As you process your mourning, there are several important financial decisions that need to be made after the death of a spouse. These choices 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 will 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.
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. Additionally, the following steps are a good starting point.
- Lean on your support system. Surround yourself with loved ones who can listen to you and help you process your decisions.
- Get death certificate copies. Request 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 have likely inherited a large portion of your spouse's assets. An estate-planning attorney can help you with any probate and estate settlement process issues.
- Get assistance. Seek out the consultation of a financial professional and discuss any concerns you have with immediate cash-flow needs. They can also help you avoid solicitors and financial scams that prey upon new widows and widowers.
Review your current financial situation
Take a snapshot of your financial picture. Calculate total assets, including your home, any real estate or land, as well as your checking, savings and investment accounts. Next, subtract any existing liabilities, including mortgage, auto debt, credit card debt and other obligations. A financial professional can help you manage this process.
- Review and re-title assets as needed. Revisit and re-title the ownership on accounts and investments that were jointly held. If you are 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. Consult your financial and tax professionals to understand the impact of these decisions.
- Remember your taxes. Ask your CPA or tax professional which documents you will need for the current and following year’s tax filing.
- 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.
Factor in health insurance and other insurance policies
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.
- Go over insurance policies.Contact your insurance agent for assistance in receiving any death benefit on additional life insurance policies. Some professionals may advise you to roll the benefit proceeds into other products, namely other insurance or an annuity.
- Don’t make decisions hastily. Request the help of a financial professional who understands your goals and who has no personal financial interest in your decision.
Understand Social Security death benefits from a spouse
There are pros and cons to when you start receiving your benefits. For instance, if you are 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 consider taking it as early as age 60 (age 50 if you are 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 are caring for minor children.
Consider talking through your choices with a financial professional.
Find professional assistance
A financial professional, attorney and tax preparer can help ease a great deal of the stress involved in dealing with your short- and long-term needs. 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.
Learn how we can help you navigate financial challenges.