Thursday, July 31, 2014
Inquirer Daily News

Ask Carrie: What financial steps should you take when a spouse dies?

Dear Carrie,  

I’m 65 and my husband just died suddenly. He handled our finances and I’m feeling overwhelmed by this new responsibility. What should I do first?

—A Reader

Dear Reader,

I’m sorry for your loss, and I understand the stress you’re feeling during this difficult time. There’s so much to think about and adjust to, plus a lot of practical issues to handle. Some things like getting copies of the death certificate, locating financial and legal documents, and notifying certain financial institutions and government agencies will have to be done early on. But when it comes to bigger financial decisions, I caution you to take it slowly. Grief can muddy your thinking, so give yourself some time.

Also, you don’t have to do everything yourself. Now’s the time to reach out. Consult with your estate planning attorney, executor or trustee, or other trusted advisors. Ask friends or family for help—at least for moral support.

With your support system in place, here are the financial things to focus on first:

  • Get an idea of your general financial situation. The easiest way is to create a simple net worth statement. Basically, you just need to make two lists. First, list what you own (your assets)—things like the current market value of your home, bank and investment accounts, and retirement savings. Next, list what you owe (your debts)—things like a mortgage or a car loan. Then subtract your debts from your assets. This will give you a good idea of how much money you have to work with.
  • Organize your financial papers. This will make it easier on yourself and easier to share information with someone who’s helping you. Create a simple filing system for things like bank, brokerage, and credit card statements, receipts, insurance policies—anything you may need to refer to periodically.
  • Set up a system for paying bills. For instance, if you have a computer, using online bill pay through your bank and setting up automatic payments for regularly recurring bills is an excellent way to stay on top of due dates.
  • Update information on personal accounts and property. Contact banks and credit card companies to change joint loans, accounts, and credit cards to your name only. You should also review and update beneficiary designations on your own retirement accounts, annuities, and insurance policies; update health and life insurance records as needed; and update titles on all property owned by your late husband. Your attorney can help you do this.
  • Contact Social Security. A widow or widower at full retirement age (FRA) qualifies for 100 percent of a spouse’s benefits, or reduced benefits if younger. If you’re not currently collecting Social Security based on your husband’s work record, you’ll need to apply for survivor benefits. As a survivor, you’re entitled to receive whichever is greater—a benefit based on your husband’s work record, or your own. Call 800-772-1213 or contact your local Social Security office.

As time goes on, it will be important for you to look at the bigger picture. You’ll want to set some goals, develop a realistic budget, and build a safety net of cash to cover two or three year’s expenses. You’ll also want to reevaluate your investment portfolio to make sure you’re taking on the appropriate amount of risk for this point in your life.

It may seem like a lot, but take it step by step. And remember, you’re at a vulnerable time so be on the lookout for financial scams. Never give out personal or financial information to someone you don’t know well.

Again, turn to family or trusted friends and advisors for help during this transition. Once you have the practical details under control, hopefully you’ll feel more confident and able to move forward both emotionally and financially.

 

Looking for answers to your retirement questions? Check out Carrie’s new book, The Charles Schwab Guide to Finances After Fifty: Answers to Your Most Important Money Questions (Crown Business, 2014), available in bookstores nationwide. Read more at http://schwab.com/book.

This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. COPYRIGHT 2014 CHARLES SCHWAB & CO., INC. MEMBER SIPC. (0514-3006)

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Carrie Schwab-Pomerantz
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