A Financial Checklist for Widows, Part 1
A few key items need immediate attention; everything else can, and probably should, wait
In the days and weeks following the death of a spouse, it would be ideal if the surviving spouse had the space and time to gently navigate the grieving and emotional turmoil free of other obligations.
Yet the reality is that when one spouse dies, the survivor must tend to financial issues. From making sure no bills slip through the cracks, to longer-term decisions such as what to do with a life insurance payout. For older widows, deciding how to handle Social Security benefits needs immediate attention, as a surviving spouse is entitled to one benefit, not two.
Women historically have tended to marry men a few years older. And women have a longer life expectancy. So, wives typically outlive husbands, though the advice herein applies to widowers, too. Regardless of gender, everyone should organize their essential paperwork to make things easier on survivors.
And for many women—especially those in their 60s and beyond, who grew up in a culture in which husbands “handled” money stuff — taking over the finances, at the absolute worst time, brings much anxiety.
A survey by Merrill Lynch and Age Wave found that nearly seven in 10 widows considered having to become the sole decision-maker their hardest financial challenge.
To help widows, widowers and family members called on to step in and help, a game plan can reduce stress and help to steer clear of costly mistakes. A key strategy: Separate the few things you must take care of ASAP from all the bigger decisions that can, and should, be delayed. So, I’ve split the widow’s to-do list into two articles.
In the fog of a recent death, it’s hard to see your way to clear-eyed financial decisions. No matter how strongly you feel about something in the immediate aftermath of a death, that may not be the way you feel months later. Giving yourself a year or so to just “be” without making consequential decisions will often be your best move.
Here’s a financial checklist or immediate must-do’s. (Part 2 of this article focuses on the stuff you may want to push a bit further out.)
Ask for multiple death certificates. Many financial tasks ahead of you require providing banks, brokerage and insurance companies an official copy of a death certificate. For instance, a life insurance death benefit will only be paid out to the beneficiary once a death certificate is presented. Funeral homes typically offer obtaining a death certificate as part of their service. Ten certificates might sound like a lot, but once you get into the nitty gritty of everyone’s rules for changing title to accounts, or inheriting assets, you may find 10 isn’t enough. (Don’t worry, it’s easy to contact your state or county government office and get more.)
Track down every monthly and quarterly bill and set up auto-pay if it’s not already in place. Not sure about all the various bills? OK, pull up a few months of bank statements and credit card statements, and circle every recurring living expense you find: mortgage/rent, utility bills (don’t forget water), credit cards, insurance premiums, car payments, etc. On a practical level, these are the only financial tasks you need to focus on in the first few weeks. If there is auto-pay from a joint bank account, you can even take your time switching the title of the account to your name only.
Notify Social Security. If your deceased spouse was receiving Social Security benefits, you must let them know to stop those direct payments. (Social Security requires reimbursement of any payments after the death of the beneficiary.) At the same time, as the surviving spouse you will now have the choice of receiving your earned benefit, or 100% of your deceased spouse’s benefit. You can’t collect both. (If you are working, or if you are taking care of minor children, you may be eligible to collect a survivor’s benefit as well, and your children may be entitled to a benefit too.)
Notify the pension issuer. If your deceased spouse had a pension, you must notify the payer. Depending on what benefit option you and your spouse chose before payments began, you may be entitled to keep receiving the entire payment (100% joint and survivor), or a smaller pension. If the payment was life-only, you will no longer receive a payment.
Notify the life insurance issuer. If you are the beneficiary of the policy, and you don’t need the money for current living costs, your best move is to tuck the money in a savings account and not touch it for six months to a year. (Details in Part 2.)
Deal with retirement and investment accounts. You are most likely the sole beneficiary of retirement accounts, and other accounts as well. Not sure what’s what? If you are retired and have begun making withdrawals, you will be able to “find” all accounts listed in your federal tax return. That can be a template for sifting through filing cabinets or desktop folders that contain your household’s financial documents.
Be on alert for quarterly tax payments. If your spouse handled it all, this is probably one financial chore you may want to offload to a pro. You want to do this sooner than later if you are retired. Chances are your household was making quarterly estimated tax payments; don’t let that slide. An accountant will sort it out for you.
That’s the near-term stuff. Part 2 picks up where this list left off.