Financial advice for your first year as a widow
How do you adjust to your first year as a widow?
The funeral is over.
Your family and friends have gone back home, returning to their day-to-day routines.
The world has started turning again.
Amid the pain of losing your spouse, you must find a way to carry on even though your world has turned upside down.
Many of the decisions that you made together now rest on your shoulders alone. As the days slip by, important financial decisions must be made, many that carry implications for your future as a newly single woman.
The first task is to confer with your trusted advisors and focus on the most immediate financial tasks. Avoid making any major life-altering decisions when you’re in a state of emotional flux – it may be tempting to shake up your life in the wake of such a major loss by buying a new sports car or selling your house and moving across the country to live near your kids, but this isn’t the time to act impulsively.
It’s better to take your time and consider all your options and go about your day-to-day routine as much as possible before making any major changes.
As you move into your new life, this is no time to go it alone.
You probably have questions and concerns. These may include:
Dealing with pension survivor options
Social Security spousal benefits
Life insurance proceeds
Changing the title on your home and other assets
Making sure your bills continue to get paid on time
Updating your will and estate planning documents
and possibly much, much more.
Even if you’re a strong, fiercely independent woman by nature, do yourself a favor and take advantage of the help that’s available. Working with your trusted advisors, tackle the decisions that need to be made immediately.
Then, once those are taken care of and you’re in a better place, you can move on to the decisions with long-term financial implications.
Important advisors such as your attorney, financial advisor, and accountant are available to answer questions and support you during this difficult time.
They each have a role to play in assisting you in taking care of your late husband’s estate and other pressing matters.
Here’s how they can help:
Attorney: Your attorney will guide you through the probate process. As the executor of your late husband’s estate, it may be tempting to try to handle everything yourself, especially if you’re in the legal field.
Let your attorney manage the process so you can focus on moving forward with your life.
Additionally, your attorney will be able to make modifications to your estate planning documents, including updating your will, your living will, and powers of attorney to reflect your new circumstances.
Once the immediate decisions are made and you’re feeling better, your attorney can check your estate planning documents and recommend any further changes that might be necessary to keep those documents current.
Certified Public Accountant: The death of a spouse can render an already complex tax situation even more complicated, so your CPA is a welcome partner in this process.
He or she can help you determine which benefits are taxable and which aren’t.
When it comes time to file taxes, your CPA can help you maximize deductions and plan for all your upcoming tax obligations, which may include estate taxes and returns for living trusts.
Make an appointment with your CPA within the first month or so after your spouse’s passing. That way, you will be able to meet the tax filing deadlines for the estate, which are different than the regular Federal tax filing deadline of April 15th.
Financial Planner: The third member of your team of professionals is perhaps the most important when it comes to helping you create a comfortable and confident financial future.
Your financial planner can assess your current financial situation and the impact of your husband’s passing on your financial situation going forward.
As your partner in managing your finances in a proactive manner, your financial planner can craft a financial strategy or update any existing financial plans taking your goals and dreams into account in a holistic fashion. Consider your planner as a coach, support, and accountability partner as you transition into a new stage of life.
With your trusted advisors at your side, here are the most immediate financial priorities to deal with during your first year as a widow:
Probate the will
If you are the executor of the estate, you must probate the will.
This is done by filing a Petition for Probate of a Will with your county of residence.
Depending on the complexity of the estate, the entire legal process can take a few weeks to several years to complete. Keeping your attorney in the loop from the beginning can help you keep the process on track.
Deal with life insurance
There are two potential sources of life insurance coverage to pursue: insurance you and your husband bought through an insurance agent and any employer policies that might exist.
In the first case, contact your insurance agent about your husband’s passing. The agent can help you navigate the necessary paperwork to get things moving in the right direction.
And don’t be surprised if the insurance agent encourages you to invest the death benefit into another product; the product most commonly suggested is a variable annuity.
But be cautious.
