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VIDEODealing With the Death Of a Spouse
By
Scott Reeves May 28, 2008 3:00 pm
Key financial steps in the event of tragedy.
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You may be buffeted by waves of depression and may experience periods of paralyzing inertia. Paying attention to small details is a good first step as you work your way back from your loss.
“The most difficult thing I see is that the partner who handled the finances, often the husband, dies first and the wife has no idea what’s going on,” says Mark Stempel, a certified financial planner and founder of Mark Stempel & Associates. “This makes the surviving spouse easy prey for unscrupulous sales people. I think it’s important for couples to discuss their personal finances and start planning long before one partner dies.”
Here are five basic steps to take after a spouse’s death:
1. Financial Records— Locate and organize important financial documents needed to understand your financial situation, including bank and brokerage statements, insurance policies, deeds, tax returns, stock and bond certificates.
Call the benefits manager at your spouse’s employer. Ask about pension, insurance and retirement accounts.
Contact the Social Security Administration and apply for survivor benefits. Then make a list of all available retirement money. There may be tax considerations, so talk to your financial adviser about the best way to take possession of the money.
2.
Calculate Cash Flow—Your income may drop sharply after the death of a spouse, but this probably won’t be an insurmountable problem if you’re still working. If you don’t have a budget, draft one to be sure you have enough money to cover the basics, including mortgage, utilities, food, car and medical expenses. If there’s a gap between your income and expenses, it’s time to trim your expenditures. 3. Calculate Your Net Worth – List all your assets. This will help determine your financial health and give you a better understanding of how to meet short- and long-term needs. Next, make a list of long-term debt such as mortgage and car payments.
4. Re-title Assets – Get all property, bank accounts and other holdings listed in your name. Long before it’s needed, individuals with a high net worth may want to consider setting up a trust to assure the surviving spouse’s financial future and to bequeath more assets to their children. This will require an attorney.
5. Seek advice, gather facts – You’re not the first to travel this road so talk to others about their experience and learn from their mistakes. Read financial Web sites and personal finance magazines and think about taking a basic course in financial planning. Consult a financial advisor. Consider dealing with a fee-only professional to be sure the advice you receive is objective and the planner isn’t pushing products to earn a sales commission.
These basic steps will get you started, but are just an outline of what needs to be done. Remember: each case is different. That’s why it’s important to talk to a financial advisor who is active in survivor and retirement planning.
The key: take a fresh look at financial planning after the death of your spouse and re-budget as need. Nailing down the finances won’t fill the emptiness in your heart, but it will help you handle the day-to-day issues of life.
Many brokerage firms have Web sites offering financial planning tips, including T. Rowe Price (TROW), Merrill Lynch (MER), Goldman Sachs (GS) and Morgan Stanley (MS). Major banks also offer solid information, including JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC).
No positions in stocks mentioned.
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Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
