Stressful moments are not the opportune times for major life choices, including selling your house, quitting your job, liquidating investments, or making irreversible decisions about your retirement accounts, pension plans, or Social Security benefits.
This also extends to acquiring new financial products or reinvesting in life insurance death benefits without a solid understanding. Consult with a financial advisor first to prevent making hurried, sometimes disastrous judgments. The goal is to avoid making poor investing decisions and to avoid triggering significant taxable events.
2. Find and organize key documents
Coping with the loss of a partner brings with it the harsh reality of assuming full responsibility for your finances. Typically, one person manages the bills and accounts in a relationship. If the deceased partner handled the finances, you're now confronted with a stressful situation, unsure of what to pay and how to access accounts.
During this time of grief, it is also important that you organize important documents, such as the will, trust, and life insurance policies, into easily accessible folders or piles. Reach out to your family attorney if you've engaged one for estate planning, as they may have valuable information stored in their vaults to guide you.
3. Make informed choices regarding Social Security
Financial experts advise widows and widowers that when their spouse dies, their income usually decreases as they lose one Social Security benefit and may have their pension benefits reduced as well. Furthermore, if their income declines, their taxes may go up.
If both you and your spouse were already receiving benefits, opt for the higher benefit moving forward. If you have not yet claimed any benefits, you must make a decision between your survivor's benefit based on your spouse's work history or your own retirement benefit. You can then switch to the profitable option if it proves to be higher.
4. Keep your assets and estate plan up-to-date
Losing a spouse requires a comprehensive assessment of the surviving partner's assets and estate planning paperwork. Seek legal guidance to revise your will, living will, powers of attorney, HIPAA form, and beneficiary designations for life insurance and tax-advantaged retirement accounts (IRA and 401(k)). Additionally, widows and widowers should consider updating property titles and other asset documentation.
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Surviving partners should also carefully examine their checkbooks, internet banking information, and loan statements. The goal is to create a complete inventory of invoices, expenses, loans, and other financial commitments and arrange them according to ownership. This entails making a separate list for accounts primarily in their name, solely in the name of their late spouse, and those owned jointly. This accumulated data serves as a road map for the next steps you will take. Following that, contacting financial institutions in charge of joint accounts is required to remove the deceased spouse's name.
Simultaneously, businesses and service providers linked to accounts solely in the late spouse's name should be advised that the account is now in probate and will be managed by the estate. To speed up the process, include the attorney's name and contact information for future reference.
5. Consider adjusting your investment plan
The investment strategy your spouse favored may not necessarily be suitable for your current situation as a sole decision-maker. It's entirely reasonable that you might opt to redirect some of the funds from benefits related to your spouse's passing into fresh investment opportunities. As with any investment decision, conducting thorough research before entering the market is essential, as is being aware not to let emotions interfere with sensible financial decision-making.
6. Organize your credit card affairs
It might come as a surprise that you're not considered an equal account holder on your credit cards. You could be listed merely as an authorized user on a card that belongs entirely to your partner. When your spouse passes away, the card issuer will eventually be notified and may close the account.
Experts recommend against waiting for this. Inform the firm about your spouse's death as soon as possible. Most issuers will cooperate with the spouse to issue a new card. Alternatively, you may want to take the following precautions while your spouse is still alive: Establish joint credit card accounts (with shared payment duties) or make sure that you are the primary owner of at least one card while your spouse is still alive.
7. Plan for your immediate future
As a widow or widower, you must understand the assets you had together, the income available to you, and how to provide for your loved ones in your new role. Make a new household budget and consider your financial goals and retirement objectives. You should also share information regarding your income and expenses with your financial advisor.
