Moving Forward Financially After the Death of Your Spouse
By Mark Yatros
The death of a spouse can be a devastating, life-changing event. And the added pressure of having to settle the estate and organize finances can be overwhelming. Fortunately, there are steps you can take – now and right after your spouse passes – to make dealing with these matters less complicated.
As much as we don’t want to think about it, most likely, one spouse will outlive the other, so it is best to prepare.
Before the death of either spouse
To ensure you are prepared should one of you pass away, you should:
Talk and plan – Regularly discuss your finances, so you both are up to date on all accounts. Together, you should create a plan of how you each move forward financially after one of you dies. It’s best to include your financial advisor in these discussions to be sure you have all the essential information you need. Plus, your advisor will be more ready to help you when a death occurs.
Share the info – In addition to your financial advisor, tell your grown children about your plans as well as the executor of your will or trust. Also, consider sharing the information with a close friend so they can help your children when the time comes.
Create a paper trail – All account numbers, passwords, security codes, PINs, and important papers should be kept in one central location, such as a fire safe in your home or a safe deposit box. Make sure your children, or whoever will execute your estate, knows where to find everything.
Update, update, update – Be sure your wills, trust, powers of attorney, healthcare directives, and beneficiaries are up to date. Confirm that all accounts are in both of your names and titled correctly.
Reserve your space at The Family Love Letter Workshop
Will your loved ones know your wishes if you unexpectedly become incapacitated or pass away?
To assist in your preparations, we are bringing Donna Pagano, co-creator of the Family Love Letter, to help you provide instructions.
The Family Love Letter organizes the paper trail you create over your lifetime. It attaches your “voice,” giving your loved ones the insight and direction you want to provide them at these challenging times. Without clarity of desire and specificity of information, families struggle about “what to do,” experience conflict, overlook assets, or make costly and irrevocable mistakes.
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Make the most of Social Security – After your spouse dies, you’ll want to maximize all sources of income, including social security. Speak with your advisor about the best option for claiming your Social Security and the steps you should take for any of your dependents if you have any.
Now comes the hard part
It's critical for you to organize your finances after your spouse's death and take ongoing steps to help secure your financial future and that of your family. If you and your spouse took the steps outlined above, things will be a bit easier. But, even if you didn’t, all will be well. Above all else, take things step-by-step, so you don’t get overwhelmed.
First, take a deep breath – Before you start handling the financial end of things, make sure to consider your own needs. The time right after the death of a spouse can be a blur of emotions, including shock, sadness, despair, anger, and denial. It's important to allow yourself the freedom to feel however you want to feel. You don't owe it to anyone to feel or act in a certain way.
Facing your loss can ultimately help you as you work to adapt to the new conditions of your life so that, in time, you can create something new. This period of adjustment, which can last for several years, is often a time of profound self-discovery. You may find yourself examining issues of identity, life meaning, and aging. During this time, it's important to surround yourself with people you trust — family, friends, support groups, professionals — who can offer support and advice that's in your best interest.
The short term: Steps to take after your spouse dies
There are several financial tasks that must be done in the weeks and months after a spouse's death. If some matters are too overwhelming to tackle alone, don't hesitate to ask family or friends for help.
Locate important documents and financial records – To settle your spouse's estate, you'll
need to locate many important documents. These include your spouse's will and other estate planning documents such as their trust, insurance policies, bank and brokerage statements, stock and bond certificates, deeds, Social Security number, birth and marriage certificates, and certified copies of the death certificate.
Set up a communications tracking and filing system – To help keep track of all the details, set up a system to record incoming and outgoing calls and mail. For phone calls, keep a notebook handy where you can write down the caller's name, the date, and the subject of the call. For mail, keep track of what you receive and whether a response is required by a certain date. Make a list of the names and phone numbers of the people and organizations you're dealing with and post it in a central location. Finally, create a filing system for important documents and correspondence with separate folders for different topics — insurance, government benefits, tax information, bank records, estate records, and so on.
