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A Step-By-Step Financial Checklist for the Newly Widowed


A Step-By-Step Financial Checklist for the Newly Widowed

 

Paralyzed. We hear this word a lot from those who have recently lost a spouse. The flood of emotions, the countless decisions, the upheaval of everything you’ve ever known — it all can leave both widows and widowers numb, overwhelmed, and utterly unsure of what to do next.  

To make this life-altering time even more challenging, many couples often have one spouse who understood and controlled the finances, paid the bills, and made many of the financial decisions. When that partner dies, it often leaves the other person lost, wondering, “What do I do now?” 

You’re not alone. Close to 900,000 people are widowed each year, and the vast majority of surviving spouses say that becoming the sole decision-maker is the top financial challenge they face. If you’re feeling overwhelmed and a little paralyzed, start by taking a deep breath and recognizing that you don’t need to accomplish it all right now. If you take your time and work through each step at your own pace, you can allow yourself the opportunity to process and plan appropriately to ensure you’re financially secure for the years ahead. 

Step 1: Gather 

Before you take any action, you need to make sure you understand your entire financial picture. Many surviving spouses have bills and expenses coming in every month, and they may not even know what they’re paying for. Start by creating a list of all those recurring expenses. This may even help you uncover assets you didn’t know you had, like additional life insurance policies. 

Once that’s complete, start by collecting the important documents you’ll need: 

  • Death certificate – Work with your state to get 10-20 copies of the death certificate. You will need this to close out or make changes to certain accounts, and you often need more copies than you think. Note that this request often takes several weeks. 
  • Will/trust – Make sure to note the assets you need to be aware of so you can be prepared for conversations with your financial professionals. 
  • Tax returns – As you work with a CPA or your attorney, you’ll need these documents going back five years to help you make decisions moving forward. 
  • Health insurance policy – If you’re not already familiar, learn what benefits you have and the process for discontinuing your spouse’s benefits. 

Step 2: Notify 

Now that you’re armed with the critical information and documents you need to make financial decisions, it’s time to contact all the necessary parties about your spouse’s death. 

  • Social Security office – Benefits are paid to both surviving spouses and dependents of eligible workers, so give Social Security Administration a call at 800-772-1213 between 8 a.m. and 7 p.m. local time, Monday through Friday. Be ready with the Social Security numbers for you, your spouse and any dependents. 
  • Your spouse’s employer – Be sure to request information about their retirement plan and any other death benefits to which you may be entitled. 
  • Estate attorney – If the estate is complex, set up a meeting with your estate attorney to start working out the details. This can be especially helpful if you’re serving as executor of the estate. 
  • Accountant – The death of a spouse always impacts tax issues, so contact your CPA to start the process of making those necessary changes.  
  • Financial advisor – Offload some of your financial burden to your trusted advisor, who is already familiar with your financial situation. This meeting alone can often bring tremendous peace of mind. 

Step 3: Act 

The final step is to start systematically working through the various changes that need to be made. One of the most common mistakes we see, however, is the rush to take the deceased spouse’s name off bank accounts. Here’s why you should wait: It's fairly common to receive a reimbursement check from insurance or for hospital expenses, for example, even up to a year later. Those checks are often made out to your spouse, and if you don't have a bank account with that person's name on it, you don't have a place to cash them — making the process extremely challenging.  

So, my advice here: Give it at least 12 months just to make sure there's not anything outstanding.  

There are plenty of actions you can start taking right away, however: 

  • Cancel all credit cards in your spouse’s name. 
  • Cancel your spouse’s health insurance and continue coverage for yourself and your dependents. 
  • Change the registration on any bills in your spouse’s name. 
  • Update your beneficiaries, tax withholding and any other information that need to be changed. 
  • Create a new budget that matches your new financial picture. 

Step 4: Breathe 

This is an uncertain time filled with so many emotions, so make sure to give yourself some grace, and take time to recalculate where you are, what your new normal looks like, and how your financial situation has transformed.  

You may have been living on two incomes, for example, and now you likely only have one. How will your lifestyle change? What decisions need to be made?  

Just keep putting one foot in front of the other, but don’t feel like you have to rush anything or make any big decisions. Turn to your trusted advisors and lean on family and friends, and together we can help you get unstuck and moving in the right direction. 

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