When a Spouse Dies: A Checklist to Preserve Your Finances

Two key elements to consider are togetherness and the unthinkable. It's important to plan for your retirement or to be prepared for the uncertain future that can arrive unexpectedly when we are unprepared. Managing finances during a time when money may seem trivial—yet remains essential in life—can feel overwhelming. Therefore, create a plan with love and protection for your loved ones in mind, especially for those times when you may not be there to support them. 

Key Points – When a Spouse Dies: A Checklist to Protect Your Finances 

• A checklist of basic necessities and things that need to be done

• Updating your financial and retirement plan

• Understanding life insurance and payouts

• Understanding legacy planning

A Checklist: 

We’ve made a basic list of what you need to start doing and documents you need to gather as soon as you can.  

• Immediately notify close family and friends’

• Arrange funeral

• Gather vital documents (wills, death certificates, insurance, titles)  

• Contact authorities (Social Security Administration at +1-800-772-1213, employers, and former employers)  

• Update finances (banks, credit cards, assets)  

• Talk with professionals from financial advisor and your attorney, to help you understand the legal and financial considerations that happen after the death of a loved one.  

Financial and Retirement Planning:  

Losing a spouse is one of the most challenging experiences one can face, but remember, you are not alone and you can navigate through this. It’s important to shift your mindset regarding retirement planning, particularly when adjusting to a single income. This change can significantly impact your retirement income and necessitate an update to your financial plan. Take time to understand what sources of income you will still have available and how other factors might change. 

Financial plans are designed to be flexible and should be adjusted to serve you throughout your life. It’s advisable to consult with your financial advisor to help ensure you stay on track for retirement and make necessary adjustments. 

Life is unpredictable, so having a solid plan can help minimize stress during difficult times and empower you to move forward confidently. 

Learn More: The Heart of Any Financial Plan is Income

Understanding Life Insurance Payouts:  

Planning for your family and loved ones should occur before any unexpected events, not afterward. When choosing your life insurance, focus on the needs of those who depend on you after you are gone. Life insurance was specifically designed to support widows and families when a spouse passes away, providing supplemental income and assistance. Financial burdens are the last thing you want your family to worry about when you're no longer there; life insurance can help alleviate that stress. If you lose a spouse, it's important to check what life insurance policies they had and understand how those may help cover some of the financial responsibilities. 

A good place to start is to investigate both whole life insurance and term life insurance and which one makes more sense for you. They both offer a death benefit to the beneficiaries. The main difference is that whole life insurance offers the death benefit for the entire lifetime and term life insurance is only within a certain time frame.   

• Burial insurance is a whole-life policy to cover your future burial and other end-of-life expenses.  

• Survivorship life insurance a type of joint policy that covers two people instead of one, offering the same characteristics and benefits as individual life insurance.  

• Universal life insurance is a type of whole life insurance that offers lifetime coverage and builds cash value. It allows you to adjust premiums cheaper than traditional whole-life insurance. However, if your investments underperform, your cash value may decrease, and your premiums could increase.

The amount you receive from a life insurance policy depends on what your spouse had in place. Generally, life insurance payouts are not subject to taxes, but it's important to do your research to confirm. When considering how to access the death benefit, it's essential to approach it strategically, as you will have three options to choose from. 

• Annuity: An annuity is a financial instrument designed to provide a steady stream of income payments. You can initiate the payments at any time, including a future date of your choosing. One of the main advantages of an annuity is that the income it provides continues indefinitely.

• Lump Sum: The lump sum payment is the most popular option and typically the default choice. With this option, you receive a large amount of cash immediately. This can be beneficial if you want to pay off your mortgage, invest the money in a specific way, buy a new car, or pursue other financial goals. It's important to consult with your financial advisor before opting for the lump sum, to ensure that the additional income is used strategically.

• Installment Payments: Rather than receiving a lump sum payment all at once, you can opt to receive your funds in a series of payments, allowing you to get a monthly check. If you need a larger amount, you can increase your payments. Additionally, if you decide to pause your payments for a period, you can let the principal amount grow until you need the income again.

Nothing is ever right or wrong; it’s just what works best for you. Talk with professionals and make time and space to help you make the decision that’s best for you and your family.   

Learn More: Seasons Change, and so Do Your Needs: Time to Review Your Life Insurance

Understanding Legacy Planning:  

Make sure to put your legacy in writing—don't leave it to chance or guesswork. Invest the time and effort necessary to relieve your family of stress in the future. After a spouse has passed away, review your legacy plans, wills, trusts, and other important documents to determine what needs to be addressed moving forward. Keep these documents up to date, or create new ones if necessary, to ensure your loved ones can proceed in alignment with your wishes.    

Learn More: Leave a Legacy That Matters  

Conclusion: 

Loss is never easy, and we are here to help you navigate your finances as well as provide support as friends during this challenging time. Please go through the checklist to safeguard your finances and family. It's important to reach out to both your financial advisor and attorney to ensure these steps are taken and that you are well-prepared.  

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