When a Parent Passes Away: What to Do (and What Not to Forget)

When a parent passes away, the emotional weight can be overwhelming—but at some point, the practical tasks start piling up. Financial accounts need attention. Benefits may need to be claimed. Tax and estate issues need sorting out. It’s a lot, especially when navigating it for the first time. This guide breaks down the key areas to focus on—from cash flow and taxes to digital accounts and investments—so you can feel more organized during a disorganized time.

1. Cash Flow: Who Needs What (and When)?

If your surviving parent depends on income from Social Security, a pension, or an annuity, you'll want to determine what continues, stops, and shifts. For example:

• Social Security: Surviving spouses (and sometimes dependent children) might be eligible for survivor benefits.

• Pensions and Annuities: Some stop altogether, some continue at a reduced amount, and others require beneficiary action. Also, don’t forget to check whether your parent was taking the required minimum distributions (RMDs). If they passed away later in the year, someone (likely the beneficiary) might need to complete that RMD before December 31.

  
  

2. Estate Settlement: The Legal Stuff

Even if your parent had an immaculate file cabinet labeled “In Case of My Death,” there’s still detective work to do. A few key questions:

• Were there jointly owned assets that need updating?

• Should any beneficiaries consider disclaiming inherited assets to pass them along to the next generation (must be done within 9 months)?

• Could there be unclaimed property—like forgotten savings bonds, safe deposit boxes, or even airline miles?

• Federal estate taxes could be an issue if the estate is sizable (over $13.99 million for individuals or $27.98 million for couples in 2025). Even if taxes aren’t due, it might still be wise to file IRS Form 706 to preserve portability of any unused estate tax exemption.

  
  

3. Insurance & Employment Perks

If your parent was still working (or recently retired), check with their employer or union. There might be:

• Group life insurance

• Final paychecks or vacation payouts

• Stock options, RSUs, or deferred comp

• Also, some life insurance policies include accidental death riders or offer additional benefits through professional associations. And if your parent was a veteran, burial and survivor benefits may be available.

  
  

4. Taxes (Because, of Course)

• If your parents filed taxes jointly, the surviving spouse can continue using that status for the year of death.

• If they had capital loss carryforwards, those can be used on their final return—but are lost after that.

• The Qualifying Widow(er) status may apply for two years after death if there’s a dependent child.

• Don’t forget to confirm all prior tax filings were completed and notify the IRS and credit bureaus to help prevent identity theft.

  
  

5. Assets & Investments: Step Up and Take Stock

Many assets—like homes or brokerage accounts—receive a step-up in cost basis at death. This means that the asset's cost basis is adjusted to its current market value at the time of the owner's death, which can reduce capital gains taxes if sold later. Retirement accounts like IRAs and 401(k)s do not get that step-up. Non-qualified annuities can come with tax complications if beneficiaries take distributions.

If your parent had investment losses, the surviving spouse might want to realize capital gains before year-end to make use of those losses. Realizing capital gains involves selling an investment that has increased in value, which can offset the losses and reduce your tax liability. And don’t forget to consider how this new reality might change someone’s investment strategy or risk tolerance.

6. Digital Assets, Dogs, and … Details

Your parent might have left behind online photo accounts, cloud subscriptions, crypto wallets, or other digital assets you’ll want to preserve—or shut down. Cancel email and social media accounts, update their driver’s license records, and notify the election board and credit agencies to help guard against fraud. And while you’re at it, this might be a good time to review and update your estate plan, especially if you’re inheriting assets or responsibilities you hadn’t anticipated.

Final Thoughts

Sorting through a parent’s financial life isn’t easy, but doing so with care helps protect their legacy—and can give you peace of mind in the process. Tackle the big issues first, ask for help where needed, and remember, it's crucial to take care of yourself along the way. Your well-being is a priority, and it's okay to take a step back when things get overwhelming.

WHWM is here to guide you in identifying your priorities, developing a plan, and making adjustments along the way. By choosing WHWM, you're partnering with our Founder and President, Stephen Bodwell. As a CPA and CFP® professional, Stephen is committed to helping you achieve your financial goals and aspirations. Don't hesitate to take the next step toward realizing your dreams. Schedule your complimentary, no-obligation 30-minute consultation with Stephen. 

Walnut Hill Wealth Management, LLC (“WHWM”) is a registered investment advisor offering advisory services in the State of Texas and in other jurisdictions where exempt. The information provided is as of the date indicated and is subject to change.