The death of a spouse is a challenging event to face and move through. You are dealing with grief, along with worries about an unknown future. If that isn’t enough, unfortunately, many practical financial issues must be addressed at this time. It can all seem overwhelming. To help guide you through the process of coping, we’ve created a comprehensive checklist and timeline of responsibilities you may face after your spouse’s death.
First, it can be helpful to understand the most important general issues.
What to Do First When a Spouse Dies — Set Up an Assistance Network
There are a lot of decisions to be made and tasks to be done when a spouse dies. You do not have to do it all by yourself. It’s important to take advantage of all available help. Friends and family can help you make notifications and funeral arrangements, and cope with immediate living needs. Advisors like your attorney, insurance agent, financial advisor, and accountant can help guide you through a maze of requirements and advise you on the best financial and legal strategies.
Organize For Peace of Mind
It isn’t easy to keep up with complex responsibilities when you are stressed. Please think of organization as a critical component of self-care. You do not need the added worry of wondering where necessary paperwork went or whether or not you’ve taken care of essential tasks. There are three main categories of things you should try to organize well from the start.
- Records. You will need many documents, some of which already exist and will need to be located. Our checklist will help you identify and find them. You will receive others during the process. All should be filed within easy reach.
- Contact list. There are many people and agencies involved in settling a loved one’s estate and setting yourself up for the future. It will save time and angst if you have one place to store all of their names and contact information.
- Communications/actions. You should create a running “diary” of all communications and actions taken related to each issue you are working on — funeral arrangements, government benefits, bill payment, taxes, estate settlement.
Short-Term Financial Needs & Bills
If your spouse was a major contributor to the family income, you will need to think about how much money it will take to get you through the first three months or so until you can settle the estate and start receiving any benefits owed to you. Consider funeral costs, regular bills, and living expenses. If you do not have sufficient emergency cash saved up, you may be able to use credit cards to bridge the gap, access joint financial accounts, quickly receive life insurance proceeds, or negotiate with creditors for an extension on some payments.
As a surviving spouse, you may have to file multiple tax returns. If your spouse was an investor, self-employed, or a partner in a business, these can be quite complicated. You yourself may qualify for a special filing status for the two years following your spouse’s death. There are also special tax regulations related to the types of income you may receive after your spouse dies, including insurance proceeds, retirement plan distributions and Social Security survivor benefits. The advice of a tax professional can be beneficial.
It may not be long before you start thinking about giving away your spouse’s possessions, making charitable gifts or sharing benefits you receive with other family members. However, these are not decisions to be made lightly. The best idea is to wait until you have a clear overview of the estate and your own future needs, and you are better prepared emotionally to make major decisions.
Long-Term Financial Needs
One of the most important responsibilities you will have is planning for the future of yourself and your family. Once you have taken care of the immediate tasks, think about:
- Your future income needs and how to meet them
- A new spending and savings budget
- Readjustments to your investment portfolio
- Your children’s education funding plan
- Your retirement plan
- Your own estate planning
Thinking about what to do when your spouse dies is not easy. The following checklist contains more detail about the tasks and decisions involved. Your Wealth Advisor at Kayne Anderson Rudnick is also always available to provide additional information and guidance, tailored to your specific situation.
This report is based on the assumptions and analysis made and believed to be reasonable by Kayne Anderson Rudnick (“KAR”). However, no assurance can be given that KAR’s opinions or expectations will be correct. This report is intended for informational purposes only and should not be considered a recommendation or solicitation to purchase securities. Past performance is no guarantee of future results.