The First Year After Losing a Parent: A Compassionate Financial Roadmap
Losing a parent is one of life’s most difficult transitions. Amid the emotional turmoil, there’s a new reality to navigate: your parents’ financial responsibilities. A little over a year ago, my 4 month old son was hospitalized with coronavirus; 600 miles away, my family and I had decided it was time for my father to elect hospice care and spend his last few days at home with family. It was a lot to handle at once. This past year, I’ve learned that settling a parent’s affairs is a marathon, not a sprint. It’s okay to move at a pace that respects your grief.
I’ve learned that the first year after a parent’s passing will involve a series of financial steps that, with some guidance and compassion, can be managed bit by bit. This post is a guide to help you through that first year, balancing practical tasks with the patience and empathy you need to get through them. We’ll walk through five crucial areas to focus on: settling the estate, filing final taxes, managing any inheritance, handling ongoing expenses, and – if applicable – preserving a key tax benefit for a surviving spouse.
1. Estate Settlement: Navigating Probate, Accounts, and Debts
When my father passed away, my stepsister and I became the co-trustees of my parent’s trust. I found myself staring at a mounting stack of papers: mail from the Social Security office, bank statements, and unpaid bills. It felt overwhelming, but step by step, we began to settle his estate. Estate settlement typically means handling the legal process known as probate, accessing your parent’s accounts, and making sure debts are taken care of. If your parent or parents have a trust, this process is called trust administration. If your parent left a will, the named executor will guide things according to their wishes. If they didn’t have a will, don’t panic; the court will appoint an administrator, and state law will determine who inherits what. Either way, here are some steps to get started on settling the estate:
Obtain the Death Certificate: Get multiple copies of your parent’s death certificate (funeral directors are a tremendous resource to help you initially). You’ll need these to prove the passing to banks, insurance companies, and other institutions.
Locate the Will and Estate Documents: Find your parent’s will and any trust documents. These will name the executor and outline asset distribution. If a will exists, file it with the local probate court to officially open the estate. If there is no will, the probate court will still oversee the process based on state intestacy laws (which usually prioritize spouse and children).
Secure Assets and Accounts: Identify all assets – bank accounts, real estate, investments, personal property – and secure them. Notify financial institutions of the death (using a death certificate) so that accounts can be frozen or retitled as needed. Many banks will guide you through transferring or closing accounts once they have proper proof.
Handle Debts Methodically: Make a list of your parent’s outstanding debts (mortgage, credit cards, medical bills, etc.). These debts are paid out of the estate’s assets, not from your own pocket. In general, you are not personally responsible for a parent’s debts unless you co-signed or are a joint account holder. Prioritize essential debts (like securing the home with mortgage or insurance payments) and inform creditors that the debtor has passed.
Work With the Probate Court/Executor: If you’re the executor, you’ll need to follow the probate court’s requirements: filing an inventory of assets, notifying potential creditors, and eventually distributing assets to beneficiaries. If you’re not the executor, keep in touch with whoever is, and provide any help or information they might need (especially if they’re also a grieving family member). Don’t hesitate to consult an estate attorney for guidance – probate processes can vary by state and complexity.
Throughout this estate settlement phase, patience is key. It may take months to get court approvals, sell property, or clear all bills. Expect the process to take a while, possibly the better part of a year, especially for a larger estate. Give yourself grace – you’re doing one of the hardest jobs at one of the hardest times of your life. Every phone call you make and form you file is a step toward closure.
2. Filing the Final Tax Return: Deadlines and Documents Amid Grief
My dad passed away in January of last year. Because of this timing, we’re just filing his final tax return this year. Filing a final tax return for your parent is very similar to filing one for anyone living, with a few special considerations. All income earned up until the date of death must be reported on their final return, and any tax due must be paid from the estate. Here’s what to keep in mind:
Know the Deadline: The final Form 1040 (individual income tax return) for your parent is generally due by the next regular tax filing deadline – typically April 15 of the year following their death. For example, if your father died in July 2024, his final tax return covering January–July 2024 would be due April 15, 2025. (If your parent passed early in the year and hadn’t yet filed the previous year’s taxes, you may actually have two returns to file – one for the prior year and one for the year of death. Mark this on your calendar, but remember you can request an extension if needed, just as with a living person’s return.
