The passing of a spouse can take a heavy emotional toll on anyone. Especially early on, newly bereaved widows or widowers may find it difficult to get through each day, much less focus on items that involve paperwork and investments. But, while everyone grieves differently and on their own timetable, it is important for those who’ve suffered the loss of a spouse to get their financial affairs in order – and the sooner, the better. Breaking it into smaller tasks can make the process feel less daunting. If you or someone you know are looking for guidance on organizing your finances following the death of a husband or wife, the following checklist can help.
– Gather documentation. As the surviving spouse, you’ll first need to finalize your partner’s financial affairs. When you receive your spouse’s death certificate, make several copies right away, as you will have to provide the certificate as proof of death when closing or changing ownership of accounts. You will also need your spouse’s Social Security number, your marriage certificate, life insurance policies, bank account information, list of creditors and a copy of your spouse’s will or estate plan. If your spouse owned property or other assets, gather any paperwork that proves ownership. While compiling documentation can be cumbersome, having the right materials will make it easier to manage other financial tasks.
– Settle the estate. If your spouse has a will, it will determine the distribution of property and other assets. When there is no will, then probate court will decide who gets what. The laws regarding community and separate property (typically property owned by the spouse prior to marriage and/or inheritance) vary by state. The larger the estate, the more complicated the settlement. Consult an attorney who specializes in estate laws for complex cases.
– Transfer ownership or close accounts. You’ll need to notify banks, loan companies and other creditors of your spouse’s death by producing a death certificate and providing other identification. If your spouse owned an individual retirement account (IRA), you’ll need to determine whether it makes sense to roll over the assets into your own IRA or keep them where they are. If you are named a beneficiary on a life insurance policy, annuity or other account, you may have choices as to how you receive those assets. Consult a financial advisor to learn more about your options.
– Pay the bills. It can be difficult to focus on paying your bills when you’re experiencing a personal tragedy, yet keeping up on them is important. Ignoring bills will lead to late fees and may damage your credit rating. If you are unable to pay some of your bills immediately, contact your creditors and explain your situation. Consider setting up automatic bill pay if you have the option, in order to check one item off your monthly to-do list.
– Revise your budget. Once you understand your current financial situation, consider updating your budget to reflect your circumstances. Thinking about your new lifestyle and financial goals may be emotional, so it’s okay if this step takes you time to complete. Enlist a trusted family member, friend or financial advisor if you want help working out your day-to-day finances.
– File taxes. As a surviving spouse, you are responsible for filing taxes on behalf of your deceased husband or wife. The reason for filing is to receive a refund if taxes were overpaid during the year or to pay taxes if they are owed. Failure to file may result in penalties or even a lien on the estate. The IRS provides instructions on how to file on behalf of another. When in doubt, consult a tax professional.
– Consult a third-party. If you’re newly widowed, remember that you don’t have to face your financial decisions alone. This is the time to engage a financial advisor, if you haven’t done so already. Your advisor can help you look at your overall financial picture and determine next steps. In addition to helping you manage immediate tasks such as rolling over a retirement account, an advisor can also help you address pressing concerns about your future, including creating and sustaining your income as a single person. As you manage this major life change, it’s helpful to have a trusted third-party assist you in keeping your finances on track.
Jean D. Koehler, CLTC, CRPC, is a Financial Advisor and Business Financial Advisor with Ameriprise Financial Services, Inc. She specializes in fee-based financial planning and asset management strategies and has been in practice for 17 years. To contact her: ameripriseadvisors.com/jean.d.koehler, 626-254-2429, 55 E. Huntington Dr. #340, Arcadia, Ca.