Managing your finances after your spouse passes away

Monday, August 24, 2009, 5:18 AM | Leave Comment

Death is inevitable. It has to happen. There is no escape. It knows no boundaries in terms of time and age. Two years old or sixty years old have no effect on death. Sometimes, it comes without warning.

Losing a spouse is a life-changing event that can leave you feeling emotionally distraught for a very long time. In the shorter term, it also will leave you saddled with financial paperwork at a time when you may be at your most vulnerable.

Here are some steps you can take to help put your mind at ease and make sure you have all the necessary financial and legal documents in place to make important decisions for your future.

Get a number of copies of the death certificate
You will need these copies, generally supplied by the funeral home, for a variety of purposes.

Locate your spouse’s will, trusts, and beneficiary forms
Check with your attorney if you can’t find them in your own files. Remember that certain types of assets usually pass outside of a will, including joint property like bank accounts and homes, as well as life insurance proceeds and retirement accounts, which are distributed according to beneficiary designation forms.

Start probate proceedings
This is the process by which the surrogate’s court where you live determines that a will is legally valid.

Claim survivor’s benefits
You can apply for Social Security benefits by telephone (1.800.772.1213) or at any Social Security office.

Notify financial institutions
Your tax returns are a key source of information, since they show bank accounts, partnerships, and investments paying dividends or interest.

Document the value of the assets
Inherited assets are entitled to an adjustment on the cost basis of their value upon the date of death. It could reduce or eliminate the capital gains tax you have to pay if you sell the assets.

Review your own estate plan
Most spouses structure their estate plans so there is no tax when the first spouse dies. This is allowable because of the unlimited marital deduction, which permits the tax-free transfer of assets to a spouse who is a U.S. citizen. However, if the total estate is worth more than $3.5 million when the surviving spouse dies, the money could be subject to federal estate tax at that time.

In a Nutshell
The estate planning information contained herein is general in nature, is provided for informational and educational purposes only, and should not be considered legal or tax advice.

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