While it’s something we hope would never happen, losing a spouse becomes an unfortunate reality many people must face.
While the emotional trauma is the first and hardest blow, an important next step is looking towards the future and assessing your financial situation. As a single person for the first time in years, there are several steps you should take in order to help you effectively manage your financial and household needs.
Locate important documents: Determine the location of key documents such as your will, trust documents, insurance policies, deeds, stock and bond certificates and bank and brokerage statements. By locating these documents, you will be able to identify where re-titling is required.
Re-title your property and financial accounts: Regardless of how you lose your spouse, you should contact your bank and brokerage firm to re-title your accounts and change beneficiaries if necessary. In the event of a death, you will need certified copies of the death certificate in order to change account and asset titles.
Update your beneficiary designations and estate plan: A simple review and update of beneficiary designations on your IRAs, retirement plans, employee benefits, annuity contracts and life insurance policies is as important as re-titling assets. In addition, have your attorney review your will carefully and make any necessary changes to ensure your current intentions are accurately reflected.
If you haven’t already done so, you may want to consider establishing a trust, which can be created in addition to a will to allow for further instruction for the management and disbursement of your assets. Guardians and trustees for minor children will also need to be determined. If you already have a trust, check the titling of assets and make revisions as necessary.
Identify retirement money available to you: As a surviving spouse, you may be entitled to retirement assets and you may have a number of alternatives for taking possession or distribution of those assets. Check with a financial consultant for the most appropriate method. Be sure to notify the Social Security Administration, as it may be possible to be eligible for benefits prior to retirement, at retirement or for minor children. Check your credit status: You’ll want to get copies of your credit report and check it for any errors. If you don’t already have a credit card, you should consider applying for one so you can start establishing a credit history.
Know your cash-flow needs: Since your household income has most likely changed and probably diminished, start by identifying your necessary expenses that have to be paid promptly, such as your mortgage, utility bills, food and medical expenses. These may also include education expenses if you have children in college or private school.
Complete a net worth statement: This will help you identify what you have and what you owe. You also can gain a better understanding of the potential resources available to sustain your short-term and long-term income needs, especially if your household income has changed.
Review your investment portfolio: Look closely at your investments to see if they match your financial goals, time horizon and, perhaps most importantly, your risk tolerance. What may have worked for you in the past as a couple may no longer make sense for you as an individual.
Reassess insurance needs: You should check all insurance policies to see if they still match your current needs and designate your preferred beneficiaries.
While the emotional trauma of losing a spouse is difficult, looking to the future with a clear understanding of your financial situation will help give you confidence in the years ahead. .
Chris Facka, Financial Consultant of A.G. Edwards, can be reached at 642-6000. A.G.