Seek professional advice to settle the estate and file tax returns – Getting expert help from an attorney, accountant, and/or financial and tax professional can be invaluable during this stressful time. Consider bringing a family member or friend with you to meetings so you will have an extra pair of eyes and ears to process information.
An attorney can help you review your spouse's will and other estate planning documents and start estate settlement procedures. If you are named executor in the will (or if you are appointed as the personal representative), you will be responsible for carrying out the terms of the will and settling the estate. Settling the estate means following certain legal and administrative procedures to make sure that all debts of the estate are paid and that all assets are distributed to the rightful persons. An attorney can tell you what procedures to follow. A tax professional can help you file certain federal and state tax returns that may be due. A financial advisor can help you by conducting a comprehensive review of your financial situation and identifying any retirement and survivor benefits that may be available to you.
Apply for benefits – You'll need to contact several institutions for information on how you can file for benefits.
Life insurance: Life insurance benefits are not automatic; you must file a claim for them. This should be one of the first things you do. Ask your insurance agent to begin filing a claim (if you don't have an agent, contact the company directly). Most claims take only a few days to process.
Social Security Administration (SSA): Contact the SSA to see if you and/or your dependent children are eligible to file a claim for retirement, survivor, or death benefits.
Employers: Contact your spouse's most recent and past employers to find out if you are eligible for any company benefits. If your spouse was a federal, state, or local employee or in the military, you may be eligible for government-sponsored survivor benefits.
Update account names – You may need to contact financial institutions to change account names and/or update contact information.
Evaluate short-term expenses – You may have immediate expenses to take care of, such as funeral costs or outstanding debts your spouse may have incurred. If you're waiting for insurance proceeds or estate settlement money, you can use credit cards for certain expenses, or you can try to negotiate with creditors to allow you to postpone payment for 30 days or more, if necessary. Make sure you have one or more credit cards in your name and, when you can, order a free copy of your credit report and review it for accuracy.
Avoid hasty decisions – For discretionary financial decisions, go at your own pace. For example, don't commit to moving from your current home until you can make a decision based on reason instead of emotion.
Don't spend money impulsively – Don't let anyone pressure you to sell or give away your spouse's possessions. Find out where you stand financially before you make any large purchases, sell property, or loan money to others.
Moving ahead: Working with a financial advisor
After the initial legal and financial matters related to your spouse's death are handled, you'll enter a transition phase when you'll be adjusting to your new financial circumstances. As you navigate this terrain, you might find it helpful to work with a financial professional.
A financial advisor can help you by:
suggesting ways to invest any life insurance proceeds or estate settlement money you receive.
calculating your net worth by identifying your assets and liabilities. This calculation will give you an understanding of how you'll meet your short- and long-term spending needs.
establishing a budget by looking at your monthly income and routine living expenses. Remember, a budget isn’t a one-time deal. You will need to adjust your budget as your circumstances change.
helping you update beneficiary designations on your life insurance, retirement plan, IRA, employee benefits, annuity, and other accounts.
reviewing your investment portfolio at least annually (please remember, there is no guarantee that working with a financial professional will improve investment results).
updating your estate planning documents (e.g., will, trust, health-care directives, power of attorney) to reflect your new circumstances and your wishes for the disbursement of your estate (e.g., gifts to children, grandchildren, charities).
updating your insurance coverage to reflect your new situation.
As you move forward with your life, remember that sometimes it may be two steps forward and one step back. Take comfort in the fact that you are doing the best you can to make the best decisions — financial and otherwise — for yourself and your family.
You can schedule a free, no-obligation consultation with Allegiant Wealth Strategies’ team of experienced financial advisors here.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Allegiant Wealth Strategies offers securities and advisory services through Commonwealth Financial Network, Member FINRA/SIPC. Allegiant Wealth Strategies has offices in Battle Creek and Portage, Michigan, from which we serve Calhoun County, Kalamazoo County, and Kent County (Grand Rapids). The Allegiant Wealth Strategies team offers no-obligation financial planning consultations; call 269-218-2100 or contact us here.