What To Do When A Spouse Dies: A Financial Planning Checklist - Aspiriant Wealth Management

What To Do When A Spouse Dies: A Financial Planning Checklist

The death of a spouse is a profoundly sad experience. You need time and space to grieve your loss and process the life-altering impacts on you and loved ones. Unfortunately, in this worst of times, a very complicated, unwanted project is also suddenly dropped into your lap — managing your new financial affairs.

Important tasks include navigating the legal process of administering an estate, informing dozens of organizations of the death and following each organization’s different process to handle the death. It may feel downright exhausting and upsetting in these difficult times.

While mental, relational and spiritual activities to celebrate the life and mourn the death of your spouse are surely more important, we’d like to walk you through the key administrative and financial activities for when a spouse dies.

First, understand that no big decisions need to be made immediately. While we outline a few time-sensitive items below, you should not make decisions regarding housing, investing large sums, or other choices that impact your future financial wellness in the immediate period after your spouse’s death. Take it day by day — there will be enough time.

Things to do soon after death

Gather documents. There are lots of documents and information to gather when a spouse dies. Some are more pressing than others. These are the most time-sensitive:

  • Will
  • Revocable living trust
  • Death certificate (get 20 of these, the funeral home should be able to assist)

If you’re reading this while both of you are alive, you will greatly help your surviving spouse if you can put your estate planning documents in a known, secure space right now.

Make an appointment with an estate attorney. Ideally this is with the lawyer who drew up your estate planning documents. Regardless, an estate attorney can help you through the steps of executing the will, also known as probate. This is a legal process by which assets of the deceased are identified and then paid to creditors and disbursed to beneficiaries. Depending on your state of residence, the probate process may need to be initiated within weeks of death. An estate attorney is also very helpful to review and help administer any provisions in your living trust that take place upon the death of the first spouse.

Things to do within the first 30 days

Continue paying bills. Bills still come due, and you don’t want to deal with losing any basic services. If your spouse handled the bill-paying, take inventory of all your regular payments which may include:

  • Home mortgage
  • Other loans (auto, other property, college, lines of credit)
  • Insurance premiums
  • Property taxes
  • Electricity
  • Internet
  • TV cable and streaming services
  • Cell phone
  • Water/sewer/garbage

If you’re reading this while both of you are alive, you will greatly help your surviving spouse if you can put your non-discretionary bills on autopay.

Contact employer. If your spouse was still working, you should contact their employer. You need to fully understand the benefits you are entitled to as a survivor. Inquire about life insurance benefits. If your health insurance is through the employer, ask how long you will have coverage and options at the end of coverage. If there is a 401(k) account or a pension, understand the options available and timing for decisions. Also ask about balances in Health Savings Accounts and Flexible Savings Accounts.

Contact Social Security. Inform the Social Security Administration of the death and understand the benefits available to you as survivor. You could have the funeral home take care of this if you’re comfortable giving them your spouse’s Social Security number.

Contact banks and financial institutions. Create a list and inform banks, brokerages and insurers of the death. You will use plenty of the death certificates you obtained earlier, and you will need to gather recent account statements to know about the account and how to contact the company. If you have a financial advisor, they can help you navigate this process.

Start with life insurance policies where you’re the named beneficiary to get the process rolling to receive the death benefit on the policy. Do the same for payable-on-death accounts and old retirement accounts. Payable-on-death accounts (sometimes called transfer on death) bypass probate and go to the named beneficiary of the account. It may make sense to put those funds in your living trust if you have one, otherwise you can put those funds in an account in your name and name new payable-on-death beneficiaries if they are obvious at this time. Old retirement accounts can be rolled into a retirement account or IRA of the named beneficiary.

Accounts held jointly should convert to sole ownership of the survivor outside of probate. Trust accounts are governed by the provisions written in the trust and are not part of the probate process. Sole accounts held by your spouse without a named beneficiary can only be distributed through a probate process.

If you’re reading this while both of you are alive, you will greatly help your surviving spouse if you pull together a complete list of all financial companies you work with and the logins for each online account.

Contact service providers. It is likely that your spouse used services such as social media, email, cloud storage, streaming and cell phone. You should contact each provider. Cancel services you won’t use. Close accounts that are susceptible to identity theft, such as email and cell phone. Update the relationship with service providers you wish to continue using. This might be something your adult children could help with.

Things to do within 6 months

The fundamental, administrative tasks of handling the death of a loved one are now either completed or in progress. When you are mentally and emotionally ready to think about your future life, this is when you can tackle big decisions that you may have deferred. We strongly recommend continuing with the team of professionals that you have worked with to this point. Or if you’ve had any difficulties, now would be a good time to interview new professionals. These are the experts you should consider for your team:

  • Financial advisor. We recommend working with a financial advisor, preferably one that can help you with wealth planning. You should have a clear understanding of whether your new financial situation can support your vision for the future and your financial independence. You may receive a lump of cash from life insurance. Your monthly expenses will likely change. You may have a different charitable mindset. A financial planner can help you factor these and many other dimensions into a coherent plan. There are many advisors out there; we recommend an independent advisor who has a fiduciary relationship to you.
  • CPA/tax professional. You should also have a tax professional on your team. Taxes become more complicated with the death of a spouse. Your personal federal and state income tax returns still need to be filed. The estate may also need to file separate income tax and estate tax returns.
  • Estate attorney: You should also have an estate attorney on your team for purposes beyond the administration of the estate. This is a good time to review your own will and current revocable trust, if you have one. Your wishes for assets may be different from when the trust was drafted or last amended. As a trustee of the revocable trust, if necessary, you have the authority to amend it or even create a new trust that fully reflects your wishes.

There are indeed many steps on the journey after the death of a loved one. Remember to take care of yourself. Although the administrative, financial and legal tasks seem daunting, this is a time to rely on trusted advisors to guide you through and assist with the larger decisions that emerge.