Which financial decisions need to be made right away?

Financial Affairs When a Spouse Dies

by Gary Foreman


It's unfortunate, but true. If you're past 50 and married, you need to be prepared in case your mate should pass away. There are specific financial affairs that you'll need to perform. As a general rule, experts say that you shouldn't make major life changing decisions within the first six months to a year after your spouse dies. However, there are some decisions that do require attention fairly quickly. Many financial activities need to happen within the first two months of your mate's death.

Review financial documents.

You'll need to review your financial documents to see how everything is titled. If you have a list of your assets and liabilities, that's a big help. If not, you'll need to create one. Include all real property (houses, autos, boats, etc), bank and brokerage accounts, pensions, and retirement plans (401k, IRA, etc.). You may also have ownership of small business or online accounts. On the liability side, you'll need to include any mortgages, loans (auto, personal, etc.), and credit card accounts. Not only will you be checking these accounts for how they're titled, but also for any beneficiaries that will need to receive an inheritance.

Financial Affairs When a Spouse Dies

Review estate documents.

Estate documents include wills and trusts. Greg R. Wind, a CPA and partner in Kallman + Thompson + Logan, LLP in Los Angeles suggests, "It may be necessary to consult with an estate planning attorney, perhaps the individual that drafted the original trust and estate documents, if they are still practicing. If the community estate is greater than $10,980,000 (for 2017), it may also be necessary to file an estate tax return for the decedent, although no estate tax, if applicable, is generally payable until the second passing."

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Find out which benefits continue.

You may have had health insurance on your spouse's plan. You'll need to find out whether that coverage continues after death. Often, you'll be allowed to purchase coverage through the plan. Make sure you compare costs of that to an individual plan. The same is true for any drug plans.

You'll also want to find out about the Social Security benefit for surviving spouses. Mr. Wind suggests, "It is best to stop by or make an appointment at a local Social Security office to discuss your individual situation with a knowledgeable representative. More than 6.1 million widows and widowers receive more than $6.68 billion in monthly Social Security benefits based on their deceased spouse's earnings record. A widow or widower can receive reduced benefits as early as age 60 or full benefits at full retirement age or older."

What about retirement accounts?

Retirement accounts (like IRAs and 401ks) have their own rules. Your spouse might have designated a beneficiary for their IRA account. If so, that will determine who gets the account assets. 401ks are a little different. Regardless of who's listed as a beneficiary, a spouse or even ex-spouse may get the account assets. If the account administrator can't answer your questions, contact a CPA or attorney who deals with estate issues.

Who's in charge?

How much responsibility and control you'll have will depend on the estate planning you've done. Typically, a will lists an executor or personal representative. Trusts include a trustee and successor trustee. Whoever is named will bear much of the responsibility and control over distributing assets and handling financial affairs. In most families, the surviving spouse is listed as the executor and/or trustee. Sometimes this is done jointly with one of the children. That's often done so the surviving parent doesn't have to deal with all the financial affairs without any help while they're still grieving the loss of a lifetime mate.

Expert Interview: How to Choose an Executor for Your Estate

Again, experts suggest that you postpone any major financial decisions that you can delay until six months or a year has passed. And, for any decisions that must be made immediately, get qualified advice. Many of the financial choices that you make now can have an effect for the rest of your life.


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Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.

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