7 Key Questions to Consider Following the Death of Your Spouse
Losing a spouse is one of the most difficult and emotional challenges many face in life, and women are often the ones left to cope with the loss. In addition to the emotional pain of losing a life partner, many widows find themselves managing the household finances for the first time in their lives, which can be an overwhelming challenge. Even those who have been managing the finances for decades will likely need to make adjustments based on their new financial situation.
Following are seven important financial planning considerations for widows.
#1 – How is my financial plan impacted?
Following the death of your spouse, it’s important to take time to review your existing financial plan and identify any strategies that no longer meet your needs. Work with your wealth manager to re-run your financial plan analysis to account for any changes in your income or assets.
Starting with your financial plan allows you to gain a birds-eye view of your entire financial life in order to quickly identify issues that should be immediately addressed versus those that can wait. It also helps ensure your finances remain on track during this difficult period. Your wealth manager plays a key role in supporting you as you adjust to your new financial norm, so don’t hesitate to reach out to him/her with any questions or concerns.
#2 – Do my assets and income reasonably support my ongoing needs?
The next step is to work with your wealth manager to determine the impact of your spouse’s death on your daily financial needs. Are you able to continue paying your bills? Do you need to make any adjustments to your budget or investments in order to remain on track toward achieving your financial goals? Have your financial goals changed?
Again, your wealth manager is a great resource for guiding this discussion. He or she can review all aspects of your financial life and provide guidance to help ensure you’re making decisions today that support your long-term financial security.
#3 – How has my household income been impacted?
If your spouse was receiving income from employment or a pension, you may lose a portion of your monthly cash flow. If your spouse was working at their time of death, how will the loss of employment income impact your ongoing budget and savings goals? Your wealth manager can help you assess this potential impact and identify strategies to either lower your expenses or increase your monthly income.
If your spouse was receiving pension payments, you may be entitled to a survivor benefit (if you had previously elected this option). Survivor benefits typically range from 50% to 75% of the original pension payment. Again, your wealth manager can help you determine how your potential loss of income may impact your monthly spending and long-term goals.
#4 – How have my Social Security benefits been impacted?
It’s important to keep in mind that if both you and your spouse were receiving Social Security benefits when your spouse passed away, the lesser of the two monthly payments will drop off, leaving you with just the higher amount. Depending on what you were both receiving, this can lead to a significant drop in your monthly income.
As a widow, you may be eligible to receive Social Security survivor benefits if you meet the following criteria:
- Your spouse worked long enough to be eligible for Social Security. The Social Security Administration (SSA) determines eligibility based on credits. Full benefits are typically available after reaching 40 credits. The maximum number of credits granted per year is four, which means individuals must work a minimum of 10 years to receive full benefits.
- You (as the widow) are at least 60 years old (or 50 years old if you’re disabled).
- You care for your deceased spouse’s child. As a surviving spouse, you may be eligible to receive spousal Social Security benefits if you’re caring for a minor child of the deceased.
In addition to monthly Social Security payments, you may also be eligible to receive a one-time payment of $255 following the death of your spouse. This payment is intended to provide financial relief for a surviving spouse who was living with the deceased at the time of his or her death.
#5 – Do I need to make a change to my insurance coverage?
Based on your current financial situation, you may need to make changes to your own insurance policies. For example, if you have minor children in the home, you may need to increase your life and/or disability insurance coverage. If you’re currently retired or preparing for retirement, you may want to consider implementing a long-term care insurance policy to plan for the future.
Your wealth manager can help assess your risks and identify insurance policies to meet your specific needs.
#6 – Do I need to revise my estate plan?
Your spouse’s death can have a significant impact on your estate plan, which is why it’s important to review and update your existing plan. Your wealth manager and estate planning attorney can help you review and make appropriate updates to the following:
- Will and trust documents – It’s important to make sure these crucial documents continue to meet your needs and align with your legacy wishes. If your spouse was the primary beneficiary or trustee on these documents, you’ll need to update your designations. If you have minor children, it’s important to review any guardianship designations to make sure they remain aligned with your wishes.
- Powers of attorney and healthcare directives – Again, if your spouse was designated as your financial or healthcare power of attorney, you’ll want to appoint a new representative to handle both your financial and medical decisions, should you become incapacitated and unable to act for yourself.
- Beneficiary designations – If you designated your spouse as your primary beneficiary on any accounts or insurance policies, it’s important to update these designations in order to ensure your assets are passed along according to your wishes.
#7 – What other things should I be thinking about?
Other financial questions to consider following the loss of a spouse include:
- Do I have access to all accounts, investments and insurance policies?
- Am I eligible for any life insurance payouts?
- Should I consider rolling over my spouse’s retirement account(s) into my own?
- How will my spouse’s assets be distributed?
- How is my tax rate impacted?
