Monday, January 12, 2015

Surviving Spousal Loss: Financial Concerns in Widowhood, Part 2

[Reviewed and updated January 10, 2024]

An investment in knowledge pays the best interest.  ~ Benjamin Franklin

In an earlier post a recently widowed woman described her difficulty in deciding how best to take the benefits from her husband's life insurance policy. For surviving spouses with other financial concerns, I’d like to offer some additional information.

The first few hours following a death are usually filled with turmoil and disruption. Relatives, friends and neighbors are constantly ringing the doorbell and calling on the phone. Surviving spouses are faced with all sorts of immediate decisions, such as making funeral and travel arrangements, and less urgent ones, like dealing with finances and legal matters.

You may have to make some painful adjustments to your lifestyle. You may have to give up travel or retirement plans, move into a smaller house, live on a tighter budget or take a job. If you’re in a state of shock and not at your best, it is wise to postpone major legal, financial and housing decisions, at least until you can discuss them with a trusted relative, friend or financial advisor.

Help with Immediate Tasks

Friends and neighbors can assist with immediate tasks such as housekeeping, preparing food, and answering the telephone and doorbell. They can also notify others of the death, shuttle people to and from the airport, or host those from out of town.

Making Major Decisions

Professionals such as your funeral director, family attorney, financial advisor, tax accountant and insurance agent can be valuable guides to help you make major decisions. If you’re having trouble remembering everything you’re being told, take notes. Whenever you speak with an official about legal or financial matters, make a brief note of the conversation, including the person’s name, the date and a brief summary of what was said, so you’ll be able to refer back to it if you need to.

The complexity and expense of settling the estate depends on its type and size. The services of an attorney and a tax accountant usually are helpful. Sometimes the personal representative named in the will can handle estate matters. Information on how to handle probate cases typically is available on the website of the court that has jurisdiction over those matters.

If you want to hire a lawyer to assist you, get referrals from friends or consult the local bar association for an attorney specializing in wills, estates and probate. It is wise to discuss fees beforehand. Take the will to the attorney for review. If there is no will, the attorney will instruct you as to how to proceed.

In order to settle your loved one’s affairs and to establish claims for benefits, you’ll need to locate certain documents. Look for them in your loved one’s safe deposit box, brief case, home and office desks, safe, locker, shoe boxes, cedar chest or file cabinets. Always keep the originals in a safe place, and for now, don’t throw anything away.

Be aware that you will need more than one copy of the death certificate. Proof of the death is the one basic document you’ll need to settle the estate, to establish benefit claims, and to have your loved one’s name removed from accounts. Make certain that you ask for an ample number of certified copies, since the raised seal verifies its validity and legality. You can ask for your funeral director to obtain copies of the death certificate for you, or you can check the local records division listed in the phone book under Government and Community Services.

Inform credit card companies and banks of your loved one’s death; find out if the outstanding balances are covered and how to file a claim. When you contact the company, office or agent who insured your loved one’s life and health, ask for claim forms and instructions on how to file them. Submit any outstanding medical claims to the proper insurer.

Notify banks at which your loved one had accounts. Immediately set up a new account to handle funds received after the death. Inform employers and business associates. Benefits may include employee group insurance policies, retirement and pension fund benefits, the monetary value of commissions and wages or credit union balances. Ask if you are eligible for health care coverages, for how long and at what cost. If your loved one lived alone, you’ll need to notify the post office, utility companies and landlord, if any.

In addition to Social Security, you may be eligible for other benefits, depending on where your loved one worked. Social Security benefits are not automatically paid after a death; you must contact your nearest Social Security Office to apply for them.

For Civil Service benefits (survivor’s annuity), file with the U.S. Office of Personnel Management. For Veterans benefits, file with the U.S. Department of Veterans Affairs. If a spouse served in the military, benefits include funeral expenses, an American flag for the casket, burial at no charge in a national veterans’ cemetery area, dependency and indemnity compensation payments, potential pension payments, and educational financial aid assistance.

With whatever benefits you obtain, make no decision under pressure or duress. (See, for example, Part 1 of this series.) Take time to evaluate your financial situation and seek counsel from your financial advisors. Be aware that you may feel guilty for receiving money when your loved one dies, and you may feel the urge to spend it as soon as possible. If you don’t need all the money right away, investigate the different settlement options and choose the best one for your situation.

Moving to a Different Home

In deciding whether moving from your present home is necessary or desirable, these are the factors you’ll want to consider:
  • Housing costs should be limited to 30% of your income.
  • Staying where you are offers the comfort and security of being in your own familiar surroundings, if that is financially practical.
  • Moving away may depend upon work and educational opportunities for you and other members of your family. Think about location and transportation, in terms of convenience and proximity to resources.
  • Moving in with relatives can be pleasant, convenient and economical – or it can be restrictive, stressful, and in conflict with your own lifestyle and philosophy.
See what other surviving spouses have to say about moving: To Move Or Not: Making Decisions In The Wake of Grief.

Money Matters

If you stand to receive a substantial amount of money in the form of an inheritance or insurance settlement following your loved one’s death, consider these precautions:

Avoid making hasty decisions. If you feel compelled to a make a quick decision to sell property, move away, liquidate assets, lend money to friends or family members, or buy what you don’t need— you may be your own worst enemy. Here’s a good Rule of Thumb: Make no major decisions for at least six to 12 months after the death, until you’ve experienced all the seasons of your emotions. You are especially vulnerable right now, and not in the best frame of mind. Money does matter, now and for your future! Focus on caring for yourself. If making decisions is unavoidable, get the best advice you can find. Until you’re emotionally able to make decisions you won’t regret later, try making ones that are reversible (taking a leave of absence instead of quitting your job; renting out your home rather than selling it; visiting with family for a week or two before deciding to move in; taking a long vacation away from home before deciding to move permanently).

Watch out for obituary chasers. Certain companies and individuals watch obituaries, wait a month or two until the settlement is finalized, then contact the survivor with a so-called opportunity of a lifetime. Trust those you know instead of strangers!

You are not a bank. When so-called “good friends,” long-lost relatives and other freeloading types suddenly appear out of nowhere, remember that you are not a bank, and you need not let others treat you like one! You are wise to keep your financial situation to yourself.

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