When dealing with the impending death of a spouse, it can be extremely difficult to think about the many things you will need to do after they pass away.
While the executor of your spouse’s estate will take on many responsibilities, there will be a number of important steps you'll need to take to make sure you’ll remain financially secure and independent.
Ideally, you and your spouse should make a list of these tasks even before one of you becomes chronically ill, working together to identify all of your individual and joint financial assets and liabilities and collecting relevant documentation. It’s even more important to get a head start on these tasks if your spouse enters a state of physical or mental incapacity and is no longer able to help you.
Assuming funeral and interment arrangements have already been made, your first priority should be to make sure you know where your will is located. Hopefully you’ve kept at least one copy in a safe deposit box and another with your attorney.
If you don’t have a will and your spouse has passed on or their medical situation precludes them from working with you to create one, contact your county’s probate department to find out if your spouse’s estate could qualify for a simplified probate procedure. If necessary, make a formal application to the court to be appointed personal representative of your spouse’s estate.
Collecting insurance policies
Hopefully, your spouse kept all of their life insurance policies in a central location. At the very least, try to create a list of all policy numbers and contact information for each insurer. For old policies, contact numbers may not be valid. Your state’s department of insurance should have current telephone numbers for carriers that do business in your state.
If you can’t find a particular policy, you may be able to locate one written in the past 15 years through MIB Group’s Policy Locator Service at www.mib.com/lost_life_insurance.html. This service charges a $75 fee.
If your spouse was still working when they passed on, check with their employer to see if they were covered by a group life insurance policy. These policies often provide coverage equal to one or two times an employee’s salary, so it’s an important benefit you don’t want to leave on the table.
If your spouse had health insurance at work and you were covered by their policy, you may qualify for COBRA benefits for up to 36 months. Although the premiums may increase, they generally cost less than private insurance. Contact your spouse’s employer for more information.
This situation becomes more complicated if you’re age 65 or older and haven’t signed up for Medicare yet. Once your spouse’s employer’s active healthcare coverage ends, you’ll have an eight-month window to sign up for Medicare. If you don’t sign up during this timeframe, you may end up paying late-enrollment penalties that could significantly increase your Medicare premiums for the rest of your life. For help in figuring out your Medicare options, contact a representative of your State’s Healthcare Insurance Assistance Program at http://www.shiptacenter.org/
Banking and brokerage accounts
Assemble statements for all of your spouse’s own bank and brokerage accounts as well as your joint accounts. After your spouse passes, contact these institutions to change the account registrations to your name. If your spouse accessed these accounts online and you don’t have their login information, ask for these credentials to be deleted and set up your own.
Keep in mind that accounts owned individually by your spouse must be transferred to an estate account, which may prevent you from getting immediate access to these funds. However, your jointly owned accounts will not be tied up in the probate process.
Retirement plans and IRAs
By law you are the primary beneficiary of your spouse’s retirement accounts unless you specifically authorized, in writing, that someone else could take your place.
When your spouse passes, you may want to roll over all of these accounts into your own IRA to consolidate these assets. If you are younger than 59½ and need this money to pay for your living expenses, consider transferring these assets into an inherited IRA to avoid early withdrawal penalties.
Also be aware that if your spouse was taking required minimum distributions (RMDs) from their retirement accounts you’ll need to continue taking them. If they died before they started taking RMDs, these distributions can be delayed to the calendar year in which they would have turned 70½ (if they were born before July 1, 1949) or 72 (if they were born on or after that date).
Some IRAs and retirement plans offer a survivor annuity or lump-sum payout option that may have undesirable tax implications if exercised inefficiently. To avoid unnecessary taxes, discuss the options with your accountant or financial advisor.
Social Security benefits
After your spouse’s death, you may be eligible to receive a small Social Security death benefit and survivor income benefits. Depending on your age, you may receive between 71.5% to 100% of:
- Your spouse’s monthly benefit, if they were already receiving Social Security benefits; or
- The monthly amount your spouse would have received based on their age, if they hadn’t yet signed up for Social Security.
In general, you must be at least 60 to receive survivor benefits. If you’re already receiving Social Security benefits, you’ll only be eligible for survivor benefits if your spouse’s monthly payments would be higher than your own. To understand how this process works, visit the Survivors Benefits section of the Social Security Administration website at http://www.ssa.gov/benefits/survivors.
Paying off loans
If your spouse took out mortgages and other loans in their own name, you generally will not be responsible for paying off this outstanding debt unless you live in a community property state.*
However, it may be better for you to continue paying off your spouse’s debts. If you don’t, creditors will probably make claims on your spouse’s estate. If the estate isn’t large enough to pay off these debts, creditors may try to repossess the assets they’re financing, including your home.
If your spouse had outstanding debt on credit cards registered under their own name, you won’t have to pay off these debts if you don’t live in a community property state. You will, however, be responsible for paying off debt accrued to joint credit card accounts.
In either case, make sure you cancel any credit cards registered under your spouse’s own name to avoid potential fraudulent use. For joint accounts that have no balances, you may wish to cancel these accounts or change the account registration to your name only. You may have to provide proof of the death of your spouse before these requests are approved.
After your spouse passes away, you will have to file a final income tax return for them.
Since you may end up owing additional taxes, make sure you consult with your accountant or attorney before you transfer accounts or distribute estate assets.
As part of this process, you, your spouse’s executor, or your spouse’s trustee will need to obtain tax identification numbers for the estate and for any formerly revocable trusts. Give these numbers to your bank and brokerage firms.
Required certificates and licenses
You and your children may need copies of various licenses and certificates to apply for certain benefits or change account registrations. You can get copies of most of these documents before your spouse passes away.
- Marriage licenses and birth certificates. Obtain copies of these documents from the county or town in which they were issued.
- Military discharge papers. If your spouse served in the military, you may be entitled to veterans’ benefits. Use the Veterans’ Service Records section of the National Archives website at http://www.archives.gov/veterans to obtain a copy of their military records.
- Death certificates. When your spouse passes away, you should obtain at least 10 certified copies of their death certificate from the funeral director or from your state’s department of health or vital records. You can find the appropriate office in your state on the Centers for Disease Control and Prevention (CDC) website at http://www.cdc.gov/nchs/w2w.htm
Your personal financial affairs
As difficult and overwhelming as these tasks may seem, it really is important for you to do as much of this work as you can before your spouse passes on.
If your spouse can’t help, try not do it all on your own. This is a situation where you, your children and your accountant, attorney and financial advisor should be working together to give your family the advice and assistance you need to fully understand your financial situation, including insurance benefits, bank and retirement assets and outstanding obligations.
Learn from any challenges you may encounter during this process by making sure your children and other beneficiaries know where to find your financial information, your will and your funeral and burial arrangements. That way, they may be spared some of the stress you may have to deal with during this trying time.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
*As of February 2020, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states.
This article was written by Joelle Spear and Commonwealth Financial Network. Joelle is a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. She offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. She can be reached at 508.598.1082 or [email protected]
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