The first few weeks: A financial checklist for widows

Posted by Cindy Wilson .
Bereavement can be such a shock to the system that it temporarily impairs high-level cognitive reasoning and one’s ability to plan for the long, or even the medium term.
It’s crucial that we give our grief the space it needs and attend only to what is pressing: Our immediate comfort and wellbeing. Entrust your financial affairs to a family member, a friend, or an outside party, such as a financial advisor—someone you trust to handle the situation delicately. He or she is there to help make sure you’ve got all bases covered during the bewildering days and weeks following bereavement. Here’s a checklist of things you may be able to handle yourself:

Six-point financial checklist for widows

First few days
  • Get multiple copies of the death certificate. You’ll need one to close each of your spouse’s accounts, or to consolidate them with your own assets.
  • Use those copies to notify all relevant financial institutions. Unfortunately there are opportunistic fraudsters out there who target accounts belonging to the recently deceased.
  • Notify the Social Security Administration, especially if you or your deceased loved one were already receiving benefits. If your spouse’s benefit was higher than yours, you’ll be eligible to receive that amount instead. For example: If you were receiving monthly benefits of $500 and your husband was getting $2,000 while alive, you’ll generally be entitled to the $2,000 amount as a survivor’s benefit. (However, you must have been married for at least 10 years).
First few weeks
  • Check beneficiary designations for all your spouse’s retirement plans and IRAs. The way you get the money depends on what type of account it is. For example, if your spouse has money in a Roth IRA, you don’t ever have to liquidate it and instead, can make tax-free withdrawals from it as needed.
  • If your spouse had money growing in an IRA, consider the option of receiving distributions over time to avoid the potential tax implications of a lump-sum withdrawal. Your tax advisor can help you determine how much to withdraw each year.
  • Review the choice of investments in your inherited portfolio. It’s common for married couples to be uninformed about their loved one’s investing style or risk tolerance. Though you may not plan to liquidate your inherited assets any time soon, your advisor may recommend changes that would better align the portfolio to your needs as a widow. A portfolio overconcentrated in stocks, for instance, may not be right for you.
Make preparations now
Widows outnumber widowers by around four to one.1 For married women of all ages, it therefore makes mathematical sense to consider and plan for the possibility of surviving your spouse for as long as several years or even decades. Adjusting to a new financial reality, when you are feeling raw with grief is an unnecessary burden; you may not be in the right state of mind to make good long-term decisions.
A far better course of action is to cover widowhood in your estate plan; to fully understand what your benefits will be in the case of your partner’s passing, and to put that information in a binder, which you can easily access during those painful days following such an event. The last three points in the above checklist can, and should, be discussed with your spouse while he or she is alive.
Although grief is not something we can totally control—and our emotional reactions to a partner’s death is never something we can fully prepare for—financial outcomes are manageable, especially with some forward planning.
1 Stock investing involves risk including loss of principal.
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July 12, 2018