Grief and Loss: Managing Your Finances After The Death of a Spouse
According to the Holmes-Rahe stress inventory, the loss of a spouse is the number one stressor that someone can endure. It’s certainly a time of confusion and emotion. Assessing your financial situation during this time will likely be the last thing on your mind, but it’s so important to evaluate your finances carefully. It’s crucial to avoid making hasty financial decisions during this emotionally charged time to ensure that your finances are optimized for you to continue along your life path successfully.
Discussing your situation with your financial advisor is paramount to analyze what varying and influencing factors affect your situation so they can be addressed. How many dependent children, if any, do you have? Are you employed? Do you have an emergency fund? Many issues will affect how you navigate through this life event. You don’t have an advisor yet? This would be an ideal time to find a fiduciary financial advisor. A fiduciary can be a valued copilot through these challenging transitions and you gain legal protection as the fiduciary is required by law to seek your best interest.
We will discuss a few steps here that can be taken following the loss of a spouse to ensure that you’ll come out on the other end of this upheaval with stability and a solid plan in place.
1. Again…Do Not Do Anything Impetuously
There is no denying that the loss of a spouse is a trying and difficult time and keeping yourself focused on making timely and responsible decisions can be challenging given the emotions at play. Making large decisions under stress such as taking an expensive trip, selling your home to move closer to friends or family, or deciding to help other family members with large expenses before fully knowing what your financial situation is can be extremely detrimental. You need a roadmap. You need to see the full scope of your financial situation in order to make decisions that affect your long term security and happiness. Whether the timing of this loss was somewhat expected or an absolute surprise, ideally you and your fiduciary financial advisor have had time to discuss the basics of this scenario and have a plan in place.
2. Locate Important Documents
It’s understandable that in the confusion of the time, you may not have all of your important financial and legal documents located and in order. That’s ok. But it is essential to attend to this process as soon as you can.
Obtaining, locating, and organizing essential documents such as wills, social security numbers, insurance policies, pension information, 401 (k) information, death and marriage certificates, and bank statements. Ideally, you have kept your files in order prior to this, whether you organize your data in paper form or digitally or kept such files with your advisor for quick reference, but if not, work on it as you can.
3. Begin to Construct Your Plan
Take a look at what information or documents you have that pertain to your life before the loss of your spouse and those that pertain to your life after. The records that relate to your life before losing your spouse will be vital as you navigate the settling of the estate. Those that relate to your current situation will be essential to evaluating your needs as they are now. What does your budget need to be? How much will your social security benefit be monthly? If your spouse had a life insurance policy, is the benefit enough to cover your expenses as they are now? This is where we get down to brass tacks and see what you have and what it is you need to move forward.
Debts that occurred before the loss of your spouse will be looked at and addressed. You are, of course, responsible for your personal obligations, but what about those of your spouse? Debts are typically paid out of the deceased person’s “estate,” or the property and money they leave behind. If you live in a community property state, you can be held liable for the debts of your spouse, even if you are not a signer on them, so researching what your state laws are and what you are responsible for is paramount. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
4. Enlist Some Professional Help
While friends and family will be a crucial support system during this time, it’s essential that you look for guidance on important decisions from an objective professional with the experience necessary to navigate this transition in your life. At a minimum, reach out to your advisor (or find one) and get his or her help in developing a plan and contacting other professionals as needed, such as:
* The Human Resources Department of any previous employer or company that your spouse worked to access any potential benefits.
*An attorney to help you with the will or any trusts.
*The Social Security Administration, or if your spouse was a veteran, the Veteran’s Administration to determine benefits.
*Insurance Agent to determine what policies your spouse may have had. Ideally, this will be on file with your financial advisor already.
*Your bank or banks to determine what assets you have in individual or joint accounts as well as any safe deposit boxes.
Experiencing the profound loss of a spouse is undoubtedly an enormous life hurdle. It does not, however, mean that you can not move on and have a meaningful and robust life. It’s important to remember to take care of yourself by maintaining social interaction, exercise, and eating well. Managing your financial world after a loss like this will allow for the security and freedom to take on new experiences and build a quality, rewarding life.
For more information on this topic or to schedule your free discovery call with FamilyVest, contact us today!