While this may seem tempting as a way to gain more income in retirement via an annuity payout, do some due diligence before making this decision.
In my experience, annuities are often expensive and can lock up your money for several years.
Inquire about any deadlines that exist for investing the death benefit and then make an appointment to see your financial planner to discuss options.
If your husband was employed, check with the human resources department at his employer to see if he had any life insurance there.
Apply for survivor benefits
Depending on your age and your husband’s history, there are likely some benefits you’re entitled to; these benefits potentially include a one-time Social Security death benefit, Social Security retirement benefits, Veteran’s Administration benefits for military veterans, and employer benefits, if he was still employed.
If you are over age 60 at the time of your spouse’s death, you may be entitled to survivor benefits in addition to a one-time death benefit from Social Security.
In this case, visit the local Social Security office to stop the benefits he received and apply for new benefits for you.
If your spouse received monthly disability payments from the military, you may be entitled to continue those monthly payments. Contact the Veterans Administration to discuss what benefits are available.
Lastly, if your spouse was employed at the time of death, you will need to make an appointment with the human resources department of his company to discuss any employee benefits to which you may be entitled as his surviving spouse.
If your spouse was receiving a monthly payment from either the Social Security Administration or the Veteran’s Administration at the time of his death, do not continue to cash the payments after his passing.
The government will likely take those payments back eventually so either hang onto the checks and don’t cash them or if the money is direct deposited, open a separate account where you can hold the money until it has to be paid back.
Whatever you do, don’t spend the money.
Notify the agency involved immediately of his passing to set the process in motion to stop those benefits from continuing to be paid.
Contact your bank, financial institutions, and investment management firms to have all your jointly held bank, brokerage and investment accounts retitled.
In most states, joint accounts are considered to be “Rights of Survivorship,” but you should confirm this before making any changes.
Your financial institutions will be able to advise you on the process of renaming these accounts. Make sure you include copies of the death certificate to facilitate these requests in any correspondence.
Review loans, bills, and financial obligations
Refer to your checkbook, online banking profile and/or files of bills and loans, and make a list of all the bills, expenses, loans and other financial obligations you have, separating items by ownership.
This should include a list of accounts solely in your name, solely in your husband’s name and those held jointly.
Once that list is complete, you’ll have a roadmap for your next steps.
There should be little to no change in the handling of the accounts and expenses in your name only unless you need to make temporary payment arrangements until the estate is probated.
Next, contact all the businesses where you have joint accounts to arrange to have your spouse’s name removed from these accounts.
It’s best to make these contacts by phone to clarify any specific procedures you need to follow. Follow up that conversation up with written correspondence including a copy of the death certificate for verification.
Finally, notify any businesses or service providers with accounts solely held in your late husband’s name.
Let them know that their account is now subject to probate and will be handled by the estate and provide your attorney’s name and number in case there are questions.
Try to handle these matters as soon as possible – definitely within one billing cycle – so you don’t endanger your credit report and credit score with late payments.
Fortunately, there are some payments you may be able to cancel outright.
These include gym memberships, professional journal subscriptions, and club and professional association memberships.
These dues can be terminated without any further obligation in most cases.
If the company is local, go and speak with a manager personally.
If it is not, call customer service and notify them of the death and follow up with written documentation and a copy of the death certificate if necessary.
Consider the long term
After you’ve taken care of the immediate financial concerns, you need to look at some of the long-term decisions you’re going to have to make.
Eventually, you will need to update your own estate plan and life insurance policies.
You’ll need to take a look at your investment portfolio and make some decisions about the direction you want to take.
You’ll want to decide if you want to move or continue living in the home you shared with your partner.
Perhaps you’ll want to buy a new car, take a cruise to Europe or remodel your home.
These are all important things to consider and potentially discuss with your trusted advisors.
Your First Year as a Widow: In Conclusion
The loss of a spouse is one of the most stressful events in life.