Gather Key Documents: Start collecting all relevant financial documents. This includes W-2s, 1099s for interest, dividends or retirement distributions, Social Security statements, and documentation of any other income or deductible expenses up to the date of death. If you’re unable to access some of your parent’s records (for instance, online accounts might shut down after death), you can request a transcript from the IRS or work with their employer and financial institutions to get the info you need. If your parent or parents weren’t organized, know that it can be a bit of a scavenger hunt, so your best bet is to start early.
Who Should File: The responsibility to file falls to the executor or the trustee(s) of the estate. If that’s you, you’ll sign the return on your parent’s behalf. If your surviving parent is still around and they were married, it often makes sense (and is allowed) for the surviving spouse to file a joint return for that year with the deceased spouse. In other words, if Mom died this year and Dad is still alive, Dad can file as “Married Filing Jointly” one last time, including Mom’s income up to her death.
Final Details and Refunds: When filing the return, ensure the 1040 indicates that the taxpayer is deceased by writing “Deceased” and the date of death at the top of the form (most tax software will have a checkbox for a deceased taxpayer). If a refund is due and it’s going to an heir or surviving spouse, you may need to include IRS Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer) to claim it on their behalf. If taxes are owed, the payment should come from the estate’s funds. Keep copies of all filings for your records, and consider using certified mail or an IRS e-file option for peace of mind.
As with all things related to taxes, Mana recommends working with a trusted CPA, especially during this crucial time.
3. Managing the Inheritance: From Receiving Assets to Wise Decisions
When the initial flurry of paperwork settled, we were then faced with a new and somewhat surreal task: managing what my dad had left behind. This might be cash from bank accounts, an insurance payout, a house, investments, a business, or even family heirlooms. For many of us, inheriting assets is bittersweet – it’s a final gift from your parent, wrapped in the sadness of their absence. There’s also a lot to think about: How do I transfer these assets? Should I invest the money, pay off my mortgage, or save it for my kids’ college? Do I need to worry about taxes on this inheritance? Here’s how to approach it thoughtfully and responsibly:
Take It Slow and Get Advice: In the wake of loss, don’t rush into big financial moves. It’s tempting to want to do something “meaningful” with the inheritance right away, but it’s usually best to pause and make a plan. If you don’t know how or where to start, Mana recommends building a team of trusted advisors: a financial life planner, a tax professional, and an estate attorney.
Take Inventory What You’ve Inherited: Make a detailed list of all assets you are receiving. This could include bank accounts, investment accounts, retirement accounts, real estate, vehicles, life insurance proceeds, personal valuables, etc. Understanding exactly what you now own is the foundation for deciding what to do next. Each asset may have its own process for claiming or transferring ownership. For example, life insurance or retirement accounts with named beneficiaries usually pay out directly once you file a claim with a death certificate – bypassing probate entirely. A house or car will require retitling in your (or the estate’s) name through the appropriate agencies. If there’s a trust, assets might flow into that trust rather than directly to you, and the trustee will handle distribution. Gather all these assets on paper so you have the full picture.
Learn the Tax Implications (if any): The good news is that inheritances are generally not income-taxable to you. If your parent(s) left you $50,000 in a bank account, you don’t owe income tax on that windfall. However, certain assets come with their own tax rules. We wrote a blog about the math of inheritance here.
Align With Your Financial Goals: Once immediate tasks and tax questions are settled, consider how this inheritance fits into your life plans. This is where the work of a financial life planner can be very additive. The key is to make conscious choices rather than reacting impulsively. Your parent worked a lifetime to save this money or asset; using it purposefully and thoughtfully is a way to honor that legacy.
