Financial Implications of Losing a Spouse: Five Steps to Take

Financial Implications of Losing a Spouse: Five Steps to Take

Planning Ahead with a Trusted Team Can Ease the Financial Transition

Financial Implications of Losing a Spouse: Five Steps to Take
Wednesday, 10 June 2020

These past few months have been filled with a collective sense of grief over what many of us have lost: loved ones, financial stability, job security, a sense of freedom, or normalcy. While all of these are incredibly hard to deal with in their own ways, losing your life partner is uniquely devastating, and navigating the aftermath on your own can be incredibly difficult.

When you lose your spouse, you can feel adrift, untethered, and fearful of what the future may hold. While you’re in the midst of tragedy, it can be difficult to simply get through each day, let alone make important decisions and think through the implications for your finances. This is why it is so important to plan ahead by assembling a team of trusted advisors who can help to make the financial transition as smooth as possible during your time of grief.

Family members, trusted friends, financial advisors and attorneys can all play a role in helping you accomplish the following steps after you’ve lost your spouse:

Retitle the Asset:

One of the most crucial steps to take after the loss of a spouse is to move all of the assets out of his or her name and into your own. This includes everything from IRAs and bank accounts to cars and real estate holdings. These processes are rather slow, and they can be overwhelming when you’re grieving. Having an attorney or financial services professional who can help you navigate the necessary paperwork will be useful in ensuring you take all the necessary steps so that your assets remain protected.

Secure Death Benefits

It can be a very emotional process, but securing death benefits for your spouse’s life insurance, Social Security and annuities is necessary in order to make sure you receive the financial benefits your husband or wife would want you to have. Securing professional assistance, or the help of a family member or friend can be helpful here, too. This allows you to avoid many of the emotional conversations inherent in going it alone.

Determine Your Surviving Income

Securing any death benefits you’re entitled to is a part of this equation, but you’ll need to calculate exactly how much money you’ll have coming to you through ongoing income on a monthly or annual basis. You may be eligible to receive certain pension benefits, for instance, that require paperwork to be filed. These crucial calculations will tell you how much income you’ll have access to, as well as uncovering whether there are any steps you need to take to access that income.

Close Your Spouse’s Estate

If proper estate planning has taken place, the process of probate can be fairly simple. However, if there are holes in your spouse’s planning, things can get a bit more complicated. An estate attorney can be crucial to ensure you take all the needed steps to close bank accounts and credit cards, inform creditors of your spouse’s passing, closeout online accounts, remove names from phone or utility bills, and more. Essentially, your goal is to close out your spouse’s digital footprint.

File a Final Tax Return

When your spouse passes away, it is essential to file a final tax return on their behalf. A Certified Financial Planner® or a Certified Public Accountant – or both – can help make sure you file properly. This is important because mistakes could negatively impact you as the surviving spouse. Working with professionals is also the best way to limit your tax liability and receive guidance on investment strategies that could reduce your taxable income going forward.

When you’re deep in grief, it’s easy to overlook the above steps. However, each is necessary to ensure you will remain on firm financial footing as you learn to live your “new normal” without your life partner by your side. Many people feel a great burden in being the surviving spouse, and dealing with the emotions associated with great loss is enough without having to navigate financial landmines on your own, too. One of the best steps you can take is to surround yourself with trusted professionals who can guide you through the financial matters and provide you with peace of mind.

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