You spent your life with someone, and now that person is gone. Perhaps you’ve spent the last several months caring for your spouse during a final illness. Or maybe their death was sudden, leaving you alone without warning or time to prepare for your loss.
However it happens, losing a loved one, especially a spouse, is a life-changing event no one wants to experience. You may have trouble getting up in the morning. You might have a hard time eating. It may become difficult to do the hundred ordinary tasks that make up daily life. For many people, the weeks and months after the death of a spouse are bewildering and lonely. You may not want to do much of anything.
Yet even as you experience these painful emotions and process your loss, you have decisions to make. You don’t have to make them immediately. Indeed, most professionals recommend putting off major changes for six months to a year after your loss, if possible.
When you’re ready, consider involving trusted professionals and family members in the choices you’ll be making. Ask them to help you navigate these eight important steps to organize your financial life after the death of your spouse.
You don’t have to do everything right now. Take time to grieve. Spend time with loved ones for support. Even getting away on a vacation can give you breathing room and a chance to collect your thoughts. Be gentle with yourself.
Contact trusted professionals to help you begin establishing your finances and following your spouse’s wishes. These may include a financial professional, an estate planning attorney, and/or an accountant who is familiar with your financial situation. You may also want to rely on your adult children or other trusted family members for advice and support.
You’ll need several copies of your spouse’s death certificate in order to transfer accounts and apply for pension and social security survivor payments and insurance death benefits. You might also wish to make a folder of all important estate documents including the will and trust agreements. If you and your spouse manage your accounts online, create a document listing log-in information and passwords for your own and your spouse’s financial accounts.
In general, the estate is responsible for paying debts that your deceased spouse incurs; if there isn’t enough money in the estate to cover these obligations, you, as the spouse, are not responsible for any remaining debts. However, there are some exceptions such as when you and your spouse co-signed loans or held joint credit cards and in the case of some special situations defined by state law.
Even so, you should still notify all lenders and creditors. You’ll also need to remove your spouse’s name from jointly held cards and loans and cancel credit cards held solely by your spouse. It’s a good idea to obtain a credit report for your deceased spouse to make sure that they didn’t have loans you don’t know about and to monitor for fraud and identity theft.
After your spouse passes away, you will have to notify Social Security of their death. If you receive Social Security payments for your spouse after their death, you must return them to Social Security.
At this time, you can apply for Social Security survivor benefits. The amount you receive as a surviving spouse may be different from what your spouse received during their lifetime.
Defined contribution accounts, like 401(k) plans and IRAs, generally go directly to the named beneficiary immediately after death without passing through probate. Just contact the administrator and let them know your spouse has passed away. You will need a death certificate as proof.
Defined benefit pensions, on the other hand, may or may not continue after the spouse who earned them passed. Contact the sponsor to find out whether you qualify for a survivor benefit; the amount may be lower than what your spouse received.
Once you’ve got a good understanding of the income and assets you’ll receive from your spouse’s estate, sit down with your financial professional and talk about how this change may affect your overall financial strategy.
Your tax bracket will change after your spouse passes since you’ll be filing as an individual moving forward. If your income remains about the same, you may find yourself paying a higher tax rate.
As a surviving spouse, you won’t be liable for estate taxes on the amount you inherit from your spouse, but your estate plan may require review.
As soon as you feel up to it, it’s smart to schedule a comprehensive review with your financial professional and/or attorney. Be prepared to provide information about all the assets and income streams you now have including life insurance proceeds, retirement accounts, savings, and investments.
Your financial professional can help you calculate the income you’ll receive from all sources including investments, retirement accounts, social security, pensions, and life insurance benefits. They can also work with you to develop a budget that fits your new circumstances.
You’ll likely need a new will after your spouse has passed since your assets will no longer go to your partner. You should also review beneficiary designations on IRAs, 401(k) accounts, and investment accounts and make sure you’ve designated living heirs. This is also a good time to review powers of attorney and healthcare powers of attorney since you may have named your spouse to make decisions for you.
Losing a spouse is devastating. It’s normal to feel sad, numb, lonely, or even angry, and you may not feel like tackling the ordinary tasks that confront you. Yet you will have to address a number of financial issues so you can be assured of having the resources and income you need. You don’t have to do it alone, though. Consider asking your financial professional to help you get your financial affairs in order. A trusted professional can provide a sounding board, a second set of eyes on the details, and a way to share the burden during this very difficult period.
This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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