At such a difficult time, it’s important to take care of yourself and rely on your trusted advisors – your attorney, CPA, and financial planner – to help you manage your affairs.
It’s also vital to avoid rash decisions that could compromise your long-term financial security and confidence.
By working with your advisors to create a temporary plan of action, you can be assured that the most important matters are taken care of as you work on getting the estate in probate and taking care of other more urgent matters.
As the estate begins to settle and any inheritances are distributed, you may have significant amounts of money to invest.
Your financial planner can help you understand your options and how they fit into your financial plan.
That way, you can secure your financial future and avoid any unnecessary risks or sacrifices to your current lifestyle.
If you’d like to discuss your situation and explore your opportunities for a comfortable, confident future, please contact me.
I’d love to hear from you, and you can learn more about me and how I can help you as well.
While You’re Here . . .
Based on the popularity of this article and additional questions I’ve received from readers, I want to share some more thoughts and offer some additional advice on this important topic . . .
Inform Your Spouse’s Creditors
The first step is ensuring that your spouse’s death is on file.
Failing to alert creditors to your spouse’s death can lead to problems ranging from suddenly canceled credit cards to attempted fraud if your spouse’s identity is stolen.
And yes, that can happen after death.
Financial planning after the death of a spouse needs to start with protecting YOU, and making this first step.
Find Your Trusted Person
A trusted person can be a family member, or it can be a professional like a financial planner.
Regardless, find a person who you can trust with financial matters, and ask them if they can help you with financial questions and situations.
A second pair of eyes can help you spot discrepancies in bills, difficulties in certain situations, and other problems, and a second pair of hands can support you as you do the hard work of unraveling your spouse’s finances.
Be Smart, Not Timid
Women tend to invest more conservatively while men tend to invest more aggressively, which means that they balance each other out as a couple.
Losing that aggressive component can, believe it or not, put you at financial risk.
For example, it’s possible to invest too conservatively and potentially outlive your savings!
Look at your finances and evaluate your risk carefully, so you’re still covered in case of the worst.
Hold Off On The Big Decisions
You may well be in a situation where you need to sell off unnecessary assets like a car or even move to a smaller home.
But, in most situations, you shouldn’t be doing this while planning a funeral or getting other major emotional events in order.
It can also be overwhelming.
Selling the home you’ve lived in for decades can be emotionally trying even if you’re not dealing with a spouse that has passed away.
There’s a risk that some people (agents, buyers, advisors, etc.) may attempt to take advantage of your situation, or you may be tempted to price the asset just to get rid of it instead of getting the full financial value out of it.
If at all possible, delay these sales until you can make them with a clear head.
Get Your Spouse’s Papers In Order
Often the toughest task, financially, is getting all the papers in order.
You need to get a sense of your spouse’s assets and debts.
If they’re not well organized, you may have to work to get that in shape.
But often it can provide some with a sense of closure, and it’ll give you a stronger overall view of your financial situation.
Don’t Write A Check To Anyone Without Official Documentation
You’d think that those dealing with an emotional setback such as a spouse’s death would be left alone by criminals.
Sadly, that’s not the case.
Fraudsters of all types will look carefully at obituaries, and then try to, for example, pose as your insurance agent and tell you that you owe thousands of dollars on your spouse’s life insurance policy.
If somebody calls claiming you owe a debt of some sort, ask for their contact information so you can look up the debt, or ask them to send you a bill first.
Be especially wary of high-pressure situations.
If somebody is demanding money from you right now, they probably have no right to it.
You Assume Pension And Retirement Fund Obligations
When your spouse passes away, often a big question is what happens to the assets.
Assets exclusively in your spouse’s name that are passed on to you may come with a set of obligations, as well.
For example, if you inherit a 401(k), you might be required to withdraw money from that account under tax law, whether you need it or not.
Or you may be eligible for specific benefits under your spouse’s pension.
There is a whole string of obligations you may need to fulfill.
