What to Do If You Survive Your Spouse: A Financial Checklist
The last thing you want to do after losing your partner is decide how life will go on without them. Yet the world doesn’t stop even when it feels like it has. While it’d be wonderful to stick your head in the sand until grief runs its course, you’ll likely have to make several important decisions in the aftermath of your spouse’s passing. Having a checklist can help you navigate financial tasks while minimizing ill-advised, emotionally-driven choices.
For starters, shut down major financial decisions until you’re emotionally ready to do so. While you may be tempted to rush into a hasty purchase or major upheaval, recognize that you could be affected by the devastating event that just occurred. Whenever possible, recruit a professional or trusted family member to help manage the transition and act as a reality check.
In the meantime, you’ll need to request (from the funeral home or mortuary at the time of the death or, if a few months later, through the county or state vital records office) multiple certified copies (at least ten) of your spouse’s death certificate.
In addition, you’ll need to gather some important documents including your spouse’s will, birth and marriage certificates, social security card, insurance policies, old tax returns, motor vehicle titles, bank statements, and anything else you might need to make changes to their affairs. You may also need to snoop around for passwords to computer files and online accounts if not readily available. Contact the three credit bureaus to obtain a copy of your spouse’s report, which will tell you what other debt your spouse is leaving behind (and also help minimize the risk of identity theft).
From there, make a list of the institutions that should be notified of your spouse’s death. Start with your spouse’s employer. You’ll have to let them know your spouse won’t be coming in, and find out about any benefits or life insurance policies. If your spouse had paid vacation or sick leave, you could be entitled to those as well. If your spouse had life insurance, you will also need to start a claim with the insurance company. And while it may seem trivial, be sure to cancel any gym, club, magazine, or other subscriptions your spouse had to prevent future charges. This includes insurance premiums, such as health care, that you won’t need with him or her gone.
If your partner left a will, prepare for a long and expensive probate process. This will include validating the will to a probate court, which will then have final say on how the distribution is handled. Court fees alone can quickly eat away at an inheritance. That’s why it’s important to avoid probate whenever possible. Consider hiring a probate attorney. If you have been named as executor, you have personal liability for any mistakes in distributing your late spouse’s assets, including correct tax treatment of the estate. An experienced lawyer can make sure the process runs smoothly, minimizing costly errors and even disputes from other beneficiaries.
Believe it or not, the IRS still expects your spouse to file a tax return for the year up until their death. There are a few caveats to filing a tax return for someone who is deceased. For example, any wages earned before their death is attributed to their personal tax return. However, income earned after death, because of accounting practices or from investments, are taxable to the estate or its beneficiary. If your spouse owned income-generating assets, you may have to file an additional estate income tax return separate from their personal tax return.
As emotionally taxing as it may be, you will eventually have to extricate your spouse from joint accounts. For example, jointly-owned assets such as cars or houses will need to be retitled. Bank accounts and any insurance policies you shared will need to be put in your name or closed. However, consider leaving shared checking accounts open for a while if you can. It may be the recipient for any direct deposits your spouse set up.
Trying to disentangle your spouse’s finances following their departure may be difficult. Yet a financial misstep can make widowhood even harder to bear. Having a game plan for processing your spouse’s estate can save a lot of extra grief in the long run.