I’ve written about this before, but I recently had an experience that reminded me of all the financial things that have to be handled when a spouse dies. In this case, a long-time client of mine died on a Monday. On Tuesday his wife called. She said, “You always told me to call you if anything happened to Steve. Well, he passed away yesterday. You know I don’t know anything about all this financial stuff. What do I do?”

 

When I got to her house, the dining room table was covered with all the financial information Barbara (not her real name) could find. So, we began.

 

The funeral home had already requested death certificates, which is essential for almost everything you need to handle after your spouse dies. Barbara had copies of the Will and the Trust documents, also necessary for many things involved in settling an estate.

 

There was a phone call to the county clerk of court to order Letters of Testamentary. These are notarized legal documents proving that you are the executor of an estate. These are often required by financial firms, credit card companies, etc. so they can legally take your instructions for the accounts you are calling about. Letters of Testamentary need to be dated within 60 days of the time you submit them to a company.

 

We began by notifying the life insurance company of the death and requesting a death claim package. Once filled out and returned with a copy of the death certificate, the company processed the claim and sent a check. This can take a few days to a few weeks depending on the company.

 

Next, we notified the insurance companies that held annuities for Steve and Barbara. In this case, all annuities were jointly owned, so it was a process of retitling the annuities into Barbara’s name alone by providing all the requested documentation, naming new beneficiaries, and beginning income from the annuities, which was the reason they were purchased.

 

All banks, credit unions, and investment companies were contacted and instructed to change the registration of the accounts from joint ownership to single. In cases like this, a decision has to be made whether to consolidate all those accounts to a single account to simplify things.

 

We notified Steve’s previous employer about his death because he chose to leave his 401(k) there when he retired. The account was converted into Barbara’s name. Because Steve was taking Required Minimum Distributions, his RMD for the year had to be withdrawn before the account could be put into Barbara’s name. Once in her name, she had the choice of whether to leave the 401(k) where it was or roll it over into her IRA.

 

Steve was also receiving buyout payments from selling his portion of ownership to his previous employer. Barbara had to provide proof of Steve’s passing so the remaining payments would be sent in her name rather than Steve’s or Steve’s estate.

 

With Steve’s passing, Barbara became eligible for a Social Security Survivor benefit. Once she reached her Full Retirement Age (FRA), which happened seven months after Steve’s death, she received 100% of what Steve was receiving at the time of his death. The funeral home notified Social Security about Steve’s death, so his check stopped immediately. Barbara notified Social Security when she was ready to begin receiving the Survivor benefit. If she had started taking it before her FRA, she would have received a slightly reduced benefit. Social Security penalizes you if you begin taking the Social Security payout before you reach your Full Retirement Age.

 

With those notifications out of the way, we began working on Barbara’s budget. One of the best ways to do that is looking through the checkbook register and find those expenses that occur on a regular basis. But there are other expenses that may not be as obvious:

  • Auto maintenance
  • Veterinary bills
  • Postage
  • Trips to the barber or salon
  • Cost of groceries
  • Gas for vehicles
  • Eating out
  • Entertainment expenses
  • Travel

We also tallied up how much cash was available in checking and savings accounts to make sure there was enough easily accessible money to handle any needs that come up during the transition period.

 

It’s also important to know all sources of income and the total to see if additional income will be required from investment accounts.

 

Not so immediate is a list of things that will need to be handled at some point.

  • Contacting Social Security to receive the $255 funeral/burial benefit
  • Was the deceased a Veteran? If so, there may be military benefits such as $300 toward burial and funeral expenses or $796 toward internment if not buried in a national cemetery. If benefits are available, you’ll need Proof of Military Service, form DD 214.
  • Finding all passwords
  • Collecting all deeds for houses/property
  • Finding car titles. You will need to notify the auto insurance company.
  • Canceling or reregistering credit cards that were in the deceased’s name alone.
  • Inventory the safe deposit box
  • Close subscriptions for magazines, newspapers, newsletters as well as online subscriptions
  • Cancel memberships to
    • Health clubs
    • Professional organizations
    • Civic organizations
    • Cultural organizations
    • Book clubs
    • Alumni associations
    • Discount clubs (Sam’s, Costco, etc.) but you have the option of converting those memberships to your name.
  • Automatically filled prescriptions
  • AARP
  • AAA Motor Club

By cancelling these things, you also avoid the possibility that someone will steal your spouse’s identity later and create headaches for you. For that reason also cancel:

  • Driver’s license
  • Voter registration
  • Library card
  • Also, notify the three credit reporting agencies of your spouse’s death (Experian, Equifax and TransUnion).

 

In this process, you also need to update some things for you:

  • Review everything that has beneficiaries listed, such as retirement accounts, IRAs, insurance policies, annuities and Transfer-on-death accounts. List the beneficiaries you want now, in this new phase of your life.
  • Update your emergency contact information.
  • Submit new HIPPA forms to doctors’ offices and medical facilities with the name(s) of the persons you now authorize to receive information about you.
  • Update your Will.
  • Update your Power(s) of Attorney.
  • Update your Advance Directives with the name of the person(s) who can now make medical decisions for you in the event you can’t.

 

You can see, it’s a long list of things that need to be taken care of after a spouse dies. Barbara was never interested in the household finances and let Steve handle everything. After his death, she had a huge learning curve to get up to speed. To keep from finding yourself in a similar circumstance, have some knowledge of your household finances; ask questions. It will make things a lot easier if you become the surviving spouse.

 

 

Disclaimer:

This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences or risk parameters. Some investments are not suitable for all investors; all investments entail risk and there can be no assurance that any investment strategy will be successful. This information is based on sources believed to be reliable and Alhambra is not responsible for errors, inaccuracies, or omissions of information. For more information contact Alhambra Investments at 1-888-777-0970 or email us at info@alhambrapartners.com.