I was in my 30s when I met a fellow financial advisor and fell in love. We got married, made life plans and were working toward our shared dreams of a house, business, children and growing old together.
But that all vanished in the blink of an eye when my husband suddenly passed away, just one month into my pregnancy with our twin girls. The loss was profound and it highlighted the importance of having a good support system, including a trusted financial advisor.
In the 14 years since my husband’s death, I’ve grieved with many clients who have experienced a similar loss. Talking about the experience is never easy, but clients are often comforted by the fact that I know what they’re going through. Once we get past that initial, emotional conversation, we discuss the financial matters that need attention following the death of a loved one.
Review wills, handle estate
Dealing with an estate, retirement accounts, investments and taxes can be overwhelming at any time, but especially so when grieving a spouse. That’s why it’s important to tackle these matters step by step.
As a first step, I advise my clients to review their late spouse’s will with an attorney. Depending on the family’s structure, this process can come with varying levels of complexity, especially if the spouse had former spouses and children from previous marriages. This is also a time to figure out if probate is necessary based on the amount of assets and how the estate was originally established.
The next step is to take an inventory of assets and liabilities to help decide whether the surviving spouse wants to pay off debts, including mortgages, or invest. There could be additional assets such as life insurance or investment proceeds from an IRA that could be used to make debt payments. Joint assets like a house, bank or brokerage accounts or annuities, would need to be retitled without the late spouse’s name.
If the spouse was employed at the time of his or her death, I tell my clients to contact their spouse’s company to understand which employer-sponsored benefits they may have inherited. Spouses are automatically designated as beneficiaries on 401(k) plans, unless they had previously waived that right. Surviving spouses may also be entitled to certain equity compensation benefits. (This is also a time for the surviving spouse to update their beneficiary for any workplace plans to a non-spouse, such as a child or other family member.) Depending on the occupation, there may be specialized benefits involved, such as veterans’ benefits for surviving spouses.
For couples in their 60s and older, there is Social Security to consider. The surviving spouse will need to understand which benefits they may be entitled to and how these fit into their overall financial picture.
Charitable donations and taxes
This is also a time to review tax implications. It’s wise to meet with an accountant to go over changes, including a filing status change to Single, Head of Household, or Qualifying Widow(er) with dependent child. Charitable donations can also affect taxes and the surviving spouse may want to review contributions to nonprofits or religious institutions to determine if they want those to continue.
The immediate aftermath of losing a spouse can bring a lot of financial uncertainty. For many two-income families, the household income drops, but financial obligations often remain the same. That’s why I emphasize the importance of seeking advice, setting priorities and, of course, budgeting. Plans and dreams developed as a couple might need to be recalibrated, but the surviving spouse can still work toward achieving their financial goals.
I know all too well how hard it is to hear “It’s going to be OK” when you’ve just experienced a tragedy. In my situation, enough time has passed that I can say I really am OK now. My kids are thriving, and we’re enjoying life. What I tell my clients who have lost a spouse is that you have to take things one day at a time. Allow yourself to grieve, but keep moving forward. Having supportive people around you, including professionals who can help you navigate your responsibilities, can make all the difference.
Linda Donovan is a financial advisor with RBC Wealth Management – U.S. West Houston branch.
RBC Wealth Management is a division of RBC Capital Markets LLC, registered investment advisor and Member NYSE/FINRA/SIPC. Investment and insurance products offered through RBC Wealth Management are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, or guaranteed by, a bank or any bank affiliate, and are subject to investment risks, including possible loss of the principal amount invested.