Money after a death
The payment that arrives after the death, and why it goes back
Social Security pays a month behind. The money that arrives in April is April’s payment for March, and if the person died in March it doesn’t belong to the estate.
This is a United States system, so what follows applies to American accounts.
Nobody explains it at the time, and the money usually turns up in an account somebody has already started paying the funeral out of.
The month of death isn’t paid at all
Even if the death was on the last day of the month. A death on 31 March means March isn’t covered, and the payment that lands in April has to go back.
If the money came by direct deposit, the bank will usually take it back on its own once it is told. Sometimes that happens within days. Sometimes it happens weeks later, out of an account the family has been using. That’s how people end up overdrawn in the worst two weeks of their year.
The instruction from Social Security is straightforward. Tell the bank, ask it to return the payment, and don’t spend it in the meantime.
There’s a payment of $255, and a deadline on it
A one-off lump sum of $255 goes to a surviving spouse who was living in the same household, or, where there’s no qualifying spouse, to an eligible child.
A divorced spouse can’t receive it, however long the marriage was.
The deadline is two years from the date of death. Miss it and the payment is gone, and there’s no appeal to make. It’s a small sum against the cost of a funeral, and it is worth having.
One account freezes and one carries on
An account in one name alone is generally frozen once the bank learns of the death, and stays frozen until whoever is dealing with the estate can show they’re entitled to act. That can take weeks.
A joint account usually carries on, because the other holder is still a living owner of it. The direct debits keep running. The heating stays on.
Families discover which of the two they’re dealing with at the worst possible moment, standing at a counter. It is knowable in advance, and it takes one question.
The pension decision nobody can revisit
Occupational pensions often carry a survivor option. It’s chosen once, usually decades before it matters, and taking it means a smaller monthly payment in exchange for something continuing after death.
Somebody who took it leaves an income behind. Somebody who didn’t leaves nothing, and no amount of paperwork afterwards changes that. It’s the one decision on this page that can’t be revisited.
A household running on two pensions where one of them ends is a very different household. Knowing which kind you have is worth an afternoon, years before anybody needs it.
- The bank goes by whose name is on the account
- There is money sitting with the state, waiting for somebody to ask for it
Sources
What comes in each month, from where, and who else is on the account. All of it answerable today by the person who knows. Here is a finished binder, free to read: the example binder.