It can be truly devastating to lose a loved one, and during that time, it can be hard to talk about much of anything, let alone finances. That’s one reason why working with a trusted professional can help after the tragic loss of a spouse.
Widows have unique financial considerations that often get lost amid the grief and adjustment to a new way of life. But you do not have to go through it alone. If you are a widow and don’t know where to start, here are some steps you can take to build a positive financial future:
1. Focus Your Time
It's tempting to make quick decisions when under incredible emotional pressure. This is the last thing you should do as you navigate your long-term financial future.
Instead, focus on understanding your immediate financial needs, such as cash flow, bills, Social Security, and insurance benefits. Two actions you will need to take if you have recently been widowed are:
Find Out Where Your Money Is
In the weeks following your spouse’s death, you will need to make countless financial decisions. While you should never feel rushed to make a decision you aren’t ready to make, you will need to get organized and understand what you’re working with in terms of finances. This is accomplished by reviewing all existing accounts, financial obligations, and income sources.
You should seek out all accounts (checking, savings, retirement, or investment) and gain access to them if you don’t already have it. Make sure to review and update your beneficiaries as necessary on your investment and bank accounts, and insurance policies.
Evaluate Your Current Situation
After gathering all of the necessary information, the next step is to review your entire financial picture and portfolio. In this step, you will want to identify your goals for the future and determine what changes, if any, need to be made to your current financial plan. A financial professional can help you navigate your finances and properly plan for the future.
2. Create an Estate Plan
One of the most important things you can do after the loss of a spouse is understand how your spouse’s assets were inherited (via will, trust, or gift) and how you want your remaining assets to pass to loved ones in the future. This is commonly referred to as an estate plan, and it’s a crucial piece of creating a positive financial future. It can be as simple as a will or as complex as an irrevocable trust.
Proper estate planning documents will outline what happens to your property and dictate your children's guardianship. It also names your executor, who will carry out your wishes. You don’t want to leave these decisions to the state (in a process called probate), which will happen if you don’t have a will or an effective estate plan in place. Make sure your loved ones know how to access your estate planning documents when the time comes and remember to review them regularly to ensure they are up to date.
No matter which option you utilize, it’s critical that you understand the probate process and taxation requirements of your inheritance. Splitting up marital assets can have enormous tax implications, especially if they have appreciated significantly. In this case, they will eventually incur capital gains tax, and, depending on how and when the assets are passed to an heir, you could be passing on a huge tax liability as well.
3. Establish a Relationship with a Trusted Professional
Having a support system with experience in these areas will make navigating your planning process much easier. Take the time now to build a relationship with a fiduciary-bound advisor. The last thing you want is to make costly investment decisions based on the advice of people who are trying to sell products and don’t take the time to understand your long-term financial needs.
Working with someone who is a fiduciary will help build a level of trust since they are legally obligated to put your best interests first. They can help guide you through the steps that apply to your unique circumstances ― making sure your affairs are in order, updating your financial plan, and implementing appropriate strategies to help you stay on track financially.
Losing a spouse is never easy, but the sooner you can establish a relationship with a trusted advisor, the easier the financial process can be.
Eric Braund is the Founder and Chief Financial Officer at Black Walnut Wealth Management, a financial advisory firm providing financial counsel and fiduciary investment services to individuals, families, and private foundations throughout the Traverse City and Northern Michigan region. He is a CERTIFIED FINANCIAL PLANNER™ professional and a Chartered Retirement Planning Counselor™ with 25 years of experience. He also has a bachelor’s degree in finance from Hillsdale College. Braund is passionate about offering services rooted in hard facts and sound reasoning combined with meaningful, long-term relationships so that his clients can experience less stress and have more time and energy to invest in what they love.
Braund is a Northern Michigan native who truly enjoys all that the area offers, including hiking, biking, swimming, skiing, volleyball, and boating. He loves spending time with his family — his wife, Jodi, and his two children — and maintaining a balanced life. To learn more about Eric Braund, connect with him on LinkedIn.
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