When a loved one dies, grief is often accompanied by urgent financial pressure. Hospital bills must be settled, funeral arrangements begin, and relatives gather, all while families are forced to make quick decisions about money and property.
In that emotionally charged moment, financial advisers warn, many grieving families make costly mistakes that can affect their stability long after the funeral.
“When one loses a loved one, some of the main mistakes people make are emotional and rushed decisions,” says Mary Mwangi, a Nairobi-based financial adviser.
These can include quickly selling assets to cover immediate expenses, informally dividing property among relatives without following legal succession procedures, or spending insurance and pension payouts without a structured plan.
According to Ms Mwangi, the period immediately after a death is financially high risk because decisions are driven by shock and pressure.
“Most decisions will be emotional,” she says, noting that families often overfund hospital bills and funerals while losing sight of long-term stability.
In some cases, relatives exert influence, when many families are navigating the legal processes of succession for the first time.
Grief itself impairs judgment.
“Your mental space is not okay,” Ms Mwangi says. “You can make impulsive decisions based on the emotions of the moment, or you avoid making difficult decisions altogether.” That combination, she adds, can result in actions that have consequences long after the funeral tents come down.
Among the most damaging early moves is the hurried sale of land, vehicles or business assets. Ms Mwangi strongly cautions against this.
“When you sell quickly, you are probably selling below market value,” she says. “You attract opportunists who take advantage of dire situations.”
Grief can cloud judgment, leaving families vulnerable to costly financial mistakes in the days and weeks after a loved one dies.
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She also warns against withdrawing all savings or taking large loans to fund funerals in pursuit of what families perceive as a “befitting” send-off.
“These are emotional decisions. The effects remain with the family much later.”
Improper access to a deceased person’s finances can also create legal trouble. Ms Mwangi notes that continuing to use a deceased person’s ATM card because you know the PIN, driving their vehicle without initiating transfer processes, or verbally dividing assets among relatives without formal documentation can violate succession laws.
“There is a legal process that must be followed,” she stresses. “Some of these actions can end up being illegal.”
Disputes among relatives can further erode estate value. “When disputes arise, bank accounts and assets can be frozen for years,” Ms Mwangi says.
She adds that businesses may deteriorate if leadership is interrupted, and properties may ultimately be sold at a loss. In cases where there is no will, she adds, estates can become tied up in court for extended periods, sometimes sidelining widows and children as other relatives contest inheritance.
Before touching bank accounts, investments or property, Ms Mwangi advises families to obtain the necessary paperwork, including death certificates, and formally initiate succession proceedings.
Where there is a will, a grant of probate is required; where there is none, letters of administration must be obtained.
Banks, pension administrators and other institutions must be formally notified. Insurance payouts, however, are typically paid directly to named beneficiaries and do not pass through the succession process.
Lump-sum payments such as insurance proceeds or pension benefits present another area of risk. Ms Mwangi says families often make large, immediate purchases, upgrade lifestyles or start unfamiliar businesses without proper planning.
“When money is received in a lump sum, it needs to be very well managed. Otherwise it can disappear very fast,” she cautions.
Her advice is simple: “Stack that money away. Put it in a safe, low-risk vehicle like a money market fund and give yourself time to grieve. When you have mental clarity, then you can make structured decisions.”
She also urges families to seek professional guidance early. “Immediately after the burial, any transaction should be through guidance of a financial adviser and a legal adviser,” she says.
Clear written agreements, proper documentation and an understanding of tax obligations are essential safeguards against exploitation.
Monicah Mwaniki, co-founder and CEO of ArvoCap Asset Managers, agrees that grief is not a neutral environment for financial decision-making.
Grief, she explains, affects concentration, memory and judgment, narrowing focus to immediate relief rather than long-term stability. She recalls a family that withdrew a substantial portion of long-term investments within days of losing their primary breadwinner to meet funeral and hospital expenses.
Arvocap Asset Managers CEO Monicah Mwaniki during an interview at her home on October 1, 2024.
Photo credit: File | Nation Media Group
“At the time, it felt like the only available solution,” she says. “Months later, rebuilding that financial cushion proved more difficult than expected.”
Without proper estate planning structures such as wills, trusts and updated beneficiary nominations, confusion and conflict can follow.
“Succession disputes can last years, draining both estate value and family relationships,” Ms Mwaniki notes. Fraudsters are also alert to vulnerability during such periods, sometimes offering to fast-track insurance payouts for a fee or persuading beneficiaries to invest settlement money in questionable ventures.
Preparation, both advisers agree, is the most effective safeguard.
Ms Mwangi recommends life insurance, a clearly written will, medical cover and, where appropriate, trust structures to ensure smooth wealth transfer.
Ms Mwaniki emphasises documentation and communication. “When documentation is clear, structures are defined and risks are insured, families are left with direction rather than confusion,” she says.
Grief, she adds, is heavy enough on its own. With thoughtful planning and measured decisions, families can avoid compounding that burden with financial missteps that linger long after the condolences have faded.
