The unthinkable has happened. Why me? Why him/her? What now? I’ve always felt bad for others who lost their spouse: "Now I don't know what I feel or how I feel. It wasn't supposed to happen. We thought it would last forever. It hasn't sunk in that my spouse is gone.”
These are words I hear over and over from clients who suffer the unimaginable loss of their best friend, lover and/or co-parent.
So, now what?
People often tell me they feel numb, lost, emotionally drained as well as abandoned, paralyzed and lonely. Once the grief and mourning subside, the reality of life and time will help heal their pain.
As they move forward in their journey on a new path, organizing their finances helps them regain control and reduce financial worry during the time of healing. Their support network is also very important so they do not feel overwhelmed and disoriented.
Here are 11 steps baby boomers and others should take following the death of their significant other.
1) Funeral and memorial arrangements
The funeral and memorial arrangements need to be decided. Once a funeral home is selected, your client should discuss the cost with the funeral director. A family member or friend of your client should attend to help.
It’s important that there is a budget for the entire funeral, service, burial, clergy and obituary. The client should contact friends and family to ask for help with housekeeping tasks, caring for young children and being there in case of an emergency. They will also want to have a system to record information to acknowledge cards, letters and phone calls later.
2) Organize information
Your client will want to start a filing system if they haven’t already. This system will include information for bank and credit card statements, bills, employer information (both theirs and their spouses), along with estate planning documents and tax information.
Next, they should separate investments as well as other assets and life insurance policies. They should have a planner to keep important due dates and take notes on contacts made, or else they could forget who they talked to and what areas they are helping with.
3) Contact network of advisors (attorney, tax professional, insurance agent and financial advisor)
Your client should secure their documents for their attorney, especially wills and trusts. They will also want to meet with their tax professional to discuss tax considerations for the current year. They should be prepared to discuss their money issues with their financial advisor and talk about their current circumstances.
4) Consider cash flow and the immediate need for cash
Having sufficient cash flow during this transitional period is crucial for your client. For example, they should be aware of what money is coming in and what money is going out. They should use funds from investments that will not create a taxable event and ones that do not carry a penalty for withdrawal.
5) Consult with health care and other insurance professionals
Your client needs to secure important documents, including birth certificates and their marriage license, as well as military and company benefit papers. Filing claims with Social Security as well as life insurance companies should be done immediately. (I typically recommend taking the lump sum option versus a payout option, as it provides many additional advantages. With a lump sum, the proceeds can be invested to produce an income and if the client dies, the funds will pass on to their beneficiaries.)
Their spouse’s 401(k) or IRAs can be rolled over into their own IRA. They will also want to contact the human resources department of their spouse’s employer (if the spouse was working at the time of death) regarding unpaid salary and vacation pay, as well as life insurance policies. They will also want to draw their spouse’s pension or roll the funds over into their IRA.
6) Collect benefits
A review of your client’s medical insurance coverage, including their families (especially if covered under their spouse), is critical. How long can they stay on the plan? And if children are covered, to what age can they stay on? They should review the cost for these benefits so they can compare with other available coverages.
7) Review assets and liabilities
Your client’s net worth equals what they own minus what they owe. It is important they know these numbers, which will help them understand their limitations. This is a snapshot of their financial life to use for their goals going forward. Assets include cash and cash-like products that are liquid or can be converted to cash in an instant.
Retirement Assets: IRAs, 401(k), 403b, 401a (this depends on where they or their spouse worked). Annuities, vested pensions and other tax-deferred investments.
Personal Assets: Home, vacation home, furnishings, art, jewelry, antiques, boats, recreational vehicles, etc.
Other Assets: Investments could include individual stocks, government and corporate bonds, mutual funds that own stocks and bonds, and real estate properties.
Liabilities: What they owe on credit cards, auto loans, mortgages, education loans and other debts.
Their assets minus their liabilities equals their net worth. The analysis allows them to realize and understand what they can and cannot do regarding finances.
8) Estate settlement
Your client should start their estate settlement as soon as possible. This includes changing the title and beneficiaries on cars, insurance policies and investments. They should hold off on credit cards so they can have them available until things are settled.
I would advise them to delay closing or changing bank accounts. This will give them the ability to deposit any incoming payments to their spouse until things are cleared up. Also, they should discuss with their tax preparer when an estate tax return or final return needs to be filed.
9) Don’t get run down
It is important that your client continues to take care of him or herself so they can fight through and make rational decisions. Advise them to get their rest and exercise. As always, they need to stay in touch with their family and friends, and consider joining a support group or talking to a counselor. This will help when they feel frightened and disconnected.
10) Postpone major decisions
There is no need for your client to rush when making big decisions. As the grieving process continues, they may be vulnerable and mistakes can be made. Their life is different now and their mental and emotional feelings will develop as they rearrange their priorities. People that are well-meaning, such as friends/family who do not know their situation, will make recommendations as to what to do now. Your client should seek trusted professionals to assist with the financial decisions in order to avoid errors.
However, they should be careful, as some view widows/widowers as easy targets to take advantage of financially. Your client should move slowly on life-changing events so they have time to heal.
11) Focus on new goals
After a period of mourning, your client should start fresh by setting new goals in life. This could begin with a new financial plan. They also need to schedule a meeting with their attorney to update their will and estate plan. Writing a letter to their family about their values and what they would like the family to accomplish in the event something would happen to them may make this process easier.
Expanding their social circles to include people who will know them as themselves and not just as “someone’s spouse” may also help with the healing process. It’s important to note that your client be careful about dating too soon and always keep their finances to themselves.
Remember there is life after the grief subsides, and they will be able to continue on and create many more new memories in their life.
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