When death and finances mix

I still remember when my Grandpa died. I had ironically – or not, I’ve never been entirely sure how to use that word – just gotten engaged to my then-boyfriend. It was one of the happiest moments of my life, quickly followed by one of the saddest.

At the funeral, I overheard some family talking about his estate. It rubbed me the wrong way at first, but I quickly realized the truth – this was something that needed to be dealt with, and putting it off wouldn’t help anyone.

When people talk about dealing with death, they typically speak in emotional terms. After losing a loved one, you’re mostly concerned with coping, rationalizing, supporting the people around you, dealing with the pain – just generally trying to sort through the grief you’re experiencing. You’re probably not too concerned with your finances.

First steps

Once you’ve had the funeral, sorted through their physical belongings and gotten back to work, it might be tempting to start making big financial decisions. Should you downsize and move to a smaller home? Do you need to revamp your budget? Are you forgetting anything?

Losing a loved one is difficult, especially if it’s a spouse, parent or someone else close to you. If your finances will be directly affected by someone’s death, you need to take more time than normal before you start making big decisions. People in the midst of grief don’t often make the most rational decisions, and you don’t want to do something drastic, like putting your house on the market, that you can’t take back.

If you are truly ready to move forward, hire a financial planner who can help you figure out what you need to do. They’ll be able to advise you about what to do with the life insurance money, if your budget needs to change and what the future looks like.

For example, do you need to contribute more to your retirement account now that you won’t have your husband’s pension? Will you need to find a childcare provider if you decide to go back to work? All these questions will take time to answer and don’t need to be decided on right away.

Life insurance

Life insuranceIf your spouse leaves you a large life insurance payout, it might seem daunting to decide what to do with the money. An insurance agent might try to sell you on an annuity or another life insurance policy, but this is another instance where a qualified financial advisor is your best source of advice.

In general, you should use the money to pay for any funeral expenses or high-interest debt. Then, you can see how much is left and if it is better off invested or left in a high-yield savings account. Some people will also use the windfall to erase their mortgage or save for their children’s college fund.

Retirement accounts

Most retirement accounts ask that you specify a beneficiary when you set it up. Otherwise, it will automatically become your spouse’s property after your death.

However, you’ll likely have to contact the investment firm and explain what happened. It’s not clear how much proof beyond a death certificate you’ll have to provide, but it can take some time for the accounts to become yours.

Once you get access to them, it might be worth another call to a financial planner to discuss your own retirement and how it looks now that your spouse’s assets are coupled with yours. Do you need to keep saving at the same rate? Or can you take a breather?

Change beneficiaries

Change beneficiariesFor the most part, your spouse is the automatic beneficiary of any assets or property you have. However, if your partner dies, you should go in and designate a new beneficiary. If you have a will, you can simply update it to reflect the changes.

For many people, this will be their children. If you’re childless, you can designate your parents, siblings or other relatives. You can also request that your estate be divided up between several people or even a few select charities.

If your spouse managed the finances

If your spouse managed the financesOften, there’s one person in a marriage who managed all the money, who was in charge of paying the bills and tracking the credit card statements. When that person dies, the other person is left feeling overwhelmed and underqualified. How can they take over this huge responsibility while also feeling a staggering sense of loss?

First, create a list of all the things you need to learn about and divide them into several categories such as regular bills, credit cards, bank accounts, retirement and brokerage accounts, taxes, estate planning and others.

Next, you’ll subdivide each category into the most basic tasks. For example, the regular bills category should include utilities, rent or mortgage payments, loan payments, and more. This can also include schedule miscellaneous services such as grocery delivery, lawn mowing or house cleaning.

Then, set aside a couple weeks to tackle each category. It might take a lot of time on the phone or emailing back-and-forth to get access to those accounts, especially if you don’t have the login information or account numbers. You might have to send over a copy of the death certificate to prove the person is deceased.

Try to do a little bit every day. Tackling something difficult and onerous like switching the water bill to your name will be hard, but moving forward in life will help you deal with your feelings.

Ask for help

Ask for helpWhen you lose someone you’re incredibly close with, it’s easy to feel alone after their passing. But chances are, you have a support network of friends and family who would be more than willing to help you through the process.

If you know anyone who’s gone through this before – or someone well-versed in estate law or financial planning – don’t be afraid to ask for advice and assistance. Most people want nothing more than to help their grieving loved ones, but there’s often not much they can do other than provide emotional support. If you give them a concrete way to help, they’ll probably jump at the opportunity.

Be careful not to use this as a way to avoid learning how to manage the estate and finances on your own. Getting a helping hand is one thing – asking someone to do the work for you is another. You won’t be able to lean on friends and family forever, so use this time to learn and adjust to your new reality.

Preparing for your own death

If you’re worried about putting your spouse or loved one in this position, there are plenty of things you can do to make their transition easier. This is especially important for those who primarily manage the household finances, as you may not realize just how unprepared your loved one is to assume that role when you’re gone.

Make sure they have a cursory knowledge of all your financial accounts – and all the necessary passwords and login information. You can create a document, either online or in paper form, outlining this information.

If you work with a financial advisor, try to involve your spouse or loved one in meetings and conversations now. You want them to be comfortable with this person, so they feel confident going to them for advice after you’re gone.

Make sure you have a comprehensive estate plan, and a competent estate lawyer to oversee the process. Again, make sure your spouse or loved one is familiar with this person and understands their role in the estate process. The estate lawyer can go over this with both of you.

You should also start saving for any funeral expenses. Depending on your last wishes and how you want to be interned, funerals can be relatively affordable or incredible expensive. But no matter what, there will be a cost that you don’t want your spouse or loved one to have to deal with.

The bottom line

Dealing with a death is never easy, but you can make the grieving process less stressful. By having a general idea of what will need to be taken care of – and how to do it – you’ll be able to sort through the mundane tasks on your plate without being overwhelmed.

To make the process easier, you should have a competent estate lawyer to oversee the details. If you’re the executor of the will, they can keep you on top of your responsibilities and rights.

Try to familiarize yourself with every aspect of your shared finances now, so you aren’t left scratching your head when your partner is gone. If you’re the one handling your finances, work to ensure your spouse or loved one has all the necessary information they’ll need to go on in your absence.