Don’t be pressured into making decisions
While you need to adhere to deadlines and any time-sensitive decisions, don’t make any other decisions until you’re comfortable and understand the pros and cons of your choices.
If you don’t feel like you have all the information you need to make a decision, then don’t hesitate to take more time to research the decision. Or ask for help from your trusted advisors as one or more of them has likely helped a client with similar decisions in the past.
And while friends and family likely have your best interests at heart, be wary of their well-intentioned advice. While a decision or strategy may have worked well for them, it doesn’t mean it’s the best decision for you.
Finally, be extra skeptical of anyone who wants to sell you something, especially if it sounds too good to be true.
It’s unfortunate that there are salespeople, especially in financial services, who see new widows as easy targets for their financial product or scheme du jour.
At the end of the day, it’s your life, and there’s absolutely no one better equipped to make decisions about your life than you are.
Get (and stay) financially organized
You know from direct experience the difference it can make when you’re financially organized.
If you and your husband had everything organized and you knew where everything was, it likely made the financial transition and decision making go much more smoothly.
On the other hand, if you and your husband weren’t well organized and didn’t have your financial house in order, it probably added to your stress and anxiety as you’re adjusting to life on your own.
The best way to get and stay organized is to keep your finances as simple as possible.
That means as few accounts and moving parts as are necessary to make sure your bills are paid on time, your credit score remains solid, and you always know what, and how much, is where.
In fact, in addition to the organizational benefits of keeping things simple, you can also automate a lot of your finances to take much of the day-to-day decision making burden off your shoulders.
And just think how much easier it will be for your heirs if all your financial matters have been well organized and documented throughout your life.
Don’t Be a Banker
You may be approached by family members asking for a loan, or even being as bold as asking for part of their inheritance early.
As much as you may want to help them out, please resist this urge.
You’re a person; not a bank.
You don’t know how long you’ll live. You don’t know what challenges you’ll face that some extra money might help alleviate.
And please don’t fall for the guilt trip.
Some kids have approached newly widowed Moms saying things like, “if Dad were still around, he’d help me out.”
You’re likely familiar with the pre-flight safety routine that instructs you to put the oxygen mask on yourself first before helping others.
Well, the same concept absolutely applies here.
It was you and your husband’s money.
Now it’s your money.
No one else has any right to any part of the money you may well need months, years, or decades in the future to support yourself.
Unless, of course, it was spelled out in your husband’s Will and estate planning documents.
And on that same note, be wary of people until you really get to know them.
I’ve had women tell me more than once that a lot of older single men are looking for a “nurse”, a “purse”, or both.
It’s almost certainly best to keep money matters to yourself until you’ve really gotten to know someone (and their motives).
You Don’t Have To Go It Alone
Though you might feel shattered and alone right now, you don’t have to face your financial future by yourself. Especially during your first year as a widow.
Work with your current trusted advisors or seek out trusted advisors to help you evaluate your choices and make thoughtful decisions going forward – about your finances and more.
Most often, your team of trusted advisors will include an estate planning attorney, an accountant, and a financial advisor who works as a fee-only fiduciary.
Without these experienced and empathetic partners on your team, you run the risk of making expensive, and perhaps irrevocable, decisions that could impact you for the rest of your days.
You’ll have a lot to deal with ranging from Social Security benefits to employer life insurance to going through the probate process.
Can you do it on your own?
Should you do it on your own?
I’m not sure you want to figure that out the hard way.
In my experience, you want to be in a position to explore and understand each of the many issues you’ll be faced with and make the best decision for you (and the rest of your life) the first time.
There are rarely any do-overs in this arena.
And even if you’re a seasoned executive with a background in finance, tax, and law, it still makes sense to involve other professionals who can bring some much-needed objectivity and emotional detachment to your decision-making process.
Though you may feel alone in this endeavor, you aren’t. Not with your team of trusted advisors working alongside you and with each other.
And another word of caution: if something sounds too good to be true, it almost always is.
