Dealing with Finances After the Loss of a Spouse
By: By Lucille Rosetti, Guest Writer, The Bereaved
Elder Law Associates Newsletter dated September 24, 2019
The loss of a spouse, whether you knew it was coming or not, is devastating. As we enter our golden years with our spouse by our side, we know the day will eventually come, but we are never truly prepared for it. You might feel lost, and the financial decisions you must make in the wake of your grief certainly don’t make it easier. The following tips will help you navigate the financials, so that you can emerge from your grief in a good spot financially and free from unnecessary stress.
Claim Your Benefits
It seems odd to use the word “death benefits,” but these benefits are in place so that you can continue living as normally as possible after the loss of a spouse, and you are entitled to claim them. If your spouse was still employed, you may be able to receive pension benefits, as well as payouts on 401(k) funds, unused vacation time, and earned bonuses. If your spouse was retired and had an IRA, it is likely that your spouse designated you as the beneficiary. You can keep the IRA, roll it over, convert it to a Roth IRA, disclaim the assets, or cash out the IRA, all of which are explained in more detail by Investopedia. It is likely that your biggest benefit claim will be your spouse’s life insurance policy and his or her Social Security. However, before you begin the process of collecting any benefits, you need to gather a few important documents, such as:
· Letters testamentary/letters of administration (to show you have the legal right to handle the financial affairs of your deceased spouse)
· Death certificate
· Investment accounts
· Bank accounts
· Tax returns from the past two years
· Marriage/birth certificate
Assess the Situation
After the loss of your spouse, it is absolutely imperative that you review your own current financial situation and analyze your cash flow. You don’t want to make any big financial decisions or changes immediately, but it will be helpful to take stock of your current situation, so you can make any necessary adjustments. List all your sources of income, including Social Security, pensions, dividends, interest, job income, and IRA distributions, for both you and your spouse. Then, list your monthly expenses, such as mortgage payments, utilities, insurance, groceries, gas, and leisure.
Now is also a good time to think about the future. For example, you might want to review your health and life insurance policies and make changes. To ensure you’re getting enough coverage with your health insurance, take a look at your current plan’s benefits and switch to a new one if necessary. Seniors can greatly benefit from switching to a Medicare Advantage plan. These plans give the same benefits as an Original Medicare plan, plus additional benefits including dental care, vision care and prescription drugs.
In terms of your life insurance policy, determine if it is worth keeping or selling, as selling the policy can help with expenses and medical costs later on. It’s good to know your options should you suddenly find yourself in a sticky situation financially. If your financial future has you worried, meet with a financial advisor and discuss the possibility of setting up a liquid bank account, such as a money market account or checking account, that is reserved only for emergencies.
Take Your Time
Grief is a process that shouldn’t be rushed, and the same applies to any and all financial decisions. It doesn’t matter if you are used to handling the finances or not – it will be an adjustment, and you may have to make some changes. Perhaps, in the beginning, you need to cut back on certain services and memberships and create a set budget for any discretionary spending. Although you may prefer to do it yourself, it is worth speaking with a financial planner who can truly assess your financial situation and make recommendations to send you in the right direction.
Once life has settled down a little, meet with an attorney to revise your estate plan. An attorney can help you make adjustments so that you and your heirs are cared for. While you are seeking help, consider finding a support group or even meeting with a therapist.
Navigating life without your spouse is hard, but with help, it isn’t impossible. To ease the process, get your financials in order -- claim your benefits, assess/modify your financial situation -- and take your time. Life will eventually return to normal, so keep looking forward.
Disclaimer: The views, information or opinions expressed in this article are solely those of the writer and do not necessarily represent those of Elder Law Associates PA and its employees or attorneys. For specific information regarding your financial or legal situation, please contact your financial advisor or attorney.
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