How To Prepare Your Finances for the Death of a Spouse
Written by
Yaël Bizouati-Kennedy
Edited by
Jana Lynch
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The death of a spouse or partner is immensely painful and emotional and during this stressful time, financial challenges may arise. That’s why experts strongly recommend talking with a financial planner and educating yourself so you can properly prepare.
According to an article published by the financial services company Merrill (formerly Merrill Lynch), “The financial burdens that come with the loss of a partner are immense and immediate. In addition to the financial demands, critical paperwork and decision-making begin their steady creep right away. That’s when help from a knowledgeable professional can be invaluable.”
The surviving spouse has to contend with many financial changes, including the fact that their income tax bracket may change, and, in the case of retirees, the surviving spouse also loses a second Social Security check, making it potentially more difficult to make ends meet.
“Widows and widowers have to understand that when their partner dies, typically, their income goes down with the loss of one Social Security benefit and a possible reduction in pension benefits,” John Iammarino, president and founder of Securus Financial in San Diego, California, told MassMutual “And while their income goes down, their taxes may go up.”
In addition to understanding tax and Social Security changes, experts urge widows and widowers to update their assets and estate plans. Russ Thornton, founder of Wealthcare For Women, also said in a blog post that they may also need to update the title on their home and other assets.
“Contact your bank, financial institutions, and investment management firms to have all your jointly held bank, brokerage and investment accounts retitled,” he wrote. “In most states, joint accounts are considered to be “Rights of Survivorship,” but you should confirm this before making any changes.”
Finally, additional tasks include dealing with life insurance, applying for survivor benefits, and reviewing loans, bills and financial obligations. “Your financial planner can help you understand your options and how they fit into your financial plan,” Thornton added. “That way, you can secure your financial future and avoid any unnecessary risks or sacrifices to your current lifestyle.”
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