Losing a spouse may be one of the most difficult experiences you’ll ever have in life. No one is ever ready for the emotional and physical toll it can take on your body. In the midst of grieving, many times, the surviving spouse is faced with countless financial decisions and unexpected expenses that must be dealt with right away.
It can be overwhelming, to say the least. Widows need to consider the importance of risk management and estate planning, but it’s something they shouldn’t have to figure out on their own. At Align Wealth Partners, we work with a lot of widows who are struggling with what to do first. So we’ve compiled a list of 10 financial tips to help surviving spouses get through this tough period and rebuild their life.
1. Press the Pause Button
The time immediately following a spouse’s death is arguably one of the most difficult times to get through. It may seem as though there are a million decisions to make and your attention can be pulled in many different directions.
So, we suggest taking a moment to stop and breathe. To avoid hastily making major financial decisions that can negatively impact you, focus on the most important things first. After everything has settled down and you’ve had time to grieve, then you can focus on other financial issues.
2. Assemble a Team of Professionals
As you settle your spouse’s affairs, you’ll benefit greatly from having a team of professionals there to help you every step of the way.
A financial advisor can help you assess your current financial situation, consider the importance of risk management and estate planning, create a new financial plan and then implement it. Think of a financial advisor as your coach and accountability partner, and make sure you choose an advisor who has experience working with widows.
An attorney can help guide you through the probate process, check estate planning documents and help you update your will and powers of attorney. If the financial advisory firm you are working with does not have an estate attorney in house, ask your financial advisor for a recommendation – someone he or she works with often. When all of your financial planning needs can be coordinated under one roof, making sure everything on your list is taken care of can be an easier task.
A certified public accountant can help you maximize deductions, sort through estate tax obligations and file your own taxes. Again, see if your financial advisor can help you choose someone to work with or offers these services in house.
Looking for help with your finances? Align Wealth Partners works with many widows, helping them adapt to their new life. Contact us to see how we can help you too.
3. Gather Financial Documents
Gather any important financial documents you may need to settle your spouse’s affairs. These could be documents that were in your name, your spouse’s name or both of your names.
Some examples include:
- Estate planning documents (will or trust)
- Certificates (birth, marriage, divorce and marriage certificates)
- Financial documents (retirement accounts, insurance policies, tax returns, bank accounts, etc.)
4. Initiate the Probate Process
Any estate without a named beneficiary may have to pass through probate – the legal process of distributing property and assets. The executor of the estate, which could be you, initiates the process and then the probate court oversees it. While probate can be a lengthy process, it includes 4 main stages:
- Stage 1: The executor of the estate files a petition with the probate court and notifies the beneficiaries
- Stage 2: Creditors of the estate are notified and property inventory is taken
- Stage 3: The deceased’s debts and taxes are paid
- Stage 4: Assets are distributed to beneficiaries
5. Handle Life Insurance
Your spouse’s life insurance policies most likely came from two places: An insurance agent or an employer. If the insurance policy was through an insurance agent, contact him or her about your spouse’s passing. The agent should help you start the paperwork and get the process going. If your spouse had an insurance policy through his or her employer, call the human resources department to get started.
Note: If the insurance agent or anyone else tries to sell you other insurance products such as a variable annuity, talk to a financial advisor first to see if this is the best decision for you.
6. Look Into Survivor Benefits
If your spouse had a pension plan, you may be entitled to survivor benefits – a benefit option that lets you continue to receive your spouse’s monthly benefits for the rest of your life.
You may also be eligible for certain Social Security benefits. If you had reached retirement age at the time of your spouse’s death, for example, you can receive 100 percent of your late spouse’s Social Security benefit. You may also be eligible for a one-time death benefit from Social Security – currently a lump-sum of $255.
If your spouse received any type of veteran benefits, contact the Veterans Administration to see what survivor benefits may be available to you.
Note: Whatever you do, don’t cash any benefit checks once your spouse passes before talking to your financial advisor. You’ll most likely have to pay that money back, so hold on to the checks for now.
7. Decide What to Do With Your Inheritance
Certain investment strategies may have worked when your spouse was still alive, but now that you’re on your own, you may need to adjust the investment strategy to suit your new financial goals.
If you received non-qualified annuities or a retirement account upon your spouse’s passing, you may be confused about what to do with it. You may have the option of rolling it over into an existing account, taking a lump-sum payout or annuitizing.
Family and friends may try to offer you sound advice, but be wary. Don’t rush to make any decisions without consulting a trusted professional first.
8. Get Financially Organized
If your marriage was like many, one spouse took on the role of managing the finances and paying the bills. If you weren’t the one who oversaw that task, don’t panic. There may be a slight learning curve as you learn the ropes, but you’ll get there.
Start by assessing your current financial picture. Calculate your new sources of income (your salary, your spouse’s benefits, etc.). Once you know what your new income will be, calculate any new debt payments you may have (such as funeral costs). With these numbers in hand, create a new monthly budget. A financial advisor can help you with this.
Your short-term and long-term goals have likely changed since losing your spouse. During this difficult time, it’s important to have a trusted financial advisor you can go to for support. This person can help you strategize a new financial plan based on your budget, your goals and your dreams.
9. Update Your Own Policies
Your spouse was likely listed as the beneficiary on your legal and financial documents. He or she may also have been named as your power of attorney or the executor of your estate. If so, get these documents refiled as soon as possible in the event something happens to you.
If you had any joint accounts with your spouse, such as a banking account, auto loans, mortgage, etc., you’ll need to contact these companies to get the accounts put in your name.
10. Don’t Do It Alone
As you adjust to your new normal, you’ll probably have additional questions about managing your finances. Know that you’re not alone in this process. Find a trusted professional who can help you move through the grieving process and find financial clarity. Your risk level may have changed now that you’re on your own, and a financial advisor can help you consider the importance of risk management and estate planning.