Financial Decisions After the Death of Your Spouse
Last fall I listened to Mike Piper discuss his then new book After the Death of Your Spouse: Next Financial Steps for Surviving Spouses on the Bogleheads on Investing Podcast. Immediately after listening, I placed an order for the book.
The book arrived a few days later. I promptly placed it on my bookshelf where it sat unopened for the next few months.
Recently, family circumstances dictated that it was time for me to read the book in order to better help my dad. Few of us have any desire to dig into this topic until we have to.
That’s why it is so valuable to have a resource like this at the ready for when you need it. The reality is either you or your partner will need to navigate this situation if you’re married and you remain married long enough. This is a fantastic book to help you, or to share with others, when it is time to work through this unfortunate reality.
Overarching Themes in After the Death of Your Spouse
Piper wrote a concise introduction and conclusion of the book. He emphasized a few key themes that he wove throughout the body of the book.
- The death of a spouse creates a tremendous amount of financial tasks and decisions. You need to take important actions at a time when you are least mentally and emotionally prepared to do so.
- You will need to make many important decisions and complete associated tasks, but not all of them are urgent. Whenever possible, it is best to delay making major decisions when you are struggling mentally and emotionally.
- You need to create systems to stay organized so you don’t overlook important tasks during this hectic time.
- Struggling mentally and emotionally through this process is normal. It is wise to seek help from trusted family, friends, and financial and mental health professionals when needed.
- Depending on your life stage, there will be different tasks required and particular strategies that make the most sense.
Incredible Information Density
A short first chapter describes some basic, but necessary terminology. Chapters 2 through 10 packed an incredible amount of information into only 73 pages. Even if you are an expert on this topic, this book would be a valuable checklist to follow during this stressful time.
I consider myself knowledgeable about personal finance. Frankly it amazed me to learn how much technical information I was unaware of around this topic.
Urgent First Tasks
Chapter 2 presents a system to keep you organized. It highlights the urgency of obtaining death certificates and the importance of assuring you get enough of them and that they are accurate. It also focuses on the urgent and important task of finding the deceased’s will (assuming there is one) and filing it with the appropriate probate court.
Doing these tasks promptly and properly will make all subsequent tasks possible and more manageable. Conversely, not having these foundational tasks completed will make all subsequent tasks harder. That adds stress to an already stressful process.
Notifying Necessary Parties
Chapter 3 was extremely valuable. It highlights all of the parties who may need to be notified after the death of a spouse. Most I would not have thought of, particularly in a time of distress. Piper also provides detailed insights within each topic.
One topic where I particularly learned a lot was life insurance. For example, the book covers a number of strategies to look for life insurance policies I wasn’t aware of, such as NAIC’s Life Insurance Policy Locator Service.
This section also covered a common additional benefit with many life insurance policies if the deceased suffered an accidental death. Death benefits offered by credit cards if the death occurred while on a trip paid for on the card may be worth looking into as well.
Responsibilities of the Personal Representative
Chapters 4 and 7 deal with the initial and ongoing responsibilities of the personal representative. This demanding task typically falls to the surviving spouse. These chapters are also particularly valuable because this role comes with considerable responsibilities and possibly serious consequences if this role is not properly fulfilled.
As one example, if an estate has insufficient funds to pay all debts you must pay creditors in order of priority according to state law. Failing to do so, can make you personally liable to be sued as the personal representative of the estate.
Updating the Estate Plan of the Surviving Spouse
Chapter 5 is a short but necessary reminder of the importance of updating your estate plan. Typically, spouses name one another as beneficiaries on financial accounts and insurance policies. The death of one spouse means that the remaining spouse needs to reconsider beneficiaries for all such accounts.
Social Security Planning
Chapter 6 addresses Social Security planning. This is one of the longer and more technical chapters in the book. Luckily, you don’t need to understand or even read the entire chapter.
Piper concisely lays out different scenarios. You can simply read those that apply to you and consider the pros and cons of different options, if any options exist at all, depending on your specific circumstances.
Handling Inherited Retirement Accounts
Chapter 8 deals with inherited retirement accounts. This is another of the longer and more technically complex chapters. However, Piper presents the information in an easily digestible manner.
He emphasizes that there are three urgent tasks and decisions:
- Make the time sensitive decision to determine if you want the account (almost always) or if you will disclaim it. Potential reasons to disclaim an inheritance and procedures to follow if you elect to disclaim are covered in more detail in Chapter 9.
