Review the bank account statements and bills to determine what is due, when, and if anything is being auto-paid. Again, you will need to contact the service providers. Let them know about your mother’s passing away and update accounts.

Having an increased demand on your finances from bills can be particularly challenging. This is another reason you need to contact the service providers. Ask them if they have options for situations like yours. They may let you pause payments, lower your interest rate, or create a payment plan while you get your finances in order.

You may also need to examine your spending habits. If you were living with your mother, you would likely spend money on shared expenses. Recognizing that you do not need to keep spending money in the same way can help you save money. Creating a temporary budget to understand these immediate expenses might be helpful.

This added demand can create money problems if you are not careful. That is why the next step is crucial.

Find out what money is available

This process will not only be long but also expensive. So you should check for life insurance policies through your mother’s employer or privately held. Hopefully, you uncovered this through your document search.

Once found, contact the life insurance company. They will be able to walk you through the steps necessary to file a claim.

You may be tempted to use the money in your mother’s account. Don’t. Unless it is a joint account, making withdrawals from an estate that is being wound down is not legal.

Get help from the right people

If your mother had a will, it will likely need to go through probate. Probate is a court process to validate the will and allow the executor to manage the estate. You may want to contact the lawyer who wrote the will. A lawyer can provide you with guidance on what you will need to do and who you will need to contact to help close out your mother’s estate.

If your mother does not have a will, it is still advisable to reach out to an estate lawyer for help closing out her estate. A lawyer can help you navigate the probate process while ensuring that you know your rights. They can also advise you on matters of power of attorney if applicable.

Protect yourself from financial pitfalls

As mentioned, managing money is a marathon, so take your time when it comes to making any decisions. Avoid signing anything or making big financial decisions in a panic. Unfortunately, there are some people who prey on grieving families. So, you will need to have some level of skepticism throughout the process.

Keep track of your conversations and documents. Doing so will help you reference them and keep moving you forward.

One step at a time

It’s okay to be scared, but you don’t have to do this all at once or all alone. Lean on friends and extended family. Have someone come with you to appointments for moral support. Take time to go for walks or have coffee with a friend.

Try to also see this process as an opportunity to focus on improving your financial literacy. While you go through this process, you will be able to build your skills in managing money. Take some time to consider your financial goals as well.

This experience will let you see the value of having a solid financial plan, an emergency fund, and financial security. Part of this process might be checking your credit score or looking into credit counselling if student loans or debt is an issue.

While you may be starting off scared and unsure, if you go step by step, you will likely end up with a sound financial education. It is important to acknowledge that this is hard. You are going through a lot, but you can do it one step at a time.