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Financial Tips Upon the Loss of a Spouse

Few events can turn a person's life upside down as the death of a spouse. In addition to the shock and grief associated with death and the loss of a spouse's emotional support and companionship, there is often less household income than before. Meanwhile, household bills stay the same or even increase if there are high medical or funeral bills to repay.

In addition, there are many decisions that need to be made (e.g., how to invest the proceeds of a life insurance policy), forms that need to be completed (e.g., pensions, Social Security), and suggestions from "helpful" family members and/or financial product salespeople. For some widows and widowers, the pressure to do something--anything--becomes unbearable. Decisions are, thus, made quickly, much like a "hot potato" that must quickly be tossed away.

Below are some suggestions to cope with financial issues related to widowhood:

• Take your time. Do not make any major financial decisions immediately. If you receive an insurance settlement or other payment, place it in a bank certificate of deposit (CD) or money market mutual fund until you have time to explore longer-term investment alternatives and/or educate yourself about personal finance.
• Make sure you're covered by health insurance. Call your spouse's employer to find out if you're still covered under the company plan. If not, you may be able to apply for continuation of coverage for up to 36 months under the federal COBRA law if you apply within 60 days and pay the premiums. If you've always had employer-provided benefits, the premiums for COBRA coverage can be a shock. However, they will probably be lower than what you could qualify for as an individual. COBRA coverage is available to employees of companies with 20 or more workers.
• Get organized. Among the documents that you'll need to collect are: death certificates; insurance policies; marriage certificate; birth certificates for dependent children; the deceased's will, retirement plan (e.g., pension) records, and a certificate of discharge from the military, if any.
• Retitle a spouse's or jointly held assets into your name, such as bank accounts, credit cards, auto titles, and the deed to your house. Expect minor hassles, such as the need to obtain a signature guarantee for some documents. Also, review your will, retirement savings accounts (e.g., 401(k) plan and IRA), and insurance policies. You may need to change beneficiaries.
• Identify and secure resources. Some examples include life insurance policy proceeds (both individual and employer-provided coverage); employee benefits (e.g., deceased spouse's 401(k) plan), and Veteran's benefits (e.g., burial in a national cemetery).
• If your deceased spouse was employed, contact his or her employer regarding benefits due survivors. For example, the estate may be due a final paycheck, payment for vacation and sick leave, or other compensation.
• Don't pay any large debts that your late spouse may have incurred until you check with a lawyer. Debts owed by the deceased are the responsibility of the estate and should be forwarded to the executor. Creditors will simply need to wait until the estate is settled. If you pay the bills with out-of-pocket funds or personal savings, you could leave yourself short of necessary cash, both for living expenses and a financial emergency (e.g., car repairs).