Trusts and Long-Term Management: If your parent’s assets were left in a trust, your role might be as a beneficiary or even as a trustee managing the trust. Read the trust document carefully and work with an estate attorney, if needed, to understand its terms. Trust assets might be doled out over time or have conditions. On the other hand, if you’ve inherited a significant sum outright, you might now be thinking about your estate plan – for instance, updating your will or setting up a trust for your own children using the inheritance. These are longer-term considerations, but the first year is a good time to start adjusting your financial plan to account for the change. Update account beneficiaries, review insurance coverage, and make sure your newfound assets are properly titled and protected (e.g., adequate home insurance if you inherited a house).
Above all, give yourself permission to feel whatever you feel about your inheritance. It’s normal to experience a mix of gratitude, guilt, sadness or even discomfort. I remember feeling guilty about earning interest on the money my parents left – as if I shouldn’t benefit from their death. If you feel that way, remind yourself that your parent wanted you to benefit from it; they left these things for you because they love you. Managing an inheritance responsibly is not just a financial task, but an emotional journey. Take it one step at a time, and don't hesitate to lean on professionals or family members for support and advice.
4. Ongoing Expenses and Financial Adjustments: Life Goes On (And So Do the Bills)
In the months after a parent’s passing, one of the strangest experiences is getting mail addressed to them. One night, as I reviewed my parents' bank transactions, I saw the debit come through for their car insurance - a reminder that while my dad’s life had ended, life’s expenses had not. Part of your first-year checklist is to handle these ongoing expenses and financial maintenance tasks. This includes everything from making sure the utility bills for your parent’s house are paid (at least until the estate is settled or the house is sold), to canceling services that are no longer needed, to adjusting long-term budgets now that your parent is gone. Here’s how to navigate these practicalities with minimal stress:
Keep Up with Essential Bills: Determine which bills still need to be paid in the short term. Common ones include utility bills for the home (electricity, water, heating), property taxes, homeowners insurance, mortgage payments or rent for your parent’s residence, and perhaps medical insurance premiums or storage unit fees. These should be paid from the estate’s funds if available. If the estate is still tied up in probate and you need to front a payment to avoid a service cutoff or penalty, keep a record – you can reimburse yourself later from the estate once funds are accessible. The goal is to protect valuable assets (for example, you don’t want a lapse in homeowners insurance coverage leaving property unprotected).
Cancel or Transfer Services: Equally important is identifying which recurring expenses can be stopped to save money. This may include things like your parent’s cell phone plan, cable or internet service, subscriptions (magazines, online services like Netflix or Spotify), and car insurance. Each will likely require you to call and inform them of the account holder’s death. Some companies may ask for a death certificate copy. It can be emotionally taxing to make these calls, but remember that every service you cancel is one less thing draining the estate (or your surviving parent’s finances) unnecessarily. If a surviving spouse or another family member wants to keep a service (say, transfer Mom’s phone line to Dad), ask the provider about how to transfer ownership instead of canceling.
Manage Real Estate and Property: If your parent owned a home, decide how it will be handled during this interim period. Will someone live in it (a surviving spouse or perhaps an adult child moving in)? Or will it remain vacant until it’s sold or transferred? Vacant properties need special care: continue maintenance like lawn care or snow removal (you might hire someone), and notify the home insurance company – some policies require notice if a home is unoccupied for an extended period. Secure the property by changing locks if needed and making it look lived-in (set lights on timers) to deter break-ins. If the plan is to sell the house, you may also incur some expenses like repairs or realtor fees down the line; keep track of those as they can often be paid by or reimbursed from the estate.
Adjusting Family Finances: The financial picture for your family may shift after your parent’s death in subtler ways. If you were supporting your parent financially, you might now have some extra room in your budget – perhaps to reallocate toward your kids’ needs or your savings. On the other hand, if your parent was helping you or contributing to household costs (for instance, living with you and paying rent, or helping with grandchildren’s expenses), you’ll need to adjust to the loss of that income. If a surviving parent remains, their own income may have changed – for example, one less Social Security check coming in each month, or a pension dropping to a survivor benefit. Part of ongoing financial planning is reworking the budget for those who remain.
