Losing a spouse is profoundly difficult, not only emotionally but also financially. You're now forced to make some very crucial decisions at one of the most devastating times in your life. For over 25 years, I've helped women navigate this challenging time and have seen countless issues that have arisen and the best way to tackle these. While I've yet to go a loss of this magnitude, I've held the hands of some pretty remarkable women that have gone from emotionally shattered and economically fearful to confident, optimistic and hopeful for their futures; both personally and financially.
Gather Essential Documents
Begin by assembling all crucial financial documents, including wills, marriage certificate, bank statements, insurance policies, deeds, investment records, and the death certificate. These are crucial in understanding your financial situation and obligations.
Pro Tip: It is very important for you to keep your late spouse's mobile phone. In today's day and age, many of us maintain our accounts online. To access these, many companies have instituted two-factor authentication that is linked to a cell phone. This means that to access the online records, a text message with a numeric code is sent to the number on record and this must be provided as a security measure to verify identity. If your spouse's number was primary, these texts would go to them. Your initial feeling could be to cancel the line to save on monthly costs, but this will cost you so much more in frustration and cause needless delays.
Survivor's Contribution: As you move forward, ask for the date of death value for any accounts that your late spouse was on, sole or joint.
Notify Relevant Parties
It is important to inform employers, banks, insurance companies, and government agencies like the Social Security Administration about your spouse's passing. This process is vital for claiming benefits and updating account information to reflect your current situation.
Pro Tip: Most funeral homes will notify Social Security of your spouse's passing but that is just the first step. You may be eligible for survivor benefits. These are not automatically set up for you. More on this later in our article. If you plan to notify some of these entities in person such as employers and banks, call them ahead of time to ask what, if any, documentation you will need to bring with you in addition to the death certificate.
Pro Tip: It's customary for funeral homes to provide a few certified copies of the death certificate. Some funeral homes will even ask you how many copies you would like. If you find you require more, you will need to obtain them from a local government office. Each state has its own procedure but the one thing that is the same from state to state, is that there is a cost for these. This ranges from $6-$25. So, when providing this document to these institutions, always ask if they will accept a photocopy. If they insist that they need an original, ask if they will return it to you after they've completed the needed actions on their end. This is a small thing but can save you money and time in the long run.
Survivor's Contribution: When you notify banks and other financial institutions, if the accounts were not joint, you will not be able to access them. They will be frozen.
File a Claim - Insurance Benefits
If your spouse has a life insurance policy, contacting the insurer to start the claim process is crucial. The financial support from this claim can be significant during your transition.
Pro Tip: There will be claim forms that you need to complete. If you are uncertain about some of the info being asked for, reach out to your advisor or a trusted party to aid you in completing these.
Pro Tip: Life insurance proceeds are not subject to taxes, and these are not reported to the IRS as income. You should still keep records of these for a few years.
Pro Tip: Some companies offer life insurance benefits to their employees and their dependents. If your spouse had life insurance through their company, you may be able to contact the company's HR Department for assistance. If you had a policy through your spouse's company, you should be able to convert this into an individual policy. But if this is the case, you may have a very small window to do so. You will want to inquire about this as soon as possible.
Pro Tip: At times, health insurance plans can be attached to a life insurance benefit. This information may not be forthcoming, because it's unique to every situation. Please check
this database to see if you can claim a benefit. NAIC.Life.Insurance.Locator
Assess Financial Liabilities
It's important to understand all debts, such as mortgages, loans and any medical bills you receive in your late spouse's name. Break these up into ongoing monthly tallies and lump sum bills.
Pro Tip: For any loans that you may have, especially your mortgage, it is vital to understand what the outstanding balance is, the interest rate you are paying, the remaining years to the loan, and how much of the monthly payments are principal and interest. This will help your financial advisor guide you through the options of keeping the loan or possibly paying these off lump sum.
Pro Tip: Here's where insurance comes in again. If there is mortgage insurance on the loan, this would clear up that obligation for you. As mentioned above, you will need to contact that insurance company and go through their process to claim this payout.
Pro Tip: In some states, a spouse is not liable for deceased spouse's medical expenses, especially if there aren't assets that need to go through probate. You will want to consult with an elder care attorney before paying ANY medical bills to learn about the rules in your state.
Survivor's Contribution: Many families are underinsured. It might be a good idea to look into a Liability/Umbrella policy.
Survivor's Contribution: Review your car insurance. Remove your late spouse as a driver. You may need to complete a form required by the state you live in to accomplish this. The form has nothing to do with removing your spouse as a driver. But they may not remove your spouse as a driver until that has been signed and received back.
Survivor's Contribution: Keep receipts for all expenses or bills that you pay, including proof that any funeral bills have been paid in full. Your attorney may need these as they help settle your late spouse's estate.
Redefine Your Budget
With the potential change in income following your spouse's death, adjusting your budget is necessary. Although this can be time-consuming and may be overwhelming emotionally, it's important that you compile a list of your expenses. These may be monthly, quarterly, semi-annually and annual. Start by going back through your monthly bank statements and work out from there.
Pro Tip: When one spouse dies, employment and Social Security income are reduced or eliminated. This is a scary reality because while household income is reduced, many expenses stay the same. A qualified financial advisor can put together an income plan for you that will bring clarity and guidance for you to navigate these changes.
Pro Tip: Investigate any possible financial assistance programs in your area. These can be reduced property taxes on your residence, energy and utility assistance, reduced Medicare costs. OF NOTE... Many of these programs are income based, not asset based, so you may have significant assets in the form of investments, 401(k)'s, IRA's, life insurance proceeds, etc. and still qualify for these if your income meets the thresholds in your jurisdiction. If you do qualify for a benefit, learn what the income threshold is so you and your financial advisor can consider this in your income plan. Sometimes less really is more. Less income but qualifying for assistance could actually leave more in your pocketbook.