Be wary of people offering advice, even family, and close friends, trying to steer you a certain direction with your finances or your home.
While some issues will need to be addressed sooner than later, you shouldn’t feel like you need to rush to make any decisions, especially involving your money.
Remember, Rome wasn’t built in a day, and neither will the process of addressing all the financial and lifestyle decisions be something you can run through in a couple of days or weeks.
Depending on the size and complexity of your financial situation, probate (the process of settling your husband’s estate) can take weeks or it can take years. Most often, it will take a few months.
Hopefully, by now I have conveyed the importance of assembling a team to help you navigate your first year as a widow.
Regardless of complexity, one of the best places to start is with a qualified and experienced estate planning attorney who can assist you with the probate process and all of its rules and deadlines.
Need help finding a good estate planning attorney?
Ask your other trusted advisors (accountant or financial advisor) who they would recommend, or feel welcome to give me a call.
While I know many good estate planning attorneys in and around the metro Atlanta area (where I’m based), I can also help you find a good attorney anywhere in the country through my network of financial advisors and other professionals.
Depending on the timing of your husband’s death, you may have some time before you have to deal with filing tax returns. Or you may not have much time at all before April 15th rolls around again.
If you’re reading this and it’s January 1st or later, I would begin working with your current accountant or start looking for one to help you with your income tax returns.
And if you want someone who can help oversee and organize the entirety of your financial life going forward, a fee-only financial advisor is an indispensable member of your trusted advisor team.
And yes, I’m admittedly a little biased when it comes to the benefits of a trusted financial advisor (that’s what I do and have done for the last 25+ years).
Once your trusted advisor team is in place, you’ll be fully equipped to deal with things like:
Life insurance proceeds
Retitling accounts and assets
Reviewing accounts, loans, bills, expenses and budgeting
Planning for the rest of your life Remember, going it alone when it comes to your money is simply a choice.
I suggest you make your first year as a widow easier by surrounding yourself with a team of professional advisors who can help you evaluate decisions and make smarter choices for the future.
Bringing It All Together
By now you should have your trusted advisor team in place or know how to assemble one.
Perhaps you’re well into the probate process, or maybe it’s done.
And you’ve begun addressing some of the financial issues I mentioned above.
Whether you’re 36, 56 or 76 years old, you need to think about the rest of your life and managing your finances to support yourself and the life you want to live.
This may, but will not necessarily, involve investment management decisions.
Do you have long-term care insurance? What happens if you have to deal with a long-term care need of some sort or another?
(By the way, I don’t sell insurance, so you don’t have to worry about ever getting a sales pitch from me. But it’s an important area and one that deserves consideration. And one that I can help you evaluate.)
What do you do if one of your children or grandchildren approaches you for a loan? Or for an “advance” on his or her anticipated inheritance?
How do you handle someone from church or a family member who thinks they “know” exactly what you need to do and how you need to do it?
Unfortunately, even after you’ve addressed the initial steps that I’ve outlined above, there will always be money matters that need to be dealt with.
That’s precisely why it’s smart to have your own personal financial plan to serve as a roadmap and decision tool when you’re faced with the scenarios above or the endless list of other potential situations you’ll encounter in the future.
And let me be clear, a financial plan is nothing more than a starting point.
The real benefit comes from the ongoing process of financial planning. This is where we would regularly update and review your financial plan and look at any of the possible “what if” scenarios you might be considering or wondering about.
And building your financial plan can be as easy as starting with an exploratory conversation where we want to uncover your attitudes about money, your goals, your hopes and your dreams, and uncover what’s important to you and what your priorities are.
The rest of your life is already happening. Make sure you plan for it to happen according to your needs, wants and wishes.
I hope this information has been helpful. If you have any questions or would like to discuss anything further, simply request a call with me.
It starts with a conversation.
Lastly, if you found this information helpful, please pass it along to someone else you think might benefit from it.
Thanks for reading.