When facing the death of a spouse, you’ll want to a plan and team in place to help you make the transition as smooth as possible, at least financially. Here are some of the steps you need to take as you move forward:
1. Continued Income
Ongoing income after the death of a spouse is always a necessity, especially if they were the primary breadwinner. You need to know what money will continue coming in or what money you can no longer count on. For example, your spouse’s Social Security benefits will go into play, but exactly how much will be contingent on the number of dependents you will support. The necessary paperwork will need to be filed, not just for Social Security, but also any pension benefits you might be privy to. There are several vehicles of income you may be entitled to; however, you need to know what they are and fill out the necessary paperwork to ensure you receive the income.
2. Varying Benefits
These benefits run the gamut, from annuities, life insurance policies, and beneficiary accounts, to name a few. Dealing with life insurance after the death of a spouse is usually a highly emotional component for the surviving partner. The lump in my throat and the gutwrenching knots in my stomach were overwhelming as I helped my mother file that claim after my father passed. It’s crucial to find all existing policies and file the appropriate paperwork as soon as possible. If you fail to do so, you could delay the financial benefits you are entitled to. Employing an expert to help in this area can be worthwhile. Not only will it help ensure everything is correctly filed, but it may allow you to avoid some of the emotional baggage from doing it on your own.
3. Closing of the Estate
Probate mistakes can be costly. That’s why I implore you to close out an estate efficiently. If the deceased adequately planned, the probate tends to be simple. However, if no planning was done prior to the death of a spouse, that can lead to a disaster that only an estate attorney can help you get in order. One mistake I saw a client make was after the death of their spouse, they never probated the estate. So when the other spouse passed, there was over $90,000 in past probate expense that still needed to be dealt with. During probate, you want to let creditors know about the passing. You must also close bank accounts, online accounts, credit cards, etc. Contracts may need to change, names removed from phone bills, and other things of this nature. The primary goal is to close out the digital footprint of the deceased individual.
4. Asset Retitling
Once a spouse expires, assets need to be moved into the name of the surviving spouse. Changes need to be made to automobiles, bank accounts, real estate, even IRAs! As with any change, this will take time. It is not an overnight process. That’s why having someone who understands the process could move things along more quickly. Turn to your lawyer or CERTIFIED FINANCIAL PLANNER™. Having qualified help is essential to a smooth transition.
5. Filing Final Tax Returns
Once someone has passed, there will still be taxes that need to be paid. Just like closing a business doesn’t erase that tax footprint, neither does the death of a spouse. A final tax return MUST be filed. I highly recommend help in this area. Working with a CFP® and a Certified Public Accountant (CPA) can help make sure the final tax return is properly completed. Unnecessary mistakes could increase your tax liability, harming you, the surviving spouse in the end. A CFP® and a CPA can work hand in hand to minimize taxes on any inherited monies. They can also offer various investment strategies to help reduce your taxable income.
Far too often I see critical matters overlooked during the death of a spouse. Let this list help keep you on track when the time comes. In doing so, you could ensure the security of your financial future. After all, no one should be forced to shoulder the burden of dealing with financial crises alone during such a devastating time as the death of a spouse. Surround yourself with an experienced team to help you with the paperwork, allowing you peace of mind so that you can begin walking the path to emotional healing.
