There are several important financial decisions that need to be made after the death of a spouse. These steps will help you set up your estate and secure your finances in the short and long term after losing a loved one.
While some decisions need to be made quickly, make sure that you take time to understand the impact of each choice on your retirement and other major financial goals.
1. Get organized
- Start with the basics. In the short term, focus on gaining a clear understanding of your assets, liabilities and cash flow. Keep a log of your financial actions and conversations over the first few months.
- Request death certificate copies. Get 10 to 15 copies of the death certificate from your funeral director or health provider. Several copies will be needed for potential financial, legal and estate planning amendments and updates.
- Address estate plans. You’ve likely inherited a large portion of your spouse's assets. Gather relevant estate planning documents, such as a will or trust.
- Contact credit bureaus. Notify Equifax, Experian or TransUnion that your spouse is deceased, and any accounts held in their name should be closed. You may also want to request a copy of your spouse’s credit report to check for unknown debt.
- Don’t forget your spouse’s digital assets. If you don’t have their online account usernames and passwords stored on a secure document or via password management software like LastPass, these steps can help you access their digital assets.
- Meet with trusted advisors. Sit down with your financial professional, tax advisor and/or attorney before making any changes to accounts or exercising beneficiary or death claims. They may have options you’re not aware of that could help you from a tax perspective when claiming assets.
2. Review your current financial situation
- Calculate total assets. Make sure you factor in your checking, savings and investment accounts, as well as your home, vehicles, any real estate or land. Next, subtract any existing liabilities, including mortgage, auto debt, credit card debt and other obligations. A financial professional can help you manage this process.
- Update titles on accounts. Change any titles that were jointly held, such as on investment and credit accounts, as well as your home or vehicle. One exception is bank accounts; consider keeping your spouse’s name on the account for a minimum of six months in case any checks come in.
- Transition or rollover investment accounts. If you’re the designated beneficiary, qualified accounts held by your spouse, such as any 401(k) or IRAs, can potentially be transitioned and rolled into your qualified accounts. Other options may exist, such as arranging for an inherited IRA.
- Remember taxes. You’ll need to file taxes for your spouse the year of their death.
- Be cautious about selling. Although selling your home may be a consideration, make sure to proceed carefully early in the process. Leaving your home can bring with it an additional emotional toll on you and your family. Also resist the desire to pay off your mortgage immediately. Having ample cash on hand in the near term is likely much more important to your overall financial well-being.
3. Factor in insurance
- Contact your spouse’s employer. If your spouse’s workplace provided health insurance or life insurance benefits for your family, contact the human resources department about settling the current policies and receiving benefits.
- Contact insurance companies. Talk with your insurance agents about any death benefits for beneficiaries.
4. Understand third party benefits
- Notify the Social Security Administration. There are pros and cons to when you start receiving your benefits. For instance, if you’re the widow or widower of a spouse who worked long enough to qualify for Social Security benefits, you can start receiving the full survivor benefit at your “full retirement age” or as early as age 60 (age 50 if you’re disabled). Your benefits will be reduced if you take them early, but they could also provide the cash flow you need. Benefits may also be available if you’re caring for minor children.
- Check into veteran’s benefits, if applicable. The Veterans Benefits Administration has information on benefits and services available to spouses.
5. Ask for assistance
- Lean on your support system. Surround yourself with loved ones who can listen to you and help you process your decisions.
- Work with your estate planning attorney. They can assist you with any probate or estate settlement process issues.
- Work with your tax advisor. They can advise you on the documents you’ll need for the current and following year’s tax filing and help you prepare the tax documents for filing.
- Work with your financial professional. They can update your financial plan, accounting for your new income and expenses. They can also help inform and guide your decisions related to insurance policies, investments and benefits you’ve received, and help you avoid solicitors and financial scams that prey upon new widows and widowers.
The professionals you select should work together to make certain you’re fully informed on important decisions and ensure your requests are followed through on during the process. They can help ease a great deal of the stress involved in dealing with your short- and long-term needs.
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