When your spouse or a family member dies, you'll need to handle numerous financial and legal matters. Even if you've always handled your family's finances, you may be overwhelmed by the number of matters you have to settle in the weeks and months following your loved one's death. While you can put off some of these tasks, others require immediate attention. After planning the funeral, you'll need to get organized, determine what procedures to follow to settle the estate and claim survivor's and death benefits, and find competent advice to help you through this difficult time.
Planning a funeral
A funeral allows the family and friends of the deceased to both celebrate that person's life and mourn their death. Funerals often take into account religious and social traditions. According to Christian tradition, funerals often include a visitation of the body (also called a viewing or a wake) and a ceremony performed by a clergy member, family member, or friend. There may be readings, music, and words spoken about the deceased person's life. However, they are personal--not legal--events and should reflect your own preferences, as well as those of the deceased and other family members. Although you aren't required to do so, you may wish to hire a funeral director to help you, particularly if you are planning a funeral on short notice. He or she can help you coordinate the details and help you apply for death certificates and certain survivor's benefits.
Getting organized
To settle your loved one's estate or apply for insurance proceeds or survivor's benefits, you'll need to have a number of documents. Locating these documents (and applying for certified copies of some of them) should be your first step in getting your finances organized. You'll also need to set up files to keep track of important documents and paperwork, keep a phone and mail list to record important calls and correspondence, and evaluate your short-term and long-term finances.
Settling an estate
Your spouse or family member may have named you executor of his or her estate. If so, you'll need to find out what procedures to follow. Settling an estate means following legal and administrative procedures to make sure that all debts of the estate are paid and that all assets are distributed to the rightful persons. If you are named executor in a will or if you are appointed as the personal representative or administrator of an estate, you will be responsible for carrying out the terms of the will and settling the estate directly or with the help of an attorney.
Paying income and estate taxes
You may have to file city, state, and federal tax returns, including Form 1040 (U.S. Individual Tax Return), Form 1041 (Fiduciary Income Tax Return), and, if the gross estate is large enough, Form 706 (U.S. Estate Tax Return). In addition, your state may impose a state death tax or an inheritance tax.
Filing a claim for insurance and/or survivor's and death benefits
Life insurance benefits are not automatic; you have to file a claim for them. Ask your insurance agent to begin filing a life insurance claim. If you don't have an agent, contact the company directly. Although most claims take only a few days to process, contacting an insurance agent should be one of the first things you do if you are the beneficiary of your spouse's or family member's policy. You should also contact your spouse or ex-spouse's employer as well as the Social Security Administration (SSA) to see if you are eligible to file a claim for survivor's or death benefits. Tip: If your spouse was a federal, state, or local employee, then you are likely eligible for government-sponsored survivor's benefits. In addition, children under age 18 or parents who are dependent upon their children for financial support are sometimes eligible for Social Security survivor's benefits. Tip: Dependent children or dependent parents are sometimes eligible for benefits from employer-sponsored plans or Social Security.
Finding competent advice
Getting expert advice is essential if you want to make good financial decisions. After all, you are probably doing many things for the first time, such as filing a life insurance claim or settling an estate. In fact, an attorney is one of the first people you might contact after your spouse or family member dies because this person can help you go over the will and start estate settlement procedures. Your funeral director can also be an excellent source of information and may help you get death certificate copies and apply for Social Security and veterans benefits, among other things. You may also wish to contact a financial professional, accountant, or tax advisor for help with your finances. And don't overlook the help of other widows and widowers; having been through it before, they may be able to provide you with valuable information and support.
Organizing Your Finances When Your Spouse Has Died
Losing a spouse is a stressful transition. And the added pressure of having to settle the estate and organize finances can be overwhelming. Fortunately, there are steps you can take to make dealing with these matters less difficult.
Notify others
When your spouse dies, your first step should be to contact anyone who is close to you and your spouse, and anyone who may help you with funeral preparations. Next, you should contact your attorney and other financial professionals. You'll also want to contact life insurance companies, government agencies, and your spouse's employer for information on how you can file for benefits.
Get advice
Getting expert advice when you need it is essential. An attorney can help you go over your spouse's will and start estate settlement procedures. Your funeral director can also be an excellent source of information and may help you obtain copies of the death certificate and applications for Social Security and veterans benefits. Your life insurance agent can assist you with the claims process, or you can contact the company's policyholder service department directly. You may also wish to consult with a financial professional, accountant, or tax advisor to help you organize your finances.
Locate important documents and financial records
Before you can begin to settle your spouse's estate or apply for insurance proceeds or government benefits, you'll need to locate important documents and financial records (e.g., birth certificates, marriage certificates, life insurance policies). Keep in mind that you may need to obtain certified copies of certain documents. For example, you'll need a certified copy of your spouse's death certificate to apply for life insurance proceeds. And to apply for Social Security benefits, you'll need to provide birth, marriage, and death certificates.
Set up a filing system
If you've ever felt frustrated because you couldn't find an important document, you already know the importance of setting up a filing system. Start by reviewing all important documents and organizing them by topic area. Next, set up a file for each topic area. For example, you may want to set up separate files for estate records, insurance, government benefits, tax information, and so on. Finally, be sure to store your files in a safe but readily accessible place. That way, you'll be able to locate the information when you need it.
Set up a phone and mail system
During this stressful time, you probably have a lot on your mind. To help you keep track of certain tasks and details, set up a phone and mail system to record incoming and outgoing calls and mail. For phone calls, keep a sheet of paper or notebook by the phone and write down the date of the call, the caller's name, and a description of what you talked about. For mail, write down whom the mail came from, the date you received it, and, if you sent a response, the date it was sent. Also, if you don't already have one, make a list of the names and phone numbers of organizations and people you might need to contact, and post it near your phone. For example, the list may include the phone numbers of your attorney, insurance agent, financial professionals, and friends--all of whom you can contact for advice.
Evaluate short-term income and expenses
When your spouse dies, you may have some immediate expenses to take care of, such as funeral costs and any outstanding debts that your spouse may have incurred (e.g., credit cards, car loan). Even if you are expecting money from an insurance or estate settlement, you may lack the funds to pay for those expenses right away. If that is the case, don't panic--you have several options. If your spouse had a life insurance policy that named you as the beneficiary, you may be able to get the life insurance proceeds within a few days after you file. And you can always ask the insurance company if they'll give you an advance. In the meantime, you can use credit cards for certain expenses. Or, if you need the cash, you can take out a cash advance against a credit card. Also, you can try to negotiate with creditors to allow you to postpone payment of certain debts for 30 days or more, if necessary.
Avoid hasty decisions
• Don't think about moving from your current home until you can make a decision based on reason rather than emotion.
• Don't spend money impulsively. When you're grieving, you may be especially vulnerable to pressure from salespeople.
• Don't cave in to pressure to sell or give away your spouse's possessions. Wait until you can make clear-headed decisions.
• Don't give or loan money to others without reviewing your finances first, taking into account your present and future needs and obligations.
As always, talk to your estate planning attorneys, tax professionals, and wealth advisors to make sure you are able to tackle all of these things in the most efficient way possible.
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