The death of a spouse is one of life's most disorienting experiences. Money is rarely the first thing on anyone's mind during grief, but financial decisions made (or missed) in the months after a loss can have lasting consequences.
This article covers the key financial areas that need attention. For a comprehensive, step-by-step walkthrough of the entire transition, see our detailed guide After Loss, Toward Clarity: A Financial Guide for Surviving Spouses.
Insurance and Benefits Claims
Life insurance. Locate all policies, including employer group coverage, individual term or permanent policies, and any accidental death riders. Contact each carrier to begin the claims process. If the death was accidental or work-related, check whether the policy includes an accidental death benefit (often double the face value).
Employer benefits. Contact your spouse's employer about any death benefits, accrued vacation or sick pay, deferred compensation, and continuation of health insurance under COBRA.
Veterans benefits. If your spouse served in the military, you may qualify for a burial allowance, Dependency and Indemnity Compensation (DIC), and survivor pension benefits through the VA.
Social Security survivor benefits. If your spouse earned Social Security credits, you may be eligible for survivor benefits. The amount depends on your spouse's earnings record and the age at which you claim. At full retirement age, the survivor benefit equals 100% of your spouse's benefit. Claiming before full retirement age reduces the benefit. If you are already collecting your own Social Security, you can switch to the higher of your own benefit or the survivor benefit. Timing this decision carefully can make a significant difference. See our guide on how to claim Social Security strategically.
Children's benefits. If you have a dependent child under 18 (or a child with a permanent disability at any age), that child may qualify for Social Security benefits based on your spouse's record. You may also qualify for a mother's/father's benefit while caring for a child under 16.
Tax Considerations
Filing status. In the year of death, you can still file a joint return with your deceased spouse. For the following two years, if you have a dependent child living with you, you may qualify for the Qualifying Surviving Spouse filing status (formerly called Qualifying Widow(er)). This preserves the married filing jointly tax brackets and standard deduction during the transition period.
Standard deduction (2026). The married filing jointly standard deduction is $32,200. When you shift to single filing, the standard deduction drops to $16,100. This compression means more of your income becomes taxable, often called the "widow's tax penalty."
Capital gains housing exclusion. If you sell your home within two years of your spouse's death and meet other ownership and use requirements, you may still qualify for the $500,000 capital gains exclusion (rather than the $250,000 single filer exclusion). Timing matters here.
Step-up in cost basis. Assets that pass from your deceased spouse generally receive a step-up in cost basis to fair market value at the date of death. This eliminates the capital gains tax on any appreciation that occurred during your spouse's lifetime. If you and your spouse owned property jointly, the stepped-up portion depends on your state's property laws. In community property states, both halves of community property receive a step-up. In common law states, only the deceased spouse's share is stepped up.
Prior tax obligations. Contact the IRS and your state tax authority to confirm whether your spouse had any outstanding tax liabilities. You may be responsible for unpaid taxes on a joint return.
Estate Planning Considerations
Locate the will. If your spouse had a will, identify the named executor and begin the probate process. If there was no will, the estate passes under your state's intestacy laws, and the court will appoint an administrator.
Portability election. This is one of the most important and time-sensitive decisions. The federal estate tax exemption for 2026 is $15,000,000 per individual ($30,000,000 for a married couple). If your spouse did not use their full exemption, you can preserve ("port") the unused portion by filing IRS Form 706. This effectively doubles your available exemption. Form 706 is due nine months after the date of death, with a six-month extension available. If filing solely for portability (no tax due), the deadline is two years from the date of death.
Even if your current estate is well below the exemption, filing for portability is often worth it. Asset values change, the exemption amount could decrease in the future, and the filing preserves optionality at relatively low cost.
Beneficiary designations. Life insurance, IRAs, 401(k)s, and transfer-on-death accounts pass directly to named beneficiaries, bypassing the will entirely. Review all beneficiary designations immediately. Your spouse may have been the primary beneficiary on your accounts, which now need updating.
Disclaiming assets. If you have more assets than you need to maintain your lifestyle and there are valid contingent beneficiaries named, you may choose to disclaim some assets. This shifts them to the next beneficiary in line, which can be useful for estate tax planning or providing for children directly. Disclaimers must be made within nine months of the date of death and before you have accepted any benefit from the asset.
Update your own estate documents. Your will, powers of attorney, healthcare directives, and trust documents likely named your spouse in key roles. These need to be updated to reflect your new circumstances.
Cash Flow and Income Planning
Assess your new income picture. Your household income may change significantly. Social Security benefits may decrease (you keep the higher of the two benefits, not both). Pension income may stop or convert to a reduced survivor benefit. Employment income disappears if your spouse was working. Build a new income and expense projection with your advisor.
Required Minimum Distributions. If your spouse had Traditional IRA, SEP IRA, SIMPLE IRA, or 401(k) accounts, distribution rules depend on your relationship and your spouse's age at death. As a surviving spouse, you generally have the most flexibility: you can roll the account into your own IRA, remain a beneficiary, or (if your spouse was already taking RMDs) continue distributions based on their schedule. Under current law, RMDs begin at age $73, raw (increasing to $75, raw in 2033). The penalty for a missed RMD is $25, raw % of the shortfall, reduced to $10, raw % if corrected within two years.
These decisions interact with your tax situation, Social Security timing, and overall retirement income plan. See our guide on retirement distribution planning for a broader framework.
Employer stock and illiquid assets. If your spouse held stock options, restricted stock units, grants, annuities, or other illiquid assets, review the terms of each. Some have death-triggered vesting or payout provisions. Others may have time-limited exercise windows. Each asset type has its own tax treatment.
Unclaimed Assets and Loose Ends
After handling the major items, take time to search for assets you may not know about. Check for safety deposit boxes. Search your state's unclaimed property database (most states maintain an online portal). Review credit card accounts for transferable points or miles. Contact professional associations and fraternal organizations about any death or survivor benefits.
Working With Professionals
Navigating these decisions during grief is difficult. A fiduciary financial advisor, an estate attorney, and a CPA working together can help you avoid costly mistakes and make decisions at the right pace. There is no requirement to rush most of these decisions. The exceptions are time-sensitive: the portability election (Form 706), disclaimers (nine months), the housing exclusion (two years), and the Qualifying Surviving Spouse filing status (two years after the year of death).
For guidance on selecting the right advisor, see our guide on how to choose a financial planner.
For a comprehensive, step-by-step walkthrough of the full financial transition after loss, read After Loss, Toward Clarity.
