The death of a loved one is a very traumatic experience. Credit concerns and/or identity theft are nowhere near the top of your list of concerns when you lose a spouse or a child — nor should they be. However, there are important steps that you must take quickly to avoid identity theft and fraud perpetrated in your late loved one's name. You have enough things to consider without the added burden of unknown accounts and unexpected bills.
You are particularly vulnerable during the grieving period, especially when you may not be able to distinguish a valid account from a fraudulent new account. The challenge is even greater when a deceased spouse handled most or all of the family money matters, or the accounts were only in the decedent's name.
Thieves can take advantage of death notices and fish for other information on your spouse or child, such as a Social Security number. The Social Security number may be accessible in several ways — for example, through genealogy sites that use the Social Security Death Index that contains cumulative information from the Social Security Administration (SSA) files. In some unfortunate cases, unscrupulous family members with access to more pertinent information have been known to take advantage of the situation.
However they acquire it, given enough personal information, thieves can open accounts and cause damage before you have time to respond. Personal Finance Expert Jordan Goodman notes that once thieves have your information, "…they go and buy things in your name very, very quickly and it can really ruin your credit very badly."
Individual creditors and lenders need to be notified of your spouse's death, but it makes sense to start with the three major credit bureaus: Experian, Equifax and TransUnion. Start by notifying each agency by phone. To notify the credit bureaus fully, you will need to follow up with a letter to each credit bureau informing the bureau of your spouse's death. You must include a copy of the death certificate as well as proof of marriage (or proof as the executor of the will).
The letter should identify you as the surviving spouse and include the necessary personal information for contact (full name, address, phone number and e-mail address). Specifically ask for a deceased notice to be added to your late spouse's credit report with a specific statement to not issue credit in his or her name. As a further layer of protection, ask for a copy of your spouse's credit report so that you can verify all accounts, and ask to be notified of any applications for new credit in his or her name.
In the case of a deceased child, according to TransUnion, the bureau will mail a copy of the credit file (if one exists) to you upon receipt of either a birth certificate or a death certificate that names you as a requestor. You can follow the above path to seal off an existing credit report.
Unfortunately, when the child's identity offers a blank financial slate, thieves have multiple paths toward fraud. They can create new accounts without your knowledge, or claim your deceased child as their dependent in a fraudulent tax return for the tax year of his or her death. Follow-up contact with the credit bureaus may be required to make sure a fraudulent account did not appear before the Social Security number was properly classified.
The SSA must be notified of your loved one's death in order to properly classify the Social Security number, update the documentation, and pay benefits as appropriate. Funeral homes often notify the SSA, but it makes sense to do it yourself to verify that the task has been completed. The death may be reported by calling Social Security over the phone during typical business hours.
In turn, SSA notifies the credit bureaus of your loved one's passing, but there can be a time lag involved and mistakes can be made. Again, it is better to notify the credit bureaus yourself.
You will also need to notify any creditors (credit card accounts, monthly bill issuers, lenders, etc.) of your spouse's death. Before doing so, identify whether the account is a joint account or held solely in your spouse's name, and decide what you plan to do with the account (close it, transfer it into your name, open a new account only in your name, or seek another avenue). If your late child had any accounts, the same principles apply.
You are still responsible for debts on joint accounts, and in community property states, any accounts opened during the marriage are considered joint accounts. To avoid being saddled with debt, resolve each account individually. Set up the payment method for any accounts that remain open. Make sure that any closed accounts are paid off in full, including any lagging interest. It's easy to forget a payment during this time, and even a single missed payment can affect your credit score when you least can afford it.
Use the MoneyTips credit monitoring service to further protect you during the transition period. Goodman suggests that when looking for a protection service, make sure that they are "protecting you in advance" and that "after there is a problem, they are going to fix it." If you are going to seek outside help, make sure you are getting both preventative and corrective services for your money.
It's difficult to focus on adjusting to life without your beloved, but it's even more difficult to do so when thieves are trying to take advantage of your situation. Preventative action can save you from days and even months of aggravation at a time when you can least afford it — both emotionally and financially.
If you would like to prevent identity theft, check out our credit monitoring service.