Here are eight critical financial steps that should generally be taken after the death of a spouse:
1. Gather important documents and meet with each of your professional advisers. Your attorney, financial planner and accountant will each play essential roles in helping you make important financial decisions in the weeks and months to come. Before meeting with them for the first time, you should gather all the important legal and financial documents that will be needed to formulate your immediate plan. These usually include:
- Your and your spouse's last will and testament, durable power of attorney and health care proxy.
- Recent tax returns and W-2 forms.
- Bank, brokerage, credit card, retirement account and mortgage statements.
- Insurance policies.
3. Contact your life insurance company. If you are the beneficiary of a life insurance policy purchased by your spouse, contact the insurance company right away to find out what you need to do to collect your benefits. The company will likely require a death certificate to prove that your spouse is deceased, as well as other documentation and paperwork. Life insurance proceeds may constitute the bulk of your future income, so be sure to follow the company's instructions to the letter without delay.
4. Apply for any other benefits to which you may be entitled. In addition to life insurance, you might also be entitled to Social Security death and retirement benefits, veteran's benefits, and benefits (including health and life insurance) from your spouse's employer. Contact the Social Security Administration, the Veteran's Administration and the HR department of your spouse's former employer to find out about and apply for any of these potential benefits.
5. Re-examine your budget and make necessary adjustments. If your spouse was working, his or her death will obviously affect your income situation -- especially if he or she was the family's primary earner. It will also impact your ongoing expenses, so it is a good idea to sit down with your financial adviser and adjust your budget to reflect this new reality.
Depending on how much life insurance and other survivor benefits you may be entitled to, how much money you are earning (if you're working) or how much you can earn if you go back to work, and the amount of your fixed monthly expenses, you may have to make some difficult lifestyle adjustments. This might include downsizing your home in order to reduce your expenses. However, you should try not to make drastic decisions like this in the immediate aftermath of your spouse's death, if possible.
6. Re-title accounts and cancel memberships and automated payments. Any bank, brokerage or investment accounts that are jointly held by you and your deceased spouse will need to be re-titled in your name only. Contact the appropriate financial institutions or brokerage firms -- they will help you through the process of re-titling these assets. Also contact organizations where your spouse may have had memberships that are billed automatically (like a gym or country club) to cancel these memberships and the automated payments.
7. Update your will and estate plan. Your last will and testament and estate plan will most likely require significant changes after the death of your spouse. You should work closely with an experienced estate-planning attorney to ensure that these documents are properly revised so that your wishes will be fulfilled after you pass on.
8. Review and change beneficiary designations. If your spouse was the sole beneficiary of insurance policies or trusts owned by you, you will need to change these beneficiary designations. You may also need to update your health care proxy and durable power of attorney to assign another loved one the responsibility of making life-sustaining and/or financial decisions if you are unable to do so.
The days and weeks following the death of a spouse are emotionally gut-wrenching, and there are many logistical tasks and to-do's that need to be accomplished. In the midst of all this, don't forget about these and other important financial steps that need to be taken to help protect yourself from financial loss during this difficult time.