Losing a spouse is devastating, but amid the grief, you have several practical matters to attend to. You might not feel like completing financial and estate planning tasks, but they’re essential for your long-term security. Take time to grieve, and then follow this guide to help you navigate these responsibilities and regain control of your financial future.
What Are Survivor Benefits, and How Do I Claim Them?
One initial step after losing a spouse is to explore and file for survivor benefits, available through Social Security, your life insurance policy, or your spouse’s employer. These benefits provide an essential financial cushion during this difficult time. Here’s what to do:
- Contact Social Security: Call the Social Security Administration to understand your eligibility. Widows and widowers may qualify for survivor benefits based on their spouse’s work record.
- Review employer benefits: Check with your spouse’s employer for payout information, including pensions, group life insurance benefits, 401(k) and health savings account (HSA) balances, or unused paid time off.
- Submit claims promptly: The sooner you file, the quicker you can receive benefits. Gather necessary documentation like the death certificate and marriage license to streamline the process.
How Should I Adjust My Financial Priorities?
When your household income changes, it’s important to reassess your budget and financial goals. Start by taking a fresh look at your finances. Follow these steps to see where adjustments may be needed:
- List your income sources: Include survivor benefits, retirement account withdrawals, and your personal income.
- Track monthly expenses: Separate essential expenses (like housing and utilities) from discretionary spending (such as dining out).
- Build a new budget: Allocate funds to cover your immediate needs and see what’s left for savings and investments. Make sure you have an emergency fund to cover at least three to six months of living expenses.
What Tax Implications Should I Prepare For?
Transitioning to single filer status marks a significant change to your tax situation. Here’s what to prepare for:
- New filing status: The year after losing your spouse is the last time you’ll file taxes jointly. Prepare for a potential tax increase as you move to single filer status. Hiring a tax advisor can help you maximize available deductions.
- Estate taxes: If your spouse’s estate exceeds federal or state thresholds, you may face estate taxes. A tax professional can help you navigate this.
- Step-up in basis: Assets like real estate or stocks inherited from your spouse receive a “step-up” in their cost basis. This minimizes capital gains taxes if you sell these assets later.
Is My Investment Portfolio Still Well-Suited for Me?
Your financial goals and risk tolerance may shift after losing a spouse, making it necessary to review and realign your investment portfolio. Work with a financial advisor to help you make these decisions with confidence. Here’s how to start:
- Assess risk tolerance: If your income is more limited now, you may want to shift toward more conservative investments.
- Diversify your assets: Try to ensure your portfolio isn’t overly reliant on a single type of investment or sector.
- Focus on liquidity: Consider having more liquid assets (like cash or bonds) to cover short-term needs while leaving room for long-term growth.
Should I Update My Estate Plan?
Your spouse’s passing is a critical time to revisit your estate plan and help ensure it reflects your current wishes. The most important documents to review and update include:
- Will: Name new beneficiaries, executors, and guardians if applicable.
- Trusts: Update or establish trusts to protect assets for your children or other heirs.
- Power of attorney: Appoint someone to manage your financial affairs if you’re unable to do so.
- Beneficiary designations: Review accounts like IRAs, 401(k)s, and life insurance policies to ensure the correct people are listed as beneficiaries.
Should I Revisit My Health Care Directives?
Health care directives ensure your medical preferences are honored. Losing your spouse may require you to appoint a new person as your health care proxy. Take these steps:
- Review current documents: Check for outdated or missing information, such as contact details for your current proxy.
- Choose a trusted proxy: Select someone who understands your wishes and is comfortable making medical decisions on your behalf.
- Communicate your preferences: Share your updated directives with your proxy and doctor to avoid future confusion and ensure they know how to access your documents in an emergency.
What About My Insurance Policies?
Your insurance needs may change after the death of your spouse. Take time to review your coverage to help ensure it still aligns with your situation. Here’s what to look for:
- Life insurance: Update the beneficiaries and assess whether you need additional coverage, particularly if you have dependents relying on you financially.
- Health insurance: If you were on your spouse’s employer-provided plan, you may need to explore private insurance or Medicare.
- Home and auto insurance: Adjust your policies if you move or sell your spouse’s car.
Why Do I Need a Financial Support Network?
You don’t have to navigate this process alone. Partnering with professionals lightens your load and helps ensure every detail is addressed. Here’s who should be on your team:
- Financial advisor: Get help with investment portfolio realignment and budgeting based on your new circumstances.
- Estate planning attorney: This legal professional can assist with updating your trusts and will to help avoid disputes and provide clarity for your heirs.
- Tax professional: Seek guidance on estate tax planning and filing returns to maintain compliance and identify opportunities to reduce tax burdens.
Take the Next Step with Prime Capital Financial
Adjusting your financial priorities after the loss of a loved one can be difficult. That’s where Prime Capital Financial comes in. We have over 200 financial advisors across 70 locations, ready to help you claim survivor benefits, update your estate plan, and realign your investment portfolio. We provide a personal touch while leveraging the resources of a national firm. Contact us today to discuss how we may assist you in navigating your financial future during these challenging times.
Disclaimer: Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite #150, Overland Park, KS 66211. PCIA is doing business as Prime Capital Financial | Wealth | Retirement | Wellness. PCIA and its associates do not provide legal or tax advice.
