Rebuilding Finances After Losing a Spouse/ July 15th, 2020
Few events change a life as completely as the divorce or death of a spouse. Your situation has changed; your economic needs as a widow, widower, or single parent will vary greatly from what they were as a married person. If you are dealing with this kind of loss, here are ways to help you put your assets in order and create a firm financial base for your future.
Take your time — Do not make any permanent financial decisions immediately. You may want to move to escape memories or be closer to adult children. Perhaps you're ready to max out your credit card to vent your frustrations. Don't. Put those urges aside until you've had enough time to learn where you stand financially and to decide what course of action is best.
Set priorities —First, put your money in a safe place until you decide how to manage it. If you've just received a sizable settlement, you'll probably want to earn interest on the money in a safe, yet liquid account. Credit union staff can help you decide which type of account will work best for your immediate situation.
Second, make sure you're covered by medical and/or disability insurance. Call your spouse's employer to find out if you're still covered under the company plan. If not, you may file for a continuation under federal COBRA guidelines within 60 days.
Also, consult professional advisers to help you organize your finances. Most likely, you already have a lawyer. Consider talking to an accountant and certified financial planner as well; they're better qualified to answer your questions about assets, investing, taxes, and retirement.
Get organized —While divorced individuals have assets tallied and divided during the proceedings, those who become widowed must sort out assets and usually are surprised to find out their net worth. According to the AARP’s Checklist for Family Survivors, you'll need to collect copies of the following documents:
- Death certificate. A copy costs a few dollars; you'll need a dozen or so. Obtain them from your funeral director or the county health department.
- Insurance policies.
- Marriage certificate.
- Birth certificates for dependent children.
- Certificate of discharge from the military (if applicable).
- The deceased's will.
- Complete list of all property.
Many of these papers may be stored in a safe deposit box, which some states seal after a death even if the box is jointly held. In that case, consult your attorney about getting a court's permission for access to the box.
Gather resources — You'll need these documents to claim the following:
- Insurance policy proceeds. Most likely, the company will pay the policy directly to the named beneficiary in either lump sum or fixed payments.
- Social Security. You may be eligible for a death benefit toward burial expenses and survivor's benefits, depending on your age and if you have any dependent children.
- Employee benefits. Your spouse may have had insurance, a 401(k) plan, vacation or sick pay, and other benefits to which you're entitled. Contact the human resources director at your spouse's workplace for a list of benefits.
- Miscellaneous benefits. If your spouse belonged to a credit union, a labor union, or other organizations, you may be eligible for insurance coverage or assistance programs.
Remember to transfer jointly held assets into your name, including credit union accounts and titled property, such as the house. You'll need to cancel joint credit cards and open new accounts under your name. Also, review your will and insurance policies; you may want to change beneficiaries.
Perhaps the greatest change you'll face is in your standard of living. Create a budget that matches your new financial situation and helps you make the transition. Many credit unions have their own financial counselors who can help you with this or can recommend qualified counselors.