Navigating Grief and Benefits When Both Parents Die

J.C. and his only sibling, his sister, were overwhelmed with grief and dealing with the tasks associated with both deaths (their house, car, bills, canceling services, and more).

J.C. contacted the Social Security Administration on December 14 to tell it of the deaths of his parents, but he was a day late, requiring his dad to return the benefits sent to his mom for her November payment on December 13.

Because his dad had died and J.C. was over the age of 18, he and his sibling were not entitled to receive his mom’s death benefit ($255).

Because he reported his dad’s death “too early,” he had to file form SSA-1274 to receive his dad’s normal benefit for November. His dad had not yet received his direct deposit.

J.C. believes he won’t receive this benefit until April, raising these additional issues:

Does he need to file a tax return?

Is this benefit taxable to his dad’s estate or him?

If he had notified Social Security of his mom’s death on December 1 before she received her November payment, his dad would have received the death benefit.

If he had notified Social Security of his dad’s death on January 2, his dad’s November benefit would have been received in the ordinary course, avoiding the filing of the SSA-1274 and any potential tax filing for 2024.

You can find the notification requirements of the SSA here.

How common is it for a married couple to die within a short time, triggering these issues?

A common risk

Research paints a worrying picture.

Losing a spouse significantly increases the risk of death for the surviving partner. The loss of a spouse makes men 70% more likely to die within a year.

The reasons for this increased risk are varied, ranging from pre-existing health conditions exacerbated by emotional stress to increased social isolation and neglectful self-care. This heightened vulnerability underscores the importance of immediate care and support for the surviving parent.

Social Security: Stepping up while you grieve

Social Security recognizes the potential burden and financial strain placed on children who lose both parents. To ensure they receive timely benefits, specific notification requirements exist:

Promptness is key: It's crucial to report both parents' deaths to the Social Security Administration (SSA) as soon as possible. While funeral homes often do this, informing the SSA directly ensures prompt processing and minimizes delays in benefit payments. You can report deaths online, by phone, or at your local SSA office.

Gathering the essentials: Have important documents readily available during your notification. This includes death certificates for both parents, Social Security numbers for everyone involved (deceased parents and any eligible children), and proof of marriage for the surviving spouse.

Who qualifies for survivor benefits? Children under 18 are eligible for survivor benefits based on the higher-earning parent's Social Security record. Full-time students between 18 and 19, disabled adult children, and stepchildren or adopted children under certain circumstances may also qualify.

Claiming the right benefits: Applying for survivor benefits can be done online, by phone, or in person. Contact the SSA for the most appropriate method for your situation.

Beyond Social Security: While receiving Social Security payments provides crucial financial support, explore other potential sources of aid. This could include life-insurance policies, retirement accounts, or any disability benefits one parent may have received.

Final thoughts

Losing both parents is profound, and navigating the practicalities during a time of grief can feel impossible. As financial advisors, you can be there for your clients in their time of need. By understanding the potential Social Security pitfalls and recommending proactive steps, you can ensure your clients receive the financial support they deserve while prioritizing their well-being and grief journey.

Dan coaches evidence-based financial advisors on how to convert more prospects into clients. His digital marketing firm is a leading provider of SEO, website design, branding, content marketing, and video production services to financial advisors worldwide.

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