Over the next 25 years, it’s estimated that 45 million U.S. households will transfer $68 trillion in wealth to heirs and charity. Baby boomers hold the lion’s share of that amount and are considered the wealthiest generation in American history.
This vast inheritance will generate an opportunity for heirs to make their dreams come true and for advisors to expand those relationships to serve the heirs of their current clients. Unfortunately, it will also generate a huge opportunity for criminals practicing a specialized type of identity theft: ghosting.
Deceased identity theft, more commonly known as “ghosting,” is the practice of stealing the identities of deceased persons for fraudulent purposes. Ghosting plays havoc with what’s already a difficult time for executors, heirs and advisors alike. Two-and-a-half million deceased identities are compromised by criminals each year.
Once the fraudulent identities are obtained, they’re used for a variety of purposes. Perpetrators open credit card accounts, obtain cell phone service, get access to financial assets, apply for driver’s licenses, get medical IDs and even file falsified tax returns in order to get refunds.
Usually, by the time the identity theft is discovered, a great deal of damage has been done. Accounts must be canceled. Creditors signed up by the criminals will have to be notified that the heirs aren’t responsible for those debts (which legally they’re not). The tangle of issues created can add months, or even years, to the settlement of an estate. Worse than any of this is the emotional stress caused by the unexpected trouble.
How Ghosting Happens
The time after a death leaves an estate vulnerable to attacks because executives and heirs are often unaware of ghosting. In the normal course of events, it can take up to six months for various organizations to be notified of a death, leaving illegal operators plenty of time to ply their trade. Obituaries are a favorite source of information for criminals to use. With a name, address and birth date, ghosting practitioners can obtain a person’s Social Security Number from illicit sources, sometimes for the bargain price of just $10. Another commonly mined source of information for criminals is social media accounts, as they also tend to contain the information that ghosting practitioners typically seek.
Criminals can also obtain Information from hospitals and funeral homes. And in the confusion of a death, ghosting can be even simpler. Criminals, having obtained the deceased’s address, can just go by the home and check the mailbox. Too often, the mail has gone uncollected for days and is just sitting in the box, credit card offers and all.
Many heirs are acting as executors for the first time and are ill-equipped to handle the aftermath of deceased identity theft. The number of entities that must be advised of the situation can be staggering. Copies of the death certificate must be sent to each credit-reporting bureau by certified mail to place a deceased alert on the credit report. Banks, brokerages, insurers, mortgage companies and credit card companies where the deceased had accounts must be notified. The Social Security Administration must be alerted, and so must the state’s Department of Motor Vehicles to cancel the driver’s license. The list goes on, and once all that’s done, the executor must continue to check the credit reports for months to ensure there’s no fraudulent activity. Finding all the correct organizations, discovering their contact information, and performing all the notifications is a vexing and time-consuming process, prone to human error.
Mitigating the Problem
Well-prepared advisors can position themselves as experts who help prevent deceased identity theft from occurring. They can add value by showing a commitment to serve the client’s heirs on their death. For example, they can meet directly with the heirs to discuss the history of the accounts being passed on as well as guiding them into the process of settling the estate. This kind of service extends the relationship past wealth management into a more holistic legacy planning approach, with the continued integrity of the client’s legacy at the center of it.
Some of the preventive measures that advisors can communicate to the heirs in such a meeting include:
- When cleaning out documents for the deceased, ensure that all the documents are shredded and not simply thrown out;
- Check and empty the contents of the mailbox daily;
- Forward mail if the deceased lived alone;
- Minimize the amount of information listed in an obituary, such as the recent deceased’s birth date, mother’s maiden name or similar types of personal information;
- Contact the Social Security Administration;
- Alert the various credit reporting bureaus and financial institutions; and
- Inform the Department of Motor Vehicles of the death.
While all these measures are a good way to mitigate deceased identity theft, they’re only the tip of the iceberg in terms of all the other organizations that will need to be informed. Adding to the complexity is the fact that this process requires quite a bit of legwork in terms of identifying all the organizations, tracking down the appropriate contact information and then knowing exactly what to include in the communications to initiate the account closure process correctly. Remember that time is of the essence in preventing ghosting, so the quicker this can be done, the better.
One value-add the advisor can introduce is to bring forth a solution that can automate, reduce timelines and greatly simplify the complex process of contacting all the pertinent organizations about a death, thereby reducing the risk of the deceased’s identity being used fraudulently.
Travis Harrelson, business development manager, Assurant Global Preneed, is an expert in wealth management issues related to ID theft at death and the solutions RIAs can leverage to support their clients.