The death of a spouse is a horrible thing to endure for any married person.
In the wake of a death—particularly a sudden one—getting in the right frame of mind to objectively deal with looming debts that are suddenly yours and yours alone is a massive challenge. But it is a challenge you must overcome to ensure the health of your financial future.
To help you get started on the right foot, here are the five essential steps to follow:
The first step to keeping your financial house in order after the passing of a spouse is to collect every single key document. You will need to pull together things like the will, all life insurance policies, tax returns, investments statements, all bills and more. When pulling together the bills, make sure you include anything owed for medical care, mortgage debt, credit cards, student loans, auto loans, and anything else that might be owed.
If you find that the debt has piled up and you have creditors to pay, time is ticking for you to take care of the debt that is owed. You can’t settle your spouse’s debts if you don’t know what they are and what you have to pay them off with.
Following the death of your spouse, notify creditors and debt-holders—credit card companies, cable companies, utility companies, auto lenders, the issuing bank on a mortgage, etc.—to let them know your joint-accounts will need to be transferred to your name.
Find out which bills were automatically paid (via a bank link or credit card) and which ones were paid manually month after month. If your now deceased spouse was the one who handled all the bills, this can be lot of responsibility to take on at once, especially if there are several bills. Consider creating a monthly bill checklist and placing it somewhere you’ll see it every day, like next to the house phone, or right by your computer.
If some bills or lines of credit can’t be paid immediately, ask for an interest-free extension given the extreme circumstances.
For credit lines and debts exclusively tied to your spouse, alternative arrangements will need to be made. (A credit line is like a checkbook ready to use to pay for something. Once used, a debt is owed to the supplier of the credit line). Any lines of credit with no outstanding debts should be closed immediately. Those that do owe an outstanding balance should be paid, but the when, where, and how is subject to interpretation.
If your spouse’s personal outstanding debts are too overwhelming to handle on your own, consider contacting an estate attorney. Their legal expertise in this particular field may prove invaluable.
Piggybacking on the final piece of Step 2, enlisting the help of others during this process is going to be essential.
Between grief, loneliness, and a whirlwind of other perfectly natural emotions that coincide with the passage of a spouse, you’ll have enough on your plate to deal with in solitude. Settling debts and getting your financial house in order shouldn’t be one of them.
Estate attorneys, CPA’s financial planners, friends, and family can all play a vital role in helping you find your footing and get debts settled following a death. Their help will be especially handy when it comes to updating the names listed on any deeds or titles you may have, like those to a car or house.
When you are ready to ask for help, consider working with a financial adviser as they will be able to connect you with other professionals (lawyers, CPAs, etc.) as required.
Begin the conversation with your adviser by discussing any investment or retirement accounts your spouse held, and how best to go about distributing said assets to surviving beneficiaries. This conversation should include the claim reward on any life-insurance policy that was in place at the time of death, particularly considering it can take weeks or months to get the claim paid.
Also, discuss any Social Security Administration benefits, including spousal and survivor benefits, as well as veterans benefits through the VA (if your spouse formerly served in the military). Ask your financial adviser to help you reach out to all other insurance providers—auto, health, dental, homeowner’s, etc.—and notify them of the death. Use this time to cancel or modify the policies as required.
The only two things in life that are guaranteed are death and taxes. Even though your spouse may be gone, the IRS is still going to come looking for its money. The taxes for your spouse will need to be filed (for the year of death) and any outstanding sums will need to be paid.
Now, because the death of your spouse will likely trigger a number of financial transactions and transfer a number of financial liabilities, it may be worth your time, money, and energy to just hire a tax professional.
If you have found yourself with a loss, you will be amazed at the amount of work that needs to be done just to sort things out. I think this may be by design…to help a grieving individual keep their mind focused on completing tasks instead of having the time to dwell on the reality at hand.
United Capital Financial Advisers, LLC (“United Capital”), is an affiliate of Goldman Sachs & Co. LLC and subsidiaries of the Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management and financial services organization. Investing involves risk and clients should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.
The information contained in this blog is intended for information only, is not a recommendation, and should not be considered investment advice. Please contact your financial adviser with questions about your specific needs and circumstances. This blog is a sponsored blog created or supported by United Capital and its employees, organization or group of organizations. This blog does not accept any form of advertising, sponsorship, or paid insertions. Certain authors of our blog posts may be influenced by their background, occupation, religion, political affiliation or experience. It is important to note that the views and opinions expressed on this blog are that of the owner, and not necessarily United Capital Financial Advisers. As a Registered Investment Adviser, United Capital does not allow any testimonials on their blog, and any comments deemed as such United Capital will remove.
United Capital does not offer tax, legal, or accounting advice; therefore all articles should not be taken as such. Readers should obtain their own independent legal, tax or accounting advice based on their particular circumstances. All referenced entities in this site are separate and unrelated to United Capital. Any references to any specific commercial product, process, or service, or the use of any trade, firm or corporation name is for the information and convenience of the public, and does not constitute endorsement, recommendation, or favoring by United Capital.