Achieving Financial Well-Being After the Loss of a Spouse

 Losing a spouse is a traumatic event. It drains your emotions and makes it hard to focus on simple daily tasks, let alone financial matters. Unfortunately, financial obligations don’t stop for grief; there are bills to be paid and decisions to be made. Taking an active role in understanding the key financial issues you could face before they happen can help you implement a plan that will bring more confidence and clarity to your life.
Your Journey to Financial Well-Being
The loss of a spouse can be financially derailing. This is especially true if the family’s financial obligations are managed by just one partner. Suddenly, you could be met with an unfamiliar set of worries: Do I have enough income to maintain my lifestyle? Will I be able to stay in my house or will I need to sell it? What do I do about my spouse’s retirement account? Can I collect on my spouse’s Social Security benefits?
These questions can be overwhelming and confusing. Rather than tackling them all at once, these important steps can help you begin your journey to financial well-being:
Before:
Gather information about all your financial documents.
Talk to your spouse about where the passwords and account numbers are; whom to contact at various banks; and where the Will and other important documents are kept. These may include bank and brokerage statements, retirement statements, credit card statements, loan information, property titles, business agreements, tax returns and life insurance policies.
After:
Prioritize your financial obligations.
If you have any joint accounts, begin retitling them, but consider keeping a joint checking account open for at least one year in the event you receive checks made payable to your spouse. As bills come in, pay the most important obligations first. These typically include mortgage and car payments, taxes, utilities and insurance premiums. If you’re not sure how much cash you have available, consider making minimum payments on credit cards until you have a budget in place.
Honor a ‘decision-free zone’.
While some financial decisions require immediate attention, others can wait. Consider committing to a one-year ‘decision-free zone’ where you avoid making any major, irrevocable decisions that involve large investments, gifts to family members or charities, and your home. Instead, focus on paying the bills and running your household as you usually do. If you receive a large sum of money from an insurance policy, deposit it in the bank. This will give you the time you need to adjust to your new life and make more objective financial decisions.
Create a plan and stick to it.
Determine your spending needs by tracking your household income and expenses for a few months. This will help you understand how much you will need to achieve your definition of financial security.
In the event of losing a spouse, regaining your financial balance isn’t easy, but you don’t have to do it alone. It may be a good idea to surround yourself with a support team you can trust. An experienced team of advisors, including an accountant, estate attorney and Financial Advisors can help you make informed decisions and provide critical support when you need it most.
Disclosures
Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor.
Brian Jacobs is a wealth Advisor in Valencia, CA at Morgan Stanley Smith Barney LLC (“Morgan Stanley”). He can be reached by email at brian.jacobs@morganstanley.com or by telephone at 661-290-2022.