Financial tips for widows and widowers

Kathi Balasek was still grieving for her late husband when she decided to buy a new car. She soon learned why people discourage recently bereaved family members and friends from making big financial decisions like buying a car while still grappling with their loss.

“I bought a car I didn’t need — overpaid, had all the bells and whistles, extended warranties etc. — based solely on the color,” says Balasek a widow, advocate and university professor in Chico, California. “To be fair,” she adds, “the color was called cashmere.”

Balasek now understands her rash action and calls it part of the widow money mindset, which she defines as guilt, regret and embarrassment around money decisions.

“When the money represents the ultimate cost — the death of your spouse — you find every way to ignore or get rid of it,” Balasek says.

Other widows may be worried about having too little money, losing half their incomes when a spouse dies and facing the same bills.

Whether you have a lot or a little after the death of a spouse, here are some financial tips for you and your family.

1. Get the right support. Reach out to a grief counselor and a certified financial planner. You’ll need both kinds of support going forward.

“My number one tip is to hire two professionals: a grief therapist and a CFP. Find a CFP that offers holistic financial planning and works with widows,” says Megan Kopka, managing partner with Apprise Wealth Management in Phoenix, Md.

2. Notify Social Security. Reach out to Social Security and alert them that your spouse has died.

“Make sure Social Security is notified. Typically, a funeral home or director will notify Social Security of a spouse’s passing, but ultimately, the responsibility may fall on the widow(er). Be sure Social Security is notified and any benefits are adjusted accordingly, if necessary,” says Justin Rush, a certified financial planner and founder of JGR Financial Solutions in Canton, Ohio.

3. Apply for Social Security survivor benefits. You and your school-aged children may be eligible for these benefits following the death of your spouse.

“The amount you receive will depend on your age, your spouse’s earnings record, and whether you have dependent children,” says Al Faber, a senior wealth advisor at Woodson Wealth Management in Ramona, Calif. “If your spouse had a pension, you might be entitled to a survivor benefit. Contact the plan administrator to understand your options.”

4. Gather documents. Getting a sense of the overall state of your finances is a smart way to begin, and that means organizing your financial documents.

Kopka recommends sorting documents into these categories: cash reserves and cash management, investment and retirement planning, education planning, tax planning and estate planning.

Don’t forget to get multiple certified copies of your spouse’s death certificate.

“Get at least five copies of the death certificate,” Faber says. “In some cases, you might have to send or give a copy of an original, that may or may not be returned to you.”

You also will want to review and update beneficiary designations on your assets, such as retirement savings, insurance policies and investment accounts, Faber says.

5. Make phone calls. Reach out to companies and let them know your spouse has died and you would like the account to be changed to your name. Kopka recommends saying, “My spouse has died, and I need to change the power bill to my name. What is needed from me to start the process?”

It will also be important to contact credit reporting agencies — the big three are Equifax, Experian, and TransUnion — and alert them of your spouse’s death.

“Get a credit report on the deceased spouse and freeze their credit with the credit bureaus,” Kopka says.

6. Review your budget. You’re facing a brand-new budget after your spouse’s death.

“Your household income may change after your spouse’s death,” Faber says. “Create a new budget to reflect your current financial situation, accounting for changes in Social Security benefits, pensions and other sources of income.”

Cash will be very important right after your spouse’s death because banks may freeze accounts held in both your and your late spouse’s name until their estate is settled.

“Be sure you have sufficient cash on hand, cash in the bank, or will receive life insurance proceeds in a timely manner to cover your living expenses in the days and weeks ahead,” Rush says. “Sometimes it’s necessary to provide a financial institution or life insurance company with a death certificate to access the funds.”

7. Retitle assets. When a spouse dies, it is time to retitle assets into your own name. Hiring an attorney and a financial planner can make this task less burdensome.

“Work side by side with an estate-planning attorney and financial planner to retitle all assets and tangible property,” says Eric Toepfer, a certified financial planner at Incline Wealth Advisors in Cincinnati. “Passing these tasks onto an experienced attorney and financial planner will alleviate a lot of headaches as you mourn the death of your spouse.

“Once everything is settled with your spouse’s estate,” he adds, “be sure to work with these two professionals to develop a new estate/financial plan to accommodate your new situation.”

8. Consider tax implications. After a spouse’s death, your tax options will be changing.

“In the year of your spouse’s death, you can usually file as ‘married filing jointly’,” Faber says. “Afterward, you may meet the requirements to file as a ‘qualifying widow(er)’ for up to two years, which can affect your tax bracket.”

9. Review your insurance needs. Did your spouse have health insurance for the family or do you? If your spouse had life insurance, you may want to use the proceeds to buy health insurance.

“If you were covered under your spouse’s health insurance, you might need to secure your own coverage,” Faber says. “If your spouse had life insurance, decide how best to use the proceeds. This could include paying off debts, creating an emergency fund or investing for future needs.”

10. Take your time. Don’t rush your way through these financial steps.

“Unless it is time-sensitive, avoid making any significant financial decisions, like selling a house or making large investments, immediately after your spouse’s death,” Faber says. “Give yourself time to grieve and think clearly.”