Financial Planning After the Loss of a Spouse

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Key takeaways:

• Connect with trusted legal, tax and financial advisors to help prioritize immediate financial decisions and identify what can wait.
• Focus first on essential financial matters, including understanding your finances, reviewing tax considerations and evaluating Social Security benefits.
• As your circumstances evolve, revisit your financial goals and long-term plans to ensure they continue to reflect your needs and priorities.

Understanding your financial path after loss

In the wake of losing a spouse, it is natural to feel overwhelmed and unsure of where to begin. Along with navigating grief, family responsibilities and daily life, many surviving spouses are also faced with important financial and estate planning decisions. In the months that follow, understanding which financial matters and estate planning steps after a spouse’s death require immediate attention—and which can wait—can help provide greater clarity and reduce uncertainty during a difficult time.

"After a loss like this, your focus should be on taking care of yourself and your family," says Kirk Ross, a regional fiduciary executive at Fifth Third Private Bank in Toledo. "Your advisory team is there to help shoulder the financial details and guide decisions when you are ready, so you do not have to navigate them on your own."

When to consult your team of advisors

In the months following the loss of a spouse, many financial matters come into focus at once. Rather than trying to address everything on your own, your estate attorney, accountant and wealth management advisor can help ensure that you’re addressing the financial issues related to your spouse’s death and your life going forward while also preserving the space and time you need to grieve.

"There is no single right order for these conversations," Ross says. "The goal is to help provide structure and confidence, so decisions unfold at a pace that feels manageable." A surviving spouse is often faced with several important considerations, including prioritizing next steps, organizing financial information, addressing tax filing requirements, assessing Social Security survivor benefits and revisiting estate plans during an already demanding time.

Professional advisors can help organize financial information, confirm required filings and explain available options as questions arise. Seeking experienced guidance can help simplify what might otherwise feel like an unstructured or overwhelming process.

Financial considerations after a spouse’s death

After the death of a spouse, financial decisions often arise alongside emotional and family considerations. While every situation is different, there are a few areas that are useful to review as you adjust to life moving forward. The following list outlines a few key considerations that can help to provide clarity and a sense of direction.

1. Seek professional guidance. Connecting with your legal, tax and financial advisors early can help create a clear starting point. Whether you already have a relationship with your team or you’re introducing yourself for the first time, they can provide support and guidance in the early days of your loss, while also helping to take some of the burden off your hands. "Your team will be able to provide you with timelines for finance-related matters that need your immediate attention," Ross says. Just as importantly, advisors can also help you understand which issues can wait, so you can take time to care for yourself and your family.

2. Embrace your role in financial decisions. In some cases, managing family finances may be a new responsibility for a surviving spouse, and making decisions without a partner’s input can feel unfamiliar. Rather than thinking in terms of permission or precedent, it can be helpful to view financial choices through the lens of how they can support your needs and goals today. "At this stage, it is about understanding that you are the decision-maker," Ross advises. "The role of an advisor is to provide guidance and perspective, not approval."

3. Focus on what matters first. He adds that many aspects of your financial life can wait until you’re ready to address them. However, he also points out that you need to "move deliberately toward resolving a few high-priority issues" within four to six months of your spouse’s death. These include:

• Current income and expenses. "The first thing you need to do is learn where your finances are today," Ross says. Talk with your wealth management advisor about your current financial picture and ensure that you have a clear idea of your assets, income and expenses. You may have no intention of making changes, but in the near term, consider what you need to feel financially secure.
• Tax considerations. Reviewing your most recent tax return can offer a helpful overview of your financial situation. The IRS allows you to file jointly for the full year in which your spouse passed away, which may provide certain tax advantages, such as a higher standard deduction and higher income ranges within each tax bracket that are available to married couples. You may also need to file an estate tax return, which can facilitate a step-up in cost basis that may significantly reduce capital gains taxes on the assets your family inherits.
• Social Security. Reviewing Social Security benefits for surviving spouses is another important part of near-term financial planning, especially if your spouse was the primary earner. Your advisors can help you understand the different benefit options available, eligibility requirements, and the appropriate timeline for claiming benefits. In most cases, the funeral home will notify the Social Security Administration about a death, though it may be helpful to confirm that notification was completed.

4. Estate settlement and plan review. Working with your estate attorney can help ensure that your spouse’s wishes are carried out and that account ownership, beneficiary designations and estate documents are properly updated to help execute the provisions of your spouse’s estate plan. This may include filing life insurance claims, dispersing trust assets, locating key documents and updating ownership of bank and investment accounts. Many elements of an existing estate plan may remain in place, but your attorney can guide you through any necessary actions during this period.

5. Plan for the future. After you’ve addressed your immediate financial needs, it is important to give yourself time. Decisions about lifestyle, spending or legacy do not need to be made right away.

As you move through the next year, you may consider whether your financial goals and priorities still feel right for you. Some may remain unchanged, while others may naturally shift as your life evolves.

"There’s a misconception that the plans in place have to remain the same forever," Ross says. "While some things, such as annuities or the amount of assets, can’t be changed, many aspects of a financial plan can be adjusted over time to better reflect how you want to live."

Loss affects every part of life, and financial considerations are only part of that experience. "Our role is to be present and supportive, taking care of the financial responsibilities you have entrusted to us so you can focus on what matters most to you," Ross says.

For personalized guidance on estate planning and preparing for the future, contact your Fifth Third Private Bank advisor.