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Protecting the dead against ID theft

Database breaches and hacking attacks haven't just affected millions of living Americans. The identities of more than 2 million dead people are stolen each year, potentially creating havoc for their heirs.

Nearly 800,000 of the deceased are deliberately targeted for identity theft, while another 1.6 million credit applications filed by scam artists use fabricated Social Security numbers that inadvertently match those of dead people, according to a 2012 study by ID Analytics. Criminals use identities to apply for credit cards and loans, get services such as utilities, and steal tax refunds.

Survivors typically aren't held accountable for fraud, but may have to deal with the fallout including collection attempts, lawsuits and battles with the IRS to get the stolen refunds back.

In the past, when the risk of identity theft was smaller, it might have been acceptable to wait for the credit bureaus to learn of someone's passing through the Social Security Death Index database. Creditors also notify the bureaus when they're informed of deaths.

These days, though, you'll want to be more proactive. The person responsible for wrapping up a dead person's estate -- usually called an executor or a trustee, in the case of a living trust -- should notify each of the deceased's financial institutions and creditors of the death, as well as all three credit bureaus.

Actual death certificates, rather than copies, should be sent certified mail, return receipt requested, to each of these entities informing them of the death. The credit bureaus should be asked to put a "deceased alert" on the person's credit files. Such a statement is equivalent to having a credit or security freeze on the credit reports.

"It's extraordinarily unlikely that any lender would ignore such a statement," said Rod Griffin, director of consumer education for Experian.

The addresses to use include:

TransUnion LLC P.O. Box 2000 Chester, PA 19022

Experian P.O. Box 2002 Allen, TX 75013

Equifax P.O. Box 740260 Atlanta, GA 30374

Other steps that can help prevent ID theft after someone dies:

1. Notify the state motor vehicles department of the death so that the person's driver's license can be canceled and not reissued to an identity thief.

2. Monitor the deceased's credit report for a year or more. The executor or trustee can access one free copy of each bureau's report annually at www.annualcreditreport.com.

3. File the person's final tax return as early as possible. Tax return fraud is hard to prevent, but an early filing can beat the bad guys to the punch. In some cases, taxpayers and executors may be able to get a personal identification number to help thwart bogus returns. The IRS has more information at http://www.irs.gov/Individuals/Get-An-Identity-Protection-PIN.