Preparing for life’s hurdles is a financial necessity

May 20, 2016

Hopefully, this is not happening to you right now, but some day your spouse will die, so you should be prepared for when it happens. However, since death is usually preceded by illness and/or disability you should make plans for those hurdles before they happen as well.

Sounds like the risk section of a financial plan that includes, but is not restricted to the following risks: you can become ill or disabled, you can die, your property can be damaged, someone can sue you, and you might wind up in a long term care facility at an annual cost of $137,616 per year.* But, let’s get back on track and find out what you need to do when a spouse dies.

When a spouse passes away, the emotion and magnitude of the loss can land like a knockout punch. This change can also affect your finances. All at once, you have a to-do list before you, and the responsibility of it can make you feel pressured at the worst of times. With that in mind, this article is intended as a kind of checklist – a list of some of the key financial matters to address following the death of a spouse.

The first step is to locate documents. Hopefully, your spouse kept these documents where you can easily find them – either at home, in a safe deposit box or in an online vault. Hint, why not do this now while you are both here.

Next, contact family members, friends and your spouse’s employer to tell them of your spouse’s passing. (As a courtesy, your spouse’s employer should put you in touch with the person overseeing the company’s employee benefits plan or human resources department.)

If your spouse owned a business, check to see what plans are in place for its short-term continuation. Will a partner or key employee take the reins for the time being (or for the long term) as a result of a defined succession plan? Hint, if you are the owner or partner in a business, set up a succession plan now!

Arrange payment for funeral preparation and expenses.

Gather/request as many records as you can find to document your spouse’s life and passing – birth and death certificates, a marriage certificate or divorce decree (if applicable), military service records, investment, insurance and tax records, and employee benefit information (if applicable).

Subsequently, it is time to talk with the legal, tax, insurance and financial professionals you trust. Consult with your attorney. Assuming your spouse left a will and did not die intestate (i.e., without one), that will should be looked at as a prelude to the distribution of any assets and the settlement of the estate. His or her written wishes should also be reviewed. Hint, take the time to write them up now.

Locate your spouse’s insurance policies and talk to your insurance agent. Notify your agent of your spouse’s passing; he or she will work with you to a) get the claims process going, b) help you reevaluate your own insurance needs and c) review and perhaps alter beneficiary designations.

Notify your spouse’s financial advisor and by extension, the financial custodians (i.e., the banks or investment firms) through which your spouse opened his or her IRAs, money market funds, mutual funds, brokerage accounts, or qualified retirement plan.

They must be notified so that these funds may be properly distributed according to the beneficiary forms for these accounts. Please note that the beneficiary forms commonly take precedence over bequests made in a will. (This is why it is important to periodically review beneficiary designations for these accounts.)

If there is no beneficiary form on file with the account custodian, the assets will be distributed according to the custodian’s default policy, which often directs assets either to a surviving spouse or the deceased spouse’s estate.

Next, check on survivor/spousal benefits. These important benefits may help you to maintain your standard of living after a loss. Contact your local Social Security office regarding Social Security spousal and survivor benefits. The online address is

Let’s move on to settling your spouse’s estate. You and/or your attorney need to contact the executor, trustee(s), guardians and heirs relevant to the estate and access the appropriate estate planning documents.

Your attorney can also let you know about the possibility of probate. A revocable living trust (or other estate planning mechanisms) may allow you to avoid this process. Joint tenancy and community property laws in many states also help.

In closing, I’d like to suggest that you don’t procrastinate and store this column away until the inevitable happens. Instead, start preparing now. Know what documents need to be updated, update them and store them in a proper place.

You might want to look into digital storage as well.

*According to the Genworth 2015 Cost of Care Survey New Jersey

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for the individual.
Randy Neumann is a financial professional with and securities offered through LPL Financial, member FINRA/SIPC.