Don’t Forget Yourself: As you juggle bills and accounts, remember to take care of your own financial well-being. Grief can cloud judgment, and the stress might cause you to overlook your own bills or obligations. Set up automatic payments for your things whenever possible, so you don’t accidentally miss a mortgage payment or insurance premium while focused on your parent’s affairs. This is part of that sandwich generation challenge – balancing your parents’ needs, your kids’ needs, and your own. It’s not selfish to ensure your world stays intact; in fact, it’s exactly what your parent would want for you. By the end of the first year, aim to have a clear picture of which of your parent’s expenses are resolved and which ongoing responsibilities (like maintaining a property or supporting a surviving parent) will continue. With that clarity, you can better integrate those duties into your life going forward or make plans to resolve them (for instance, arranging the sale of a house in year two, if that’s what you decide).
Financial housekeeping after a loss is tedious, but there’s a quiet catharsis in it too. Piece by piece, you are bringing order to chaos. You’re ensuring that nothing falls through the cracks. Every account closed and every bill paid is a small but significant act of respect for your parent’s affairs. Over time, the pile of “to-dos” gets smaller. Trust that eventually, you’ll get there. And if at any point it feels like too much, it’s perfectly fine to ask a family member, or even hire a professional (like an estate administrator or a daily money manager), to help carry the load.
5. Electing Portability for a Surviving Spouse: Preserving a Valuable Tax Benefit
This last section is one that many people aren’t aware of, and it may not apply to every family – but if your parent was married at the time of passing, it’s crucial to understand. Amid all the paperwork, there’s a somewhat obscure yet potentially very important task: electing portability of the estate tax exemption for the surviving spouse. Let’s break down what this means:
The U.S. tax code currently allows each person a very large estate tax exemption ($13.99 million in 2025) which is the amount they can pass on without incurring federal estate tax. For most families, your parent’s estate value will be under this amount, so no federal estate tax is due. However, if one parent dies and doesn’t use up their full exemption (which is likely if their estate was under the limit), the surviving spouse can inherit the unused portion of that exemption, but only if you proactively elect to do so. This is known as “portability.” In essence, portability lets a widow or widower add their late spouse’s unused estate tax exclusion to their own. It could potentially shield millions of additional dollars from estate tax when the second parent eventually passes. Think of it like a coupon that doubles the amount you can pass to the next generation tax-free. If not claimed, it expires. If claimed, it could mean significant tax savings for your family down the road.
Here’s what you need to know to take advantage of portability for a surviving spouse:
Why Portability Matters: Even if your parents were nowhere near $12 million in assets, consider future possibilities. The estate tax law can change – in fact, the current high exemption is set to drop by about half in 2026 if laws aren’t changed. Additionally, assets can appreciate. A $3 million estate today could grow significantly over a surviving spouse’s lifetime. Electing portability is like insurance against future estate tax: it locks in your deceased parent’s unused exemption and adds it to the surviving parent’s exemption. For example, if Dad died leaving an estate of $3 million and Mom survives, Dad unused ~$10 million of his exemption can be ported to Mom, potentially allowing Mom to shield an extra $10 million when her time comes. It’s a big deal for wealth preservation, especially for those who might approach taxable levels in the future (or if the exemption amounts drop).
How to Elect Portability: This benefit is not automatic. The estate’s representative (often the executor) must actively elect portability by filing a Form 706 (Estate Tax Return) and checking the box for the portability election. Here’s the kicker: you must file an estate tax return to claim portability even if the estate isn’t large enough to owe estate tax. Many people don’t realize this because if no tax is due, an estate tax return isn’t legally required – but to carry over the exemption, the return becomes necessary. Essentially, you file a Form 706 reporting the estate (even if under the threshold) for the sole purpose of electing portability of the unused amount to the surviving spouse. The form will calculate how much of the exemption was used (if any) and how much is left to pass to the survivor.
