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Sunday, June 10, 2018

Helping senior loved ones handle finances after the death of a spouse

Losing a loved one ranks among the top of life’s most stressful events. In the aftermath of a spouse’s death, some financial issues must be addressed quickly. While the discussion is a difficult one, encourage your loved ones to discuss finances with each other and you so that initial decisions will be easier to navigate amidst the grief.

When planning ahead, everyone will need to know how assets are titled and where they’re held. Know how the loans are handled and credit card account terms. Make sure everyone can access investments and other records — create a list of all accounts, usernames, and passwords, and remember to keep this information organized.

First Steps

When your loved one loses their spouse, help them deal with the most pressing financial needs first. Encourage them not to make decisions that can have far-reaching ramifications. Collect all the papers needed to file for benefits and finalize the estate: death certificates (ask for at least 15), insurance policies, Social Security numbers, military discharge papers, birth certificates, a complete list of assets, and their spouse’s will.

Liquidating Assets

If cash is tight and medical costs and other expenses are mounting, it might make sense for your loved one to sell their home. To determine whether it’s feasible, assess its current worth with a home sale proceeds calculator and find a realtor they trust.

Life Insurance

Contact the sources of benefits, including the employer with whom your spouse had policies. Hire and talk to a financial advisor before you decide what type of payment plan (lump-sum, fixed payments/ annuity) is best for you.

Social Security

If your loved one’s spouse was collecting Social Security, call them. You’ll need birth and death certificates, marriage certificate, birth certificates of dependent children, Social Security numbers, and copies of the most recent tax return.

Veterans’ Benefits

Contact the Department of Veterans’ Affairs (VA) office or ask the funeral director for help applying to receive a lump-sum payment of $300 for burial expenses and $150 toward a plot in a private ceremony. If your loved one’s spouse also received disability benefits, the survivor may be entitled to monthly payments.

Employee Benefits

If your loved one’s spouse was employed at the time of their death, ask the employer about survivor’s benefits. If they were retired and receiving a pension, check to see whether your loved one will still receive payments and, if so, whether the death affects the amount. 

Enlist the help of trusted friends or family, or encourage your loved one to hire a team that includes a financial advisor, an accountant, and an estate planning lawyer to help wade through the paperwork, make sound financial decisions, and avoid costly mistakes. 

Mistakes to Avoid

In the aftermath of a loved one’s death, everyone’s recovering from a huge loss and struggling to think clearly, reasonably, and logically. Encourage your loved one to wait before making big financial decisions, such as paying off a mortgage, until their head is more clear — they shouldn’t feel pressured by anyone to make a decision with which they’re not comfortable. 

Many financial planners say the biggest mistake their clients make is trusting too much. Be wary of predatory insurance salespeople and stockbrokers that work on commission or other professional scam artists. If your loved one receives a decent lump-sum of money from an insurance policy, they should do nothing for at least three or four months except put it in the bank. Encourage them to wait until they’re thinking clearly and rationally again — and have a financial planner whose judgment they trust.

Don’t assume that benefits automatically transfer after a spouse’s death. Even if they’re listed as the primary beneficiary on retirement or other accounts, they should work with a financial planner or accountant to update everything properly. 

Remind your loved one to update the beneficiary on their own retirement accounts and other financial accounts to include someone other than their spouse. An estate attorney or financial planner can provide guidance if necessary.

Whether you’re helping your loved one plan ahead or in the midst of helping strategize your loved one’s finances, this surviving spouse financial checklist may help.

Photo Credit: Pixabay.com