After the Loss of a Spouse, First Things First

Very little of this has to be decided this month. We help sort out what actually needs attention now, what can wait until you have room to think, and what should not be rushed at all.

A Reasonable Order of Operations

There is no single correct timeline, and the list below is a general shape rather than a schedule anyone should be held to. If some of it is already handled, or none of it is, both are normal.

• In the first weeks: order certified death certificates, notify Social Security, and contact employers or pension administrators about any benefits due
• Soon after: file life insurance claims and locate account statements, tax returns, policies and estate documents
• Within the first few months: review beneficiary designations on retirement accounts and begin the process of retitling assets held jointly
• Before the tax year closes: understand how this year's return will be filed and what changes in the years after
• Not yet: selling a home, moving investments, making large gifts, or committing to anything permanent

Salespeople should strive to maintain a professional and customer-oriented approach. Anyone urging you to act immediately on a financial decision is telling you something about themselves rather than about your situation.

If Your Husband Handled the Money, Start With Finding Out What There Is

A great many capable women reach this point without a clear inventory, because that was simply how the work was divided. There is nothing to apologize for in that, and the first meeting is designed for exactly this situation. You do not need to arrive knowing what you have.

We go through statements, policies, tax returns and beneficiary designations together and build the picture from the documents themselves. Melanie Radcliff is a CPA/PFS who spent 25 years reading returns, and she reviews yours with you rather than handing over a summary. As a financial advisor for widows in Fort Smith, AR, we do our best to explain each item in plain language until it makes sense, at whatever pace suits you.

Potential for a Decrease in Income, Possibility of a Change in Rate

This is the part almost nobody is warned about. When filing status changes, the same amount of income can be taxed differently, so a household with less coming in may find the rate on what remains has gone up. Required distributions, pension income and Social Security all land on that narrower structure.

It is a real problem and a plannable one. Depending on your situation, options may include adjusting the order you draw from accounts, considering partial Roth conversions during years when income is lower, or timing charitable giving differently. We work through which of these fits your numbers, and we tell you when none of them do.

The Financial Mechanics Worth Understanding

Each of these has rules attached, and several have deadlines or elections that are easier to handle correctly the first time. We walk through the ones that apply to your situation and set aside the ones that do not.

A surviving spouse generally receives the larger of the two benefits rather than both, and when you claim can affect the amount. If you are also entitled to a benefit on your own record, there may be sequencing options worth reviewing before you file anything.

Social Security survivor benefits

A surviving spouse has options that other beneficiaries do not, including treating an inherited IRA as your own or remaining a beneficiary of it. The choice affects distribution requirements and timing, and it is worth understanding both paths before the paperwork is completed.

Inherited retirement accounts

Claims generally require a certified death certificate and a claim form for each policy or account. Proceeds can often be received in more than one form, and there is rarely a reason to decide quickly on how a large sum should be handled.

Beneficiary claims and life insurance

Jointly held accounts, vehicles, real property and business interests each follow their own process for transferring into your name. Some update almost automatically, and others require documentation and time.

Retitling accounts and property

Your retirement account beneficiaries, life insurance beneficiaries and estate documents may still name your spouse, and updating them is one of the more commonly deferred tasks. This is also the point to review your own estate plan with your attorney.

Updating your own designations

For the year of a spouse's death a joint return is generally still available, and certain surviving spouses with dependent children may qualify for a favorable status for a period afterward. Eventually filing shifts to single, which can mean more tax owed on the same income, and knowing that shift is coming allows for planning around it.

The filing status change ahead

Questions Widows Ask Us Most Often

This information is general in nature and is not intended as tax or legal advice. Old Fort Wealth Management does not provide legal services. Please consult your own tax or legal professional concerning your individual situation.

A qualified distribution from a Roth IRA is tax-free and penalty-free, provided the 5-year aging requirement has been satisfied and one of the following conditions is met: age 59½ or older, disability, qualified first-time home purchase, or death.