The loss of a spouse can be one of the most devastating events in your life. You are often overwhelmed and faced with several financial tasks that require immediate attention. These financial tasks can be very stressful especially if you did not play an active role in your finances.
There are some financial tasks you will need to complete right away, but I would recommend waiting 6-12 months before making major financial decisions such as putting your house on the market, giving away money to children or charities, moving out of your community to live closer to an adult child, etc. Take your time, consider your options, and try your best to get back into a daily routine before making these major changes.
Also, be very skeptical of anyone who wants to sell you something. It is unfortunate but there are salespeople who will try to sell you an annuity or life insurance policy without looking at your complete financial picture. These types of salespeople understand that you are in a vulnerable stage in your life and may try to persuade you to make an impulse decision.
Now let’s turn our attention to items that will require attention within the first few months.
1. Create a Financial Support Team
This team will consist of a Financial Planner, Attorney, Accountant, and if you would like, a trusted friend or family member who has good financial skills. Each member of this team will play an important role in assisting with your spouse’s estate and other important matters.
- Financial Planner – I would recommend having this individual lead the team. Your Financial Planner will help you assess your current financial situation and create a financial plan based on your unique goals and dreams. As the team lead, they can keep in close contact with the other members of the team and if you choose, attend meetings you have with your attorney and accountant.
- Attorney – Your attorney will guide you through the probate process. They will also help you update your estate plan (your will, living will, powers of attorney, etc.).
- Accountant – This individual will help you understand your tax liability, maximize your deductions, and help you plan for upcoming tax obligations.
2. Compile Information
Start a file and compile the following items: Social Security numbers, birth and marriage certificates, military discharge papers, company benefits booklets, life insurance policies, car titles, will, trust documents, powers of attorney, and current statements for bank, brokerage and retirement accounts. If you have online access to accounts, gather usernames and passwords. Obtain several copies of your spouse’s death certificate from the funeral director (the exact number will be dependent on how many financial entities you will have to notify of your spouses passing). These items will be important when meeting with the members of your Financial Support Team.
3. Probate the Will
Meet with your Attorney to begin the probate process and obtain executor documents. Depending on the complexity of the estate, the legal process can take a few weeks to several years.
4. Collect Life Insurance Benefits
Your spouse may have a stand-alone life insurance policy(s) and/or life insurance coverage through work. You will have to contact the life insurance companies or human resource department to obtain the required paperwork to submit the claim and collect the death benefit. Do not be surprised if the insurance agent encourages to you purchase another product with the death benefit proceeds. I would recommend consulting with your Financial Planner before making any purchase decisions. Your Financial Planner can also be a good resource to help you locate policies and complete the required paperwork.
5. Apply for Survivor Benefits
Depending on your age and your spouse’s work history, you could potentially be eligible to receive a one-time Social Security death benefit, Social Security retirement benefits, Veteran’s Administration benefits for military veterans, and/or benefits from their current employer. I would encourage you to compile any documentation you have regarding survivor benefits and bring to your Financial Planner. You and your Financial Planner can then call into the various places to obtain further information so you can make a best decision based on your complete financial picture. Your Financial Planner can also assist with any questions you may have when completing the required paperwork.
6. Assess Your Cash Flow
Make a list of your income sources: wages, Social Security, pension payments, dividends, interest, required minimum distributions from your IRAs, etc. Then make a list of your expenses: groceries, gas, mortgage payments, utilities, insurance, real estate taxes, gifts, etc. Cancel any payments that were solely related to your deceased spouse: health insurance, gym memberships, magazine or TV subscriptions, club dues, etc. Once you have all the information compiled, review with your Financial Planner so they can assist you with cash flow management and also build your income and expense numbers into your financial plan.
7. Review Financial Accounts
Work with your Financial Planner and Attorney to review all accounts in which your spouse had ownership. Do not transfer or retitle any assets prior to meeting with your attorney as your attorney will help you develop a plan to retitle property to maximize federal or state estate-tax exemptions and also an on-going plan to help you meet your estate wishes going forward. Your Financial Planner can assist with the retitling, transfer, or rollover of accounts after reviewing the attorney’s recommendations. The loss of a spouse will often leave people feeling helpless and alone, but you do not have to face your financial future alone. Put together your Financial Support Team and they will be with you every step of the way to help you evaluate your choices and make the decision that best aligns with your financial goals. Please don’t hesitate to call (320-243-3100) or email (firstname.lastname@example.org) me with any questions.
Michelle Herickhoff, CFP®
MAG Wealth Management
This is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.