Likely, the biggest life-changing event you’ll ever face is the death of your spouse. In addition to the deep emotional wounds that such a loss brings, financial matters must be tended to. It may seem harsh to address finances at such a time, but it needs to be done in order to carry on.
The good news is that the necessary financial transitions after a spouse dies can be handled gradually. They don’t need to be done all at once. But like anything else, beware of procrastination. Get the transition going.
Here are the steps to take.
1. Plan for major life changes ahead of time.
Handling the financial transition after the death of a spouse begins before anyone dies. Now is the time to meet with a qualified financial planner and to have a conversation about estate planning.
A few months ago, I posted an article entitled, Hollywood estate planning lessons, to encourage readers to be prepared. I can think of no better way to make it easy on survivors than to plan today, while you’re still healthy and mentally aware.
2. Try to keep check of your emotions.
When a spouse or any loved one dies, realize that it’s not the time to make major financial or lifestyle decisions. For example:
- Don’t sell your house
- Don’t loan money to your children or grandchildren
- Don’t jump into retirement
- Don’t decide on any major courses of action right away
Emotions run very high in the days and weeks following the death of a loved one. Rarely is it wise to make major decisions while grieving. A better course is to sit back, allow some time and let the life change and what needs to be sorted out come to you.
In 2005, a close friend of mine died and it took me several years before I could even speak about her without a flood of emotions washing over me. Sure, I didn’t have any personal financial decisions to make as a result of her death. Even if I had, it’s hard to imagine that I would have been my normal, deliberative self. I would have taken time, and that’s my advice to you. There really is no rush.
3. Gather related financial documents.
When you’re ready to begin the financial transition process, gather documents. These include:
- Trust documents (if prepared)
- Social Security card and statements
- Life insurance policies (and related beneficiary designations)
- Retirement plan account information (and related beneficiary designations)
- Real estate deeds
- Military records
- Financial statements for investment accounts, bank accounts, credit card accounts and loans
- Death certificates
If you’re a client of mine, I’ll have records on all investments where I’m the advisor of record, so there’s no need to gather those.
The best time to get death certificates is at the time of death. Ask for many copies. You’ll be surprised at how many you need, so order 10, even 20 copies. You might spend an extra $20 or $30 for them but that’s not such a bad thing. A month ago a client whose wife died years ago needed an original death certificate and he had none. He mentioned it to me, and I just happened to have one in my files. That one copy saved the day.
Obtaining a death certificate long after a death is a hassle and takes time. So, have a few extras tucked away.
4. Claim life insurance, but as you move forward keep an eye on taxes.
Usually the best place to start is to claim any life insurance, government benefits or employer-provided benefits. Then, you can begin to change the registration on investment accounts, real estate, credit cards, loan accounts, and other property such as cars.
Much of what you do may have tax consequences, so don’t act in haste or without knowledge. Talk to me, your attorney and accountant before doing anything on retirement or investment accounts. While I am not a tax specialist, I work with many who are part of my network of qualified advisors.
5. Consider your own situation.
After the loss of a spouse, you may need to update the beneficiary designations on your own retirement accounts and insurance policies. You may need to amend your will. You should likely review your own medical insurance. There’s much to do, but it need not be overwhelming. Take your time, get professional advice, and realize that this is an emotional time where you’re likely not yourself. Don’t feel pressure to get things done right away.
Following these 5 steps won’t be easy to do after the death of a spouse. If you start the process, however, you’ll find that slowly but surely the financial transition will take place. You’ll gain confidence and a sense of well being. You’ll move forward with the rest of your life.
This material is for general informational purposes only and should not be considered a recommendation to buy or sell any security, nor a specific investment strategy. Securities America and its representatives do not provide tax or legal advice. Readers should consult their tax advisor, or legal counsel, for advice concerning their particular situation.