Closing a parent's accounts in the order that avoids frozen funds

When a parent dies, the instinct is to close everything quickly. Resist it a little. The order matters more than the speed. Close the wrong account first and you can strand the money that pays the funeral, the mortgage or the electric bill.

Before you touch anything: how is each account titled?

How an account is titled decides who can reach the money and how fast. Make a list, and for each account write down which of these applies.

Title	What usually happens at death
Joint with right of survivorship	The surviving owner keeps the account and can usually keep using it
Payable on death (POD) or transfer on death (TOD)	The named beneficiary claims it directly with a death certificate, outside probate
In a living trust	The successor trustee manages it under the trust's terms
Sole name, no beneficiary	Becomes part of the estate; usually frozen until someone has legal authority to act

Only the last row needs a court or a small-estate procedure. Knowing which accounts fall there tells you where the delays will be.

The order that works

1. Secure, don't close

In the first days, protect the accounts rather than closing them. Collect statements, checkbooks and cards. Watch for unusual activity. If a card is lost, ask the issuer to freeze it.

2. Don't empty the Social Security account

Social Security does not pay benefits for the month of death. A payment that arrives in the month after death, for the month in which the person died, must be returned, and Social Security will usually ask the bank to send it back. Leave that account open and funded until the bank confirms the return is complete. Closing it early can create a debt for the estate, or for a joint owner.

The funeral home usually reports the death to Social Security. A surviving spouse or child should also call about survivor benefits and the one-time $255 lump-sum death payment, which is payable to an eligible surviving spouse or child.

3. Get authority, then open an estate account

The executor named in the will, or an administrator the court appoints, gets letters testamentary or letters of administration from the probate court. Many states also allow a simpler small estate affidavit when the estate is below a set value; your county probate court can tell you the limit.

Then:

• Get an Employer Identification Number for the estate from the IRS. The online application on IRS.gov is free.
• Open an estate checking account with that number.
• Move money from sole-name accounts into it as each bank releases them.

From now on, the estate's bills are paid from the estate account. That keeps a clean record, which you will want when it is time to file the person's final tax return and, if required, an estate income tax return.

4. Redirect the automatic payments

List every automatic payment and deposit. Decide which ones must continue for now (mortgage, home insurance, utilities on a house that is being sold) and move them to the estate account. Cancel the ones that no longer apply: subscriptions, memberships, a phone line. Ask for refunds of prepaid amounts where possible.

5. Tell the credit bureaus

Ask Equifax, Experian and TransUnion to place a deceased notice on the person's credit file. It helps prevent identity theft. Each bureau explains on its website what to send.

6. Close the rest, last

Only now close the sole-name accounts and cards, once final statements, refunds and any returned deposits have arrived.

Debts: what the family does and doesn't owe

In general, debts are paid by the estate, not by the children. Family members are not usually responsible for a parent's debts unless they co-signed, held a joint account, or live in a state with rules that say otherwise. The Federal Trade Commission's consumer guidance on debts and deceased relatives explains what collectors may and may not say. Don't pay a debt from your own pocket until you know you owe it.

A one-page tracker

Account	Title	Contact	Death cert sent	Status

Keep it beside the phone. It turns a frightening pile of paperwork into a list you can work through.