Survivor's Contribution: Contact your utility providers and update the contact information and remove your spouse's name.
Survivor's Contribution: While it may seem daunting with all that you have going on, see where you can trim expenses by revisiting streaming services, cell phone and cable plans, other membership services, etc.
Survivor's Contribution: If you didn't share a car with your spouse, think about keeping only one of your vehicles. This will lower insurance, maintenance and sometimes property taxes. You can look up an estimate of value on a used car online. Sites like Kelly Blue Book allow you to enter criteria that will give you an idea of what your car is worth, so you are educated if you decide to sell it or trade it in. Kelley Blue Book
Evaluate Your Living Arrangement
While this doesn't have to be done immediately in most cases, it is practical to take an objective look at the costs of your housing now that your situation has changed. In addition
to the taxes, insurance and mortgage payments, if applicable, what does the annual maintenance look like from a cost and physical ability perspective. In many cases it makes sense to stay put but other times, it can be too much to take care of.
Pro Tip: Look back through your checkbook and credit card statements for the past year to tally up those extra expenses for maintenance. If you average the cost out, does it fit with your monthly budget?
Survivor's Contribution: You may want to consult with a realtor just to explore your options and get an idea of your property's value.
Understand Tax Implications
Navigating the tax implications after the death of a spouse can be complex. This is true when you file for the year in which your spouse passed but it is even more relevant in the first year in which your claiming status goes from joint to single. Your tax bracket will be different. I strongly encourage you to consult with a CPA or tax preparer as soon as possible.
Pro Tip: An experienced financial advisor can explore investment options that can help you save on or manage your taxable income.
Pro Tip: It may be good to have a joint meeting with your CPA and Financial Advisor so that all tax implications can be considered together. At this incredibly difficult time, having open communication between these two parties may help to alleviate a lot of financial and budget concerns.
Pro Tip: If you own rental properties or a vacation home, ask your CPA if you should get an appraisal on these. This data may come in helpful in the future. He or she can also help you navigate the tax complexities that can come with these assets.
Survivor's Contribution: Keep your financial records for at least five years.
Update Your Estate Plans
Now is the time to revise your estate plan. Ensure that your will, power of attorney, and healthcare directives reflect your current wishes. When both spouses are alive, they will have each other as their POA and medical spokesperson, but it's a different reality when a
trusted person becomes one of their children, another family member or a trusted friend. This is true both legally and emotionally.
Pro Tip: When you are working with your attorney for any legal or estate issues pertaining to your late spouse, ask them to start working on updating these for you so it gets done without you having to circle back at a later time.
Survivor's Contribution: Update the beneficiaries on your will and your financial accounts.
Explore Survivor Benefits
Oftentimes you are entitled to survivor benefits, either as ongoing income or a one-time lump sum. These may be from Social Security, employer pensions or veteran's
benefits. Understanding the rules and application timelines for these benefits is crucial, and prompt action can be advantageous.
Pro Tip: While you should investigate your options in a timely manner, it may benefit you to delay taking these for a greater benefit in the future or strategically time these. A knowledgeable financial advisor can help you consider all your options and can incorporate these into your income plan, so you understand the current and long-term impact.
Survivor's Contribution: Social Security may ask for a copy of your marriage certificate if you are claiming survivor benefits.
Allow Yourself Time to Adjust
While certain financial tasks need immediate attention, it is also important to allow yourself time to grieve and emotionally adjust before making significant financial decisions. This can't be stressed enough. There are things that must be done in the first few weeks or months of losing your spouse, but there are others that can wait a bit to allow you to grieve without added stress and responsibility. You will also have the benefit of making some of these decisions with a clearer head and with a plan that you and your financial advisor have created.
Pro Tip: Ask your financial advisor for a timeline so you understand what is pressing and what can wait.
Pro Tip: While some widows allow the obituary to be shared online or in newsprint, exercise caution if you are approached by a stranger either in person, via letter, email, etc. There have been fraud attempts on widows because of this information being public. As always, be guarded when giving personal information out and consult with a trusted source if there's something that seems a little off.
Survivor's Contribution: If you are having a service, you may want to offer suggestions in the obituary or tribute about possible places for donations in lieu of flowers that would be close to you or your spouse's heart.
Seek Support
This may come in the form of family and friends, but it can also be helpful to connect with other women that are working through the grieving process at the same time as
you. Participating in support groups for widows can provide both emotional support and practical advice on recreating your life after your loss. Not every resource you explore will be a fit for you and everyone grieves differently. Don't feel weak by asking for help. You have people that care about you and may not know what to do but are looking for ways to support you.
Pro Tip: Your place of worship may have one you can be a part of. You can also ask a therapist or search online. Psychology Today allows you to select the type of support group you want and your location. Psychology Today
Pro Tip: Some priceless advice shared with us some years ago: Instead of saying no, say thank you. As women, we are accustomed to taking care of everyone else. It feels uncomfortable, not only to ask for help, but to accept it. So, when you are offered support, consider for a moment what this will take off your plate. Even if it's a small thing, just say thank you. That is part of giving yourself grace. Say thank you with the knowledge that you will be there for them in the future.
Navigating your financial future without your spouse is daunting, but you are not alone. At Wealth Wise Women's Community, we combine our knowledge and expertise with compassion. We celebrate the wins, big and small, of the amazing women that we work with. This is a journey that you don't need to go it alone with. We'd be honored to be a guide for you or your loved one. If you are reading this and feel overwhelmed, please take a breath and reach out. Let's set a time to chat.
This article is for informational purposes only and should not be considered financial, legal, or tax advice. Please consult a qualified professional for personalized guidance.