Death and Credit – Important Info You Need to Know

When a family member passes away, there are certain steps that should be taken to alert the passing to the major credit reporting agencies and to assess whether a freeze, or lifting a freeze, on their credit is needed.

Swift action is important when it comes to a decedent’s credit. Why? Because if the major credit reporting agencies, along with the financial institutions where your deceased family member had open checking accounts, saving accounts, retirement accounts, etc. are not timely notified, your loved one’s accounts would remain open and could heighten the risk of identity theft and other issues. Suffice it to say, when someone passes on, their credit reports aren’t closed automatically. There needs to be action taken by a personal representative to ensure the accounts are closed properly.

What Happens When Credit Reporting Agencies are Notified of a Death

Credit reporting agencies are notified when someone passes on in one of two ways: (i) they receive a notice from the Social Security Administration or (ii) they are notified by the executor of the decedent’s estate.

Regarding the Social Security Administration, in most instances, the funeral director will notify the SSA of the death. However, to ensure this done, someone will need to give the decedent’s Social Security Number to the funeral director. From there, the SSA will inform the credit reporting agencies and lenders.

Once the three major credit bureaus (i.e. Equifax, Experian and TransUnion) are notified someone has passed on, their credit reports are sealed, and a death notice is placed on them.

Of the two, the most effective and efficient notification option is having an estate executor notify the reporting agencies. This will help expedite the sealing and death notice process, rather than waiting for a large government beauacracy to accomplish the notification.

How an Estate Executor Should Notify Credit Reporting Agencies of a Death

If you are the executor of an estate or other court-appointed designee, here are the steps to take to notify the credit reporting agencies of a death:

1. Contact each of three major credit bureaus and ask a representative what needs to be done to have a death notice placed on the decedent’s credit reports. A death notice flags a person’s credit reports as “deceased – do not issue credit.” If someone attempts to use the deceased person’s information to apply for credit, the notice should be displayed informing the creditor the person is deceased.

2. Make sure to compile necessary legal and financial paperwork, including verification that you are an authorized representative of the decedent empowered to initiate the death notice request. The documents necessary to get the process started will vary, based on your relationship with the deceased and based on the credit bureau. In most instances, a credit reporting agency will ask for the following information:

  • The decedent’s full legal name
  • The decedent’s Social Security number
  • The decedent’s date of birth
  • The decedent’s date of death
  • An official copy of the death certificate
  • Copies of any required legal documents
  • Your full name
  • Your address (to send confirmation of death notice placement)

If you are also requesting a copy of the decedent’s credit report, you will need a copy of a government-issued ID, such as a driver’s license.

3. Submit the required documents to the credit bureaus. Consider making copies of everything you send and sending the documents via certified mail.

4. Review the decedent’s credit reports to get a better sense of what accounts are open, their status, the balances, etc.

What If a Credit Report Freeze Was in Place for a Minor and the Parents Pass On?

More parents are starting to put credit freezes on their children’s credit record because they are prime targets for identity theft via the web. So what happens if the freeze was initiated by the parents and they suddenly pass away? This interesting question was recently posed by one of my clients. He wanted to now who would have the authority to lift the freeze on his child’s credit report. Answer: In this scenario, the guardian selected by the parent via their estate plan would be vested with the authority to lift the credit report freeze.

Contact InSight Law Today

As you can see, there are numerous action items that need to be completed when someone passes away. The entire process can be quite daunting and overwhelming. This is why it makes sense to sit down with an experienced trust and estate planning attorney to discuss these scenarios, ways to streamline the process, and strategies for developing an effective estate plan that fits your unique situation. Contact InSight Law today to learn more.