Managing finances after the loss of a loved one

Losing a spouse or a loved one can be a very difficult time. While planning your next steps may seem overwhelming, creating a plan to address your loved one’s finances may help you through the process.

Start with the most pressing matters, and then move on to the broader financial responsibilities. The following actions may help to prevent additional stress during this time.

Get paperwork in order

To start, you’ll want to locate several important documents, including:

  • Social Security numbers
  • Birth and marriage certificates
  • Military discharge papers
  • Insurance policies
  • Deeds
  • Bank and brokerage statements
  • Online accounts and passwords

Once these initial documents are in order, request multiple copies of your loved one’s death certificate from the funeral home. This document will be needed to close out accounts, obtain veteran’s benefits, re-title property, and transfer assets.  

Notify Social Security

If your spouse was receiving Social Security, report their passing as soon as possible. Widows and widowers are eligible to apply for survivor’s benefits— the Social Security income provided to families of the deceased. The surviving spouse can receive reduced benefit income beginning at age 60 or full benefit income at full retirement age depending on their birth year. The rules for Social Security vary depending on age and situation, so it may be helpful to speak to a Social Security representative.1

File a life insurance claim

If a late spouse or loved one had life insurance, a claim should be filed as soon as possible. Depending on the cause of death, you may be required to provide additional documentation beyond the death certificate. If the death occurred within two years of the policy issue date, you may face delays of six to twelve months.

In most cases, beneficiaries should receive a payout within 30 days, often either as a lump sum or in installments over a number of years.2 This can be helpful with immediate cash needs like funeral arrangements and debt payments. 

Map out retirement

If the deceased held retirement accounts, find out what options are available to you. You may be able to roll these accounts into your own or continue as the beneficiary on the IRA or 401(k). By rolling them over (an option only available to spouses), you may be able to delay required distribution, thereby allowing the money to grow tax-deferred for a longer period of time.
It’s also worth knowing that the 10 percent penalty for withdrawals will not be incurred as it normally would with one’s own IRA or 401(k).Consider speaking with a financial professional to help evaluate all of your options. 

Make a budget for one

Your living expenses may change following the death of a spouse, and income sources such as Social Security, veteran’s benefits and pensions may fall off. Given these changes, a new budget can be helpful. 

Hold off on big decisions

There’s no need to make any major, permanent decisions following the death of a spouse. Financial experts suggest waiting at least six months to a year before putting homes on the market, moving in with adult children, or making wholesale changes to investment portfolios. 

While tending to emotional and family needs takes precedence during this difficult time, the steps above can help ease the stress of any financial responsibilities. If you’re feeling overwhelmed, consider talking to a financial professional.

1“Benefits Planner: Survivors/ Planning For Your Survivors.” 
2Robert-Grey, Gina. “Life Insurance Policies: How Payouts Work.” Investopedia. August 11, 2019.
3Parker, Tim. “What Happens to Retirement Accounts if a Spouse Dies?” Investopedia. September 20, 2019.