A death in the family is perhaps the worst time to need to manage money.
A death in the family is perhaps the worst time to need to manage money. Unfortunately, when someone passes away, it inevitably means working through financial issues, whether you’re prepared for them or not. What are the first things to think about?
Funeral expenses are one of the first financial decisions family and loved ones must make. Like weddings and other celebrations of life, funerals can be expensive. According to the Funeral Director’s Association of New Zealand, a typical funeral might cost between $8,000 and $10,000. Funeral expenses can even be an issue where the loved one who passes away is financially independent - people who pass away unexpectedly may have most of their money tied up in investments which take time to exit, making it difficult to access funds immediately. Banding together as a family or temporarily borrowing funds can help meet immediate expenses.
Depending on your loved one’s circumstances, it might also pay to consider other options to meet immediate financial commitments such as ACC (if the death is a result of an injury) or Work and Income. If your loved one had a life insurance policy, you may also be entitled to make a claim. In the days after a loved one’s death, you’ll also need to get to grips with their estate - including their bank accounts, investments and vehicles. If your loved one left a will, this usually simplifies matters. If a person has died without a will, the law provides for the estate to be divided up, but this may not always be the same as the person would have wanted. Either way, dealing with the estate will often involve lawyers and lawyers’ fees.
If your partner or someone you financially depend on passes away, it can be incredibly difficult to take stock of the finances - particularly if you haven’t always been involved. If you’ve borrowed money together, talk to the lender to understand how they can help manage your loans. In time, consider whether consolidating debt might make it easier to keep up.
One thing that may not need to be dealt with immediately is managing any large sums of money that you receive following a death. Paying down debt or putting money aside are smart options, but if you want to invest or spend an inheritance it’s best to catch your breath first.
Following a loved one’s death, it’s important to keep money issues in perspective. Some matters will be pressing, while other things can be dealt with once you’re ready to move forward. A small personal loan may lighten the pressure giving you one less thing to think about. But, whatever does need to happen, make sure to reach out so you get the support needed.
