Your spouse recently died and you have so many items to attend to. You are most likely feeling overwhelmed with the decisions that are in front of you. What financial planning items must you attend to first? What items can wait?
The good news is that you do not have to deal with all of the issues in front of you at once. In fact, taking the time to evaluate which tasks come first and which ones can wait is a prudent way to go about it.
What Does Financial Planning for Widows Involve?
Prior to the death of your spouse, finances were organized around a 2-person family. Now you must plan for a one-person family. It will take some getting used to, but with the help of your advisor, it can be done.
Think of your timeline in the following way: the next few weeks, the next few months and finally the longer term.
What Needs Attention in the First Few Weeks
- Get death certificates.
- Report the death to Social Security.
- Notify employers and pension plans.
- Keep bills and insurance paid.
- Set aside cash.
- Watch for scams that target widows.
Know What You Own and How It Passes to You
Review all of the documents that need to be reviewed such as: beneficiary forms, joint accounts of all sorts, trusts and wills.
Make a list of each and every account that was held by you and your spouse.
Survivor Benefits, Insurance and Inherited Accounts
Depending upon whether Social Security was being claimed, survivor benefits may be available to you. It would be prudent to visit the Social Security website: www.ssa.gov.
If there is a life insurance policy or policies, contact the life insurance company to make a claim.
Once the death benefit is received, place the money in a safe and easy to reach place so that a decision can be made when appropriate. There is no need to make any decisions immediately.
Certain pension and retirement account decisions cannot be undone, therefore before making a decision(s), consult with a trusted advisor. Take your time before deciding.
How Your Taxes Change
Being married, you most likely filed your tax return as a married couple. Now as a widow, you will file as a single person.
Now that you will be filing as a single person, you will likely be subject to what is referred to as the “widow’s penalty.” Your income may not diminish that much but you will only be allowed to file as a single filer which will most likely increase your taxable situation.
Revisiting Your Investments and Income
What was once, is no longer. How the two of you once invested will most likely change to some degree. You now need to invest based upon your risk tolerance and values.
Your financial goals will most likely have changed. It is prudent to revisit those updated financial goals with a qualified retirement advisor. He/she will help you clarify your new goals and how to attain them.
Deciding What to Do With Your Home
The worst action you can take is to make a rash decision and sell your home. There are too many variables that go into deciding whether to sell your home. Take your time and think carefully before committing to a final decision.
In California, a home passing to a spouse generally isn’t reassessed for property tax.
Updating Your Own Estate Plan
- Beneficiary forms
- Her will or trust
- Power of attorney
- Health care directive
Each of these documents are critically important and deserve the time to thoughtfully decide how to attend to each document. If you have an attorney, make the time to use his/her expertise to decide what to do next.
Who Helps With What
A financial planner will help you evaluate where you are financially and where you want to go and then put a plan together so that you can feel confident that your financial goals will be met.
An accountant can help you with the task of re-evaluating your tax situation as a single person.
An estate planning attorney will help you with the numerous forms and tasks that must be attended to since the death of your spouse. Does the trust/will need updating? What about a medical directive since you are now living alone?
A Simple Checklist for Moving Forward
The First Few Weeks (Days 1 to 30)
Secure Immediate Support & Documents:
- Allow time to grieve and lean on family or trusted friends for day-to-day tasks.
- Obtain 10 to 25 certified copies of the death certificate (with raised seals), as multiple agencies, banks, and insurers will require originals or certified copies.
- Gather vital paperwork: the will, trust documents, marriage certificate, birth certificates, Social Security numbers, military discharge papers (DD-214), and recent tax returns.
Handle Immediate Arrangements:
- Plan the funeral or memorial service according to your spouse’s wishes.
- Secure the home, vehicles, and digital accounts.
Notify Key Agencies & Providers:
- Contact the Social Security Administration (1-800-772-1213) to report the death, check for the $255 lump-sum death payment, and inquire about survivor benefits (which can start as early as age 60, or age 50 if disabled).
- Notify the deceased’s employer, HR department, or pension/union administrator about potential survivor pension benefits.
- Contact financial advisors, insurance agents, your accountant, and an estate attorney.
- Tip: Avoid rushing major financial decisions (such as selling a home, paying off a mortgage immediately, or making large investments) during this initial shock phase.
The Next Few Months (Months 2 to 6)
Audit and Settle the Estate:
- Work with an estate attorney to initiate the probate process or administer the trust.
- Create a financial transition audit to track which accounts have been retitled, closed, or transferred, and verify incoming pension or insurance payouts.
- Keep joint bank accounts open for a transition period (typically around 6 months) to handle ongoing household cash flow and automatic payments.
- File the final income tax return for your spouse (and look into qualifying surviving spouse tax filing statuses, which can offer favorable rates for up to two years).
Restructure Household Income & Budget:
- Recalculate your cash flow. Household income often drops more sharply than expenses when a pension or secondary Social Security check stops.
- Separate income into predictable sources (Social Security, survivor pensions), variable sources (investments), and available liquid reserves.
- Review life insurance payouts and roll over retirement accounts or inherited IRAs carefully with a professional.
The First Year and Beyond (Months 6 to 12+)
Update Estate Plans & Legal Documents:
- Rebuild your own estate plan. Your previous plan likely assumed your spouse would step in; you now need to update your will, living trust, healthcare proxy, and financial power of attorney.
- Update beneficiary designations on all remaining retirement accounts, IRAs, life insurance policies, and payable-on-death bank accounts.
Review Property & Asset Titling:
- Retitle real estate deeds, vehicle titles, and investment accounts to remove your deceased spouse’s name or transition them properly under your trust.
Hold an Annual Financial Review:
- Sit down with your financial advisor and tax professional around months 6 to 12 to project your long-term retirement sustainability, tax bracket changes, and healthcare/long-term care needs.
FAQs
1. Should I wait a year before making big financial decisions?
How long you wait is dependent upon your personal situation. There could be some items that require your immediate attention while others can be put on hold for months or years. Discussing this situation with your financial advisor will help you decide how long to wait before taking action.
2. Can I get Social Security survivor benefits if I’m still working?
Yes, a surviving spouse can collect Social Security survivor benefits while continuing to work, though your age and earnings can affect your monthly payouts.
3. When should a widow talk to a financial advisor?
When you feel that you are able to converse with your advisor, then would be a good time to talk to him/her. You want a clear head when doing this so that you completely understand your situation.
Planning Your Next Chapter After Losing a Spouse
Retirement Solutions has been assisting widows for over 4 decades. We understand your loss and the feeling of emptiness that often follows the death of your spouse. We also understand that the widow needs time to overcome her loss and therefore we are patient when it comes to assisting the widow.
When you are up to addressing your new situation, we will take you through the steps to get your financial life back on track. We will provide you with the checklists that will identify what tasks need to be completed and when
As a way of introducing you to Retirement Solutions, we offer a no-obligation, no-cost 15 minute telephone consultation to determine your situation and whether we can be of assistance. At the end of the conversation you determine whether or not to work with us.
Simply click the link found at the top of the Home page, “Let’s Discuss Your Financial Future”.
You talk, we listen. No pressure, no sales. We understand the situation that you are in.