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April 10, 2019

5 Steps to Take Over Finances and Investments as a Surviving Spouse

The death of a spouse is never easy or timely. But it’s especially catastrophic when you have no forewarning. If your spouse was the one who handled all of the finances and investing, it’s imperative that you step up to the plate and develop a game plan.

Five Financial Steps You Need to Take

After the death of a spouse, money is the last thing you want to worry about. However, life must eventually go on, and you need to take smart steps to ensure your personal finances are in order. Here are a few specific steps we’d recommend addressing:

1. Shore Up Any Legal Issues

Before doing anything else, explore any possible legal fallout or issues stemming from your spouse’s death. If the death was the result of natural causes, this won’t be very applicable. If, however, the death was caused by a specific incident, you must be sure that you follow through on any necessary elements of the case.

In wrongful death situations, each decision you make will impact your finances in a direct manner. Hiring an attorney to walk you through these issues will ensure your best interests are protected.  

2. Request Your Spouse’s Death Certificate

You’ll need your spouse’s death certificate to handle most financial and legal issues. Instead of asking for them one by one as needed – which is frustrating and time-consuming – go ahead and request 15 or 20 copies up front. You can use the ones you need now and store the others for future needs.

3. Update Your Will

In some states, the death of a spouse invalidates a previous will that the couple had drafted together. If applicable, you’ll need to update your will to account for the new situation. It’s best to do this with an attorney who can walk you through all of the particulars for your state and situation.

4. Consider Social Security Options

Social security is something you’ll eventually need to explore – particularly if you’re at an age where you’re able to receive benefits.  

“When a Social Security beneficiary dies, his or her surviving spouse is eligible for survivor benefits,” AARP explains. “A surviving spouse can collect 100 percent of the late spouse’s benefit if the survivor has reached full retirement age, but the amount will be lower if the deceased spouse claimed benefits before he or she reached full retirement age.”

Consider your options and make a decision on when to begin drawing social security benefits and whether it makes more sense to wait. If it’s something you don’t need right away, delaying may be your best option.

5. Evaluate Retirement Accounts and Investments

When it comes to investments and retirement accounts, the decisions you make in the aftermath of your spouse’s death could have serious ramifications for your financial future. This is especially true with something like an IRA.

“If you are the only beneficiary of your spouse's IRA, you can roll the retirement plan into your own IRA tax-free. (There are other steps you must take if you are one of several beneficiaries.),” Susan B. Garland writes for Kiplinger. “Before doing so, make sure your spouse, if he was 70 1/2 or older, took his required minimum distribution before he died. If he didn't, you must take his RMD by December 31 in the year he died or pay a penalty.”

If you’re uncertain about investments, retirement accounts, and the tax implications of different types of accounts, you need to speak with an investment or tax advisor. You may even want to work with an investment advisor and a tax advisor. Having input from both will give you a well-rounded look at the big picture.

Don’t Make Rash Decisions

In the immediate aftermath of your spouse’s passing, emotions are obviously heightened. And as important as it is to take swift action in key areas of your household finances, avoid making rash decisions. In most cases, these actions are direct byproducts of the internal emotional turmoil you’re experiencing. Give yourself some leeway and take a few weeks to gather yourself. Once you have your legs underneath you, you’ll find it easier to attack some of the issues that we’ve outlined in this article.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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