Losing a spouse shatters your world; it doesn’t have to ruin your sense of financial security as well. Basic estate planning can alleviate some of the burden and stress inherent in settling up affairs after the devastating loss of a spouse.
You likely won’t want to think about money or have the wherewithal to make sound financial decisions in the early stages of grief. That’s why it’s so important to plan ahead. Understand your finances and financial rights before enduring a loss. Without planning, you may find that immediately following your spouse’s death you are asked to make countless decisions and steps to secure your financial future. But with careful estate planning and preparation, you won’t have to deal with these pressures.
Beyond Basic Estate Planning:
Many couples meet with an attorney to make a will, then go home and file it away. A year later, the couple may forget what the will says, or even where they put the original document. This isn’t the best idea. Here, some additional steps you should take:
- Sit down together and talk about a plan for if your spouse survives you
- Make certain all assets that allow you to name designated beneficiaries are up to date. These include all employer-sponsored retirement plans, life insurance policies, checking and savings accounts, and investment accounts. Remember, your will does not override beneficiary designations on a specific asset.
Taking care of these steps makes things easier for the one left behind.
The Details You Can’t Ignore:
Even with the best and most organized plans, you can’t avoid certain tasks following the death of your loved one. Here’s a guide to some steps you will need to take:
- Request certified death certificates. Original death certificates are needed to open the Estate, collect certain death benefits, and transfer some assets out of the name of your deceased spouse. It is ordinarily a good idea to order a few at the offset, so that you do not need to go through the process of reordering through the Office of Vital Statistics.
- Collect death benefits. As the surviving spouse, you are usually entitled to certain Social Security payments, including payment of any arrears, and a one-time death benefit.
- Give notice of your spouse’s death to his or her employer, account-holding financial institutions and insurance agencies. In addition to Social Security Benefits, your spouse may have benefits payable to you through a current or former employer, or a life insurance policy. Make certain you review your spouse’s employee handbook, which may detail employee benefits that may apply to you, such as accidental death, travel or funeral payment policies. These assets are often available to you before the Estate has been settled. So, you could use them for immediate expenses.
- Review financial documents.
Review all legal and financial documents. Look over the will, checking and savings accounts, brokerage accounts, life insurance policies, pensions, retirement plans, credit card statements, etc. This will give you a clear picture of assets and debts and help you prioritize financial obligations. If there are a lot of moving pieces, you may find it helpful to work with a financial advisor to organize your accounts.
- Contact Creditors. If your spouse has outstanding credit card debt, it is a good idea to contact the lender promptly, to minimize the accrual of late penalties and interest charges while the Estate is being settled. Some credit cards even have death benefits, such as cancelling all debt. It is also a good idea to notify the credit reporting bureau, so that no fraudulent accounts are posthumously opened in your spouse’s name.
- Take care of immediate and short-term expenses.
High priority expenses might include funeral costs and your spouse’s final medical bills. Remember that in Delaware there is a hierarchy for which debts are paid first, and that the Estate, not you personally, is responsible for your spouse’s personal debts. If the estate has no assets, you will not be required to use assets held solely in your name to make payment. That said, if the debt is a secured loan, such as a mortgage on a house, having the debt solely in the deceased spouse’s name does not prevent the lender from foreclosing if payments are not made.
Last, but not least…
·Update your will and estate documents
Your preferred beneficiary designations on your will and retirement accounts may change after you’ve lost your spouse. You should therefore meet promptly with your attorney to review your plans and name an executor and power of attorney for your estate. If your original documents named contingent person(s) to these roles, this gives you more time to consider what changes you want to make now. Don’t forget to review and update beneficiary designations on life insurance, retirement plan, IRA, employee benefits and annuities, as necessary.
The process of settling your spouse’s affairs as you grieve this tremendous loss can be overwhelming. But with careful estate planning, you will get through the administrative details as seamlessly as possible. This allows you to give yourself time and space to grieve, and to heal.