Losing someone you love is a very difficult thing to go through. The emotional aspect of the loss is tremendous. However, the financial impact is also one that you need to consider. If you have lost a spouse, then you have essentially gone from having two incomes to one. Because of this, it can be a substantial financial blow. Use these tips to help you navigate your financial life after losing a loved one.
Take a Breath and Take an Inventory
Many individuals come into our office with the desire to understand all of their financial affairs. Unfortunately, many spouses are put in the position of not having gone through a financial planning process until his or her spouse passed. While it can be overwhelming to try to understand all of the family's financial affairs and the steps to take in such critical time, there are individuals that can help you understand all of the moving pieces in an orderly fashion. You do not have to act quickly, but it is important to act calmly and surround yourself with trusted, experienced individuals that can provide peace. If you meet with an advisor that tries to sell you on product, then it is a good idea to explore other options.
Will and Trusts
You probably know whether your loved one created a will or not. Review the will to determine who is named as executor (or personal representative). If you are named as executor, get help as needed to begin the process of settling the estate. This is obviously an important role and expertise in this area coupled with someone that can help you navigate the emotional aspects of settling an estate is critical. If you are not named as executor, be willing to communicate with the executor and try to get some of your important questions answered. It is important, however, to allow the executor to do his or her job in an efficient manner. The executor has a fiduciary obligation to the beneficiaries of the estate -- thus, you do have certain rights under state law so familiarize yourself with these rules if you do not feel like you are being adequately represented.
In addition to wills, consider whether your spouse had a trust. Trusts also contain dispositive provisions of where assets may flow upon your spouse's passing. The trusts usually work in concert with the wills so these documents should be reviewed in conjunction with each other. There may be numerous steps you can take to minimize taxes or make other necessary steps to effectuate the estate plan - this type of planning is often referred to as post-mortem planning and specialists should be used for these purposes.
There are two possible places to look for life insurance. They may have had life insurance through their employer, or they may have had it from the open market. You will need to contact any life insurance companies that they had a policy with to provide them with a death certificate. If you are not named as executor, you will need to work with the executor to obtain this information. From there, these companies can help you get the money from their life insurance policy.
Another thing to consider is if they had any retirement accounts. While you will likely know whether they had an employer retirement plan such as a 401k or some type of Individual Retirement Account, it is not unusual for these types of accounts to accumulate and not have knowledge about all of the assets. Review past financial statements and online history to confirm what accounts exist. Once you have an idea of the types of accounts that exist, you and your professionals can review beneficiaries listed and determine any planning steps that should be taken.
Analyze Your Situation
No matter what mix of accounts your loved one had to help you financially after his or her passing, you should seek a professional to help you understand your new normal. Running cash flow projections based on your current assets, liabilities and living expenses can help provide clarity on what steps you need to make with your financial affairs. A Certified Financial PlannerTM that specializes in cash flow analysis -- and not on selling product -- can provide such analysis and help you navigate the days, months, and years ahead. Adjustments will often be needed to lifestyle expenses, income tax planning, investments, and debt so a multi-disciplined advisory or team will be critical.
This is is a very tough situation for anyone to deal with, but having the right people on your side will help you plan for your financial future.