Losing a spouse is one of life's most stressful events. That is even more true when the deceased spouse managed the couple's financial affairs. Attending to your own health and emotional well-being should take priority. Keep in mind that your health insurance may cover treatment for grief-induced depression or anxiety if you need help. Once your medical and emotional needs are met, you will be in a better state of mind to handle the legal and financial tasks ahead of you.
Assemble a team of advisers
You are likely to need advice in three areas: legal, accounting, and financial. If you don't already have them, find a lawyer, a CPA, and a financial adviser to help you. If your deceased spouse handled these matters without assistance, don't assume that you should do the same. As we age, having trusted local advisers becomes increasingly important. We have worked on cases where a local financial adviser was the first one to recognize signs of dementia in a surviving spouse and arrange for help. We have also worked on cases where a surviving spouse without a local adviser made costly mistakes on the deceased spouse's retirement account. Look for professionals who are enthusiastic about working as a team on your behalf.
Find out whether you need probate or trust administration
If your spouse had property in his or her name, it may need to be transferred to the heirs. Probate is one way that property is transferred at death, but it is not the only way. Property may also pass through joint accounts, beneficiary designations, payable-on-death designations, or through a trust. Whether you need probate or trust administration depends on how the property is titled. Start by gathering the necessary documents, such as the will or trust, deeds, and statements for banking, investment, and retirement accounts. Then consult with a lawyer who practices in this area. When the first spouse dies, it is not uncommon for everything to pass outside probate, but the answer always depends on your own personal situation.
Get a review of your estate planning documents
While you are dealing with legal questions relating to your spouse's death, it's a good time to make sure your own affairs are in order. The transfer of property is often more complicated when the second spouse passes, and probate is even more likely then. Among other things, you should review your power of attorney and your will or trust to see who is named as agent, executor, and trustee. People often designate their spouse for these roles. Make sure your documents include a backup person for each position. An estate planning lawyer may suggest other reasons to consider updating your plan, such as a change in the law or your family's circumstances. Tread carefully if family members suggest changes that are in their own interest. If not handled properly, changes under those circumstances may increase the risk of a contest to your estate.
Approach changes with caution
Speaking of changes, many professionals advise against making any major financial changes for six months to a year after your spouse's death. This could include selling your home or changing the nature of your investments. If someone approaches you about a major change, such as the purchase of life insurance or an annuity, it's a good idea to run that past your team of advisers. This is another way that your team of professionals can help protect you.
Get professional advice about how to handle retirement accounts
The more complicated the rules, the more likely you are to make a costly mistake. And the rules that apply to inherited retirement accounts, like IRA's and 401(k)'s, are very complicated. Work with your financial adviser to make sure you understand required minimum distributions (RMD's) and to decide whether a spousal rollover is best for you. Work with your attorney to make sure that the beneficiary designations on these accounts are consistent with your overall estate plan.
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