Deadlines and Timing: Initially, the deadline to file Form 706 for portability was within 9 months of death (the same as the due date if an estate tax return were required, with a possible 6-month extension). However, in recent years the IRS recognized that many families of modest means were missing the boat on portability, so they extended the timeframe. As of now, you have up to five years from the date of death to file an estate tax return purely to elect portability, provided the estate was under the filing threshold (i.e. not required to file a 706 for other reasons). This generous window, granted by a 2022 IRS procedure, is a relief – it means even if you’re finding out about portability a couple of years later, you may still be in luck. Mana absolutely recommends consulting an estate attorney or CPA to help prepare the Form 706.
Document and Preserve: Once portability is elected and accepted by the IRS, keep the documentation with the surviving spouse’s important papers. Down the line, when the surviving parent eventually passes, the executor of their estate will need to know that portability was elected and what the additional exemption amount is. It will be used on the second estate tax return to potentially save a lot in taxes. In the meantime, electing portability doesn’t affect the surviving spouse’s income taxes or day-to-day finances; it’s just a one-time paper exercise that could pay dividends later.
If all this talk of estate tax and multi-million-dollar exemptions makes your eyes glaze over, you’re not alone. Many families of more modest wealth understandably never think about Form 706 or estate taxes. But portability can benefit even moderately wealthy couples, especially with uncertain future laws. Consider it future-proofing your surviving parent’s estate. Even if you suspect “We’ll never be that wealthy,” remember that life (and markets) can surprise you. By checking this box, you keep your options open.
Finding (Some) Closure in Financial Completion
By the time you approach the one-year anniversary of your parent’s passing, you’ll have gone through an incredible amount of personal and financial housekeeping. It may not be fully over – some estates take longer than a year to settle – but you will have built a roadmap and followed it through the storm. You’ll have gathered documents, made calls, checked off tasks, and perhaps learned more about taxes, law, and finance than you ever thought you would. Through it all, you balanced being a dutiful child, a supportive spouse, a present parent, and an executor of legacy. That is no small achievement.
In the process, you might also find a measure of healing. For me, taking care of these responsibilities became a way of honoring my dad and my mom (who hasn’t passed, but has dementia). Every time I double-checked an account or paid a bill on time, I felt like I was saying thank you to them for all they’d done. It has been emotionally taxing, but it also has led to a greater sense of meaning for me.
A year on, allow yourself to reflect not just on the loss, but on how far you’ve come in managing its aftermath. The major steps – settling the estate, filing final taxes, tending to inheritances, adjusting to new budgets, and securing future benefits like portability – are acts of love. They protect your family and keep your parent’s legacy intact. Your mom or dad would be proud of you for handling these affairs with care and courage.
Finally, remember that you don’t have to walk this road alone. Lean on family members to share the load (siblings can, and should, help each other through this). Lean on your professional team for guidance. And lean on friends who’ve been through it; their real-life insights are often invaluable. Many in our generation have been or will be in your shoes – juggling elder care, child care, and self-care all at once. By sharing experiences and wisdom, we’ll help each other through the toughest days.
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Stephanie Bucko and Cristina Livadary are fee-only financial planners based in Los Angeles, California. Stephanie is the Chief Investment Officer and Cristina is the Chief Executive Officer at Mana Financial Life Design (FLD). Mana FLD provides comprehensive financial planning and investment management services to help clients grow and protect their wealth throughout life’s journey. Mana FLD specializes in advising ambitious professionals who seek financial knowledge and want to implement creative budgeting, savings, proactive planning and powerful investment strategies. As fee-only fiduciaries and independent financial advisors, Stephanie and Cristina never receive commission of any kind. Stephanie and Cristina are legally bound by their certifications to provide unbiased and trustworthy financial advice.