- Take any necessary required minimum distributions for the year if the original owner hadn’t already done so before passing.
- Update the plan’s beneficiaries.
The remainder of the decisions, while important, are not urgent. So it is wise to take some time to understand these decisions and make them with a clear head, and if needed with appropriate guidance.
Chapter 10 presents what tax forms need to be completed, when, and by whom. It also details the Qualifying Surviving Spouse filing status available to spouses with dependent children if they meet specific qualifications.
Reassessing Your Needs
The final three chapters covered the topics of Reassessing Your Own Finances, Reassessing Your Portfolio, and Finding Professional Assistance. I personally found this section of the book to be the least valuable. Unlike the earlier chapters that were packed with novel information, I didn’t learn much new here.
That is not a knock on Piper’s writing or the content he included in this book. It simply reflects that the book was written specifically for surviving spouses dealing with all of the challenges that present themselves after the death of a spouse, not personal finance junkies who already have a firm grasp on the basics.
Related: Navigating Retirement After the Death of a Spouse
Many people in the book’s target audience will be in the position of needing to build or rebuild their financial lives simultaneously with their personal lives. Given the target audience, this section of the book provides outstanding foundational knowledge.
Losing your spouse can be devastating emotionally. Simultaneously, it produces an onslaught of important tasks, some of which are also urgent, at a time when you may be least equipped to handle them.
After the Death of Your Spouse: Next Financial Steps for Surviving Spouses is an outstanding resource to help navigate the challenges this tragic but common situation creates. It is a book none of us will ever want to read, but all of us who are married should have it on our bookshelf. You’ll be grateful that it is there when you need it.
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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at email@example.com.]
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Good stuff Chris
One thing I’ll add is to plan for this event when you choose Social Security commencement date. I had our maximum draw planned through the now-defunct “file and suspend” method to really be clever about it. Shortly before executing the plan I fortunately realized that in the event of my passing first, my wife would be left severely shortchanged financially when she went from both of our draws to just taking “my” draw as her payout. That significant drop in her “single” income had me rethink our entire strategy and with minimal reduction in our present scheme, we have maximized her survivor benefits…just something to consider holistically prior to the inevitable.
Thank you for recommending and describing what sounds like a VERY helpful resource. I will just point out that its value for anyone responsible for handling a death–whether they are spouse, parent, child, or in my case, step-parents–should find most of this exceptionally valuable. Having a concise to-do guide for the particular situation, as cold as that sounds, could make things easier for the person trying to do right by the deceased and prevent negative consequences that could effect those left behind.
Thank you for this information. I wish I had it 6 months ago. My brother passed suddenly then. My sister in law was almost overwhelmed with the “work” she had to do to transition her finances both within and outside of their Trust. I say “almost” because my brother and she were great life partners and shared everything. But, of course, they each “specialized” in their marital tasks – such as my brother doing the techy and financial things. After he passed, and once she cracked his password(s) system, she was able to open up the computer access necessary for her next steps. Then she found herself mired down within the many varied online systems of their investment banks, pension, local banks, social security, etc. They each required new access sign-on (transferring off my brother’s SS as primary ID) and multiple documentation uploads – none of them had method standardizations except that they were all electronically processed and difficult to speak to “a real person”. To her credit and tenacity and organization, she has made it through the majority of this transition – it felt like a full-time job. She says she can now finally allow herself to grieve. So the moral of this – 1) thank you for sharing this resource, I will pass it on to her; 2) prepare your family / heirs that this amount of work will be needed to be done – and share passwords.
Thanks for this post. I lost my husband 2 years ago. Because I’d always handled our finances, I felt I had a good handled on things, and didn’t feel overwhelmed with that part of the grief journey. However, this is not the case for many widows/widowers. And when you’re lost in the fog of grief, it’s easy to make poor decisions. I will definitely pick up a copy of this book to help the widows in the support group I’m a part of.
I’m sorry for your family’s loss. It sounds like your dad is pretty lucky to have your help.
One point that occurred to me while
reading the comment about sharing passwords is that in case of my passing, my wife would need to keep my phone active to receive 2 factor verification messages and other financial notifications that I receive.
Great review. I’ve been through the process before. I muddled through it well enough, but it would’ve been helpful to have read this book.
To those concerned about the passwords of the departed, I’ll say that it was a fairly easy process for the lawyer handling the estate to gain access to the accounts. It’s a matter of proving (Death certificate) to the financial institution that the account holder has passed.
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