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Client Log InLosing a spouse represents a major life change – and not the type that people get excited about. Indeed, the death of a life partner can be one of the more difficult events endured during a lifetime.
Compounding the grief of losing a loved one are the inevitable complexities of managing finances, and this can prove especially difficult when the surviving spouse was generally less involved in the couple’s financial affairs.
Many people simply do not immediately know what to do when a spouse dies, and managing your finances after your spouse has died can be really tough for you and your family. Here are some tips on what to do when your spouse dies.
How to Manage Your Finances After Your Spouse Has Died
Managing the death of a spouse and finances at the same time isn’t easy. Therefore, it’s important to take it slow and methodical, to be organized, and to prioritize certain immediate tasks while delaying others.
There are a number of financial matters to settle during the weeks and months that follow a spouse’s death, so gathering records and assembling documents is an important early step. In order to apply for life insurance proceeds and Social Security benefits, you’ll need certified copies of the death certificate (a funeral director can help you access), and these will also come in handy for retitling the mortgage (if necessary), changing names on financial accounts, and tying up loose ends with your spouse’s employer. You’ll also want a copy of the life insurance policy, as well as proof of marital relationship (marriage license) and age (birth certificate) when applying for Social Security benefits.
You’ll also want to work with your spouse’s employer to distribute any supplemental life insurance benefits, retirement plan savings and final wages earned. Make sure to keep good records of all conversations with your spouse’s employer, insurance company and Social Security. Write down the date and time of all phone calls and get a “case number” that makes it easy to refer back to when you subsequently get serviced by someone else over the phone.
Next up, you’ve got to get all of your bills organized and create a budget that is strictly based on short-term income and expense levels. Assess how the loss of your spouse will affect your overall financial situation. Make a list of all credit card, utility, housing and other monthly bills that you can find by examining the checkbook record and online banking account for previous recurring payments.
Allow for the reality that there will also be near-term expenses related to funeral costs and other related items. Cancel all subscriptions and services that were used specifically by your spouse. Look for any shortfalls and temporarily draw off savings accounts to maintain your current lifestyle. If cash is tight, you should contact your creditors, inform them of the situation (another reason to have ample copies of the death certificate) and ask for temporary forbearance on your bills – even if just for thirty days.
During this time, you can file a life insurance claim and may receive proceeds relatively quickly. You may also want to contact an attorney who can help you review the will and help with starting estate settlement procedures. A financial planner, accountant or tax adviser also can prove helpful as you cope with the death of a spouse and finances.
Death of A Spouse Financial Steps
If you are the beneficiary of your spouse’s life insurance policy, contacting your insurance agent or the insurance company directly should be one of the first things you do following the death of your spouse. Although most claims are processed rather quickly, life insurance proceeds can be received only after a claim has been filed first. You should also check to see whether your spouse owned policies additional to the primary individual life insurance policy. Next up, begin the process of settling your spouse’s estate.
Locate the most recent copy of your spouse’s will and consider contacting an attorney if you are named as executor. Some estates are rather simple to settle, but others can take months, so start early and stay informed of settlement procedures if you are not the named executor. You should also contact the Social Security Administration to apply for survivor’s and/or parent’s benefits.
The preceding list represents many of the finance-related steps of what to do when a spouse dies. Later on, it will also become time to think about retirement planning, revisiting insurance policies, changing names on accounts, and reviewing overall tax ramifications of your new financial situation. You may be faced with new financial challenges that didn’t exist while your partner was alive and it will become important to secure your financial future.
Whether you have more or less money than you had in the past, the time will come to devise an updated financial strategy to provide for yourself and your dependents. You’ll also want to discuss estate planning issues related to your own will and how you choose to have your assets distributed upon your death – you may need a new executor and/or beneficiaries – and it wouldn’t hurt to devise updated planning documents related to power of attorney and living will instructions for yourself.
Finally, if you have inherited retirement plans from your spouse, you may need to find suitable alternative investment vehicles if you received the distribution outright. However, if your spouse’s retirement plan permits it, you can leave the funds in the plan and take required minimum distributions and withdrawals as needed. A financial planner or advisor can help you project retirement income requirements and create a new retirement planning strategy following the death of a spouse.
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About the Author: Steven Brachman
Steven Brachman is the lead content provider for UnitedSettlement.com. A graduate of the University of Michigan with a B.A. in Economics, Steven spent several years as a registered representative in the securities industry before moving on to equity research and trading. He is also an experienced test-prep professional and admissions consultant to aspiring graduate business school students. In his spare time, Steven enjoys writing, reading, travel, music and fantasy sports.
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Gabriel Gorelik paves the way for customer service and operations at United Settlement. He is passionate about numbers and holds a strong belief in helping anyone with their debt. Before United Settlement, Gabriel received his BS in Finance & Economics from Brooklyn College. After graduation, Gabriel went on to build his first financial services company where he managed thousands of accounts for business and consumer clients. He understands the importance of client satisfaction, professionalism, and exceeding expectations.