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April 29, 2016 at 12:43 PM
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.
