What Now? A Widow's Story About Making the Right Financial Decisions
By Ruth Delaney
Member of Ed Slott's Elite IRA Advisor GroupSM
In 2006, Alan, a strapping young man who had just turned 50, collapsed and died of a massive heart attack while attending Sunday morning Mass with his wife Karen. Alan and Karen co-owned a business. Alan was a contractor and Karen handled the accounting and billing. Karen was fairly savvy financially. However, because she felt she had to get everything settled “right away” after Alan’s passing, she made several costly mistakes. In her grief, she started to work on autopilot instead of thinking strategically. She immediately invested life insurance proceeds. Karen later said, “A friend of mine introduced me to her broker and I just gave him the money to invest. What a mistake!” The broker proceeded to put her in a series of investments that made no sense for her and her financial situation. Two years later, when she realized what her broker had done, she began to search for a true wealth advisor. She said, “I wish someone had told me to slow down. I was so upset when Al died that I just went into a frenzy. I thought that if I kept busy, the pain of Al’s loss would not feel so bad. Instead, I made some bad choices.”
Many women like Karen, when faced with the loss of their husband, feel they have to get everything done in a hurry. It is important to realize that you do not have to do everything at once. Many decisions may be made later. More importantly, key decisions should be left to a time when you are not in the initial stages of grief. You will then be able to think more clearly about what is right for you and your family. Do not allow anyone to pressure you into making any major decisions right away. Many widows fall victim to financial predators who take advantage of their vulnerable state. In fact, I recommend that you do not make any major life decisions in the year following your spouse’s death. If you need help during that time, contact your Financial Advisor and/or your Attorney who can help you through many of these duties. The next few paragraphs detail key actions (or non-actions) to consider after the passing of your loved one.
First, you will need to obtain certified death certificates. Your funeral home director will order these for you. Your Financial Advisor or Attorney should be able to help you determine the proper number to order. Then add 5 more as a cushion for unseen needs.
Second, contact your Life Insurance Agent or Financial Advisor in order to help you claim the payment of any Death Benefits from Life Insurance policies.
Then, notify your husband’s employer (or former employer, if he was retired). A representative of the Human Resources Department at his employer will walk you through the benefits that you are entitled to as his widow. These may include a pension plan, a 401(k) plan, health insurance benefits and group term life insurance. If he was receiving a pension payment, there may be an adjustment made to this benefit due to his death.
IMPORTANT: DO NOT make any hasty decisions regarding Pension, IRA, 401(k), 403(b), 457 or Thrift Savings (TSP) plan assets. Consult a qualified Financial Advisor (preferably an Ed Slott Elite Advisor) to help you navigate the proper resolution of these assets. Hasty or ill-informed decisions may cost you thousands of dollars in taxes that careful planning could avoid. I cannot stress that enough. YOU DO NOT HAVE TO MAKE DECISIONS IMMEDIATELEY. You and your children will generally have until October 31 of the year following your spouse’s death to finalize your decisions for these plans.
Next, if your spouse was a veteran, contact the Veterans Administration. Prior to contacting the Veterans Administration, collect all of the paperwork connected to your husband’s service (i.e., his discharge papers (DD 214), etc..).
If your spouse was collecting Social Security, contact the Social Security Administration. They will cease his monthly payments and work with you to start or adjust your benefits, if applicable. Social Security also has a death benefit payment ($255) that you may be entitled to as his widow. If you have dependent children, they may also be eligible for benefits.
Contact the Attorney who prepared your Wills or Trusts. If you no longer have a relationship with that Attorney, your Financial Advisor will be able to recommend one to you. The Attorney will walk you through the larger task of settling your husband’s estate. You have nine (9) months following the death of your spouse to settle the estate. DO NOT rush into the estate settlement process and potentially make mistakes that you cannot reverse.
Finally, collect all of your household bills and ensure they are paid (i.e., current). You may want to check that any quarterly tax payments are due. If your spouse paid these online, you may have to locate the website user-IDs and passwords for various financial institutions. Later, you will create a budget with your Financial Advisor and plan your income for the future.
Ruth E. “Robin” Delaney, CFP, CLU, ChFC, ADPA is a nationally-known Financial Educator, Author, Speaker, and Wealth Manager. She has been interviewed in various media, including on FOX TV’s WTVT. Her passion is helping women on their own, executives and business owners, who are retired or about to retire experience true financial freedom through a unique process that she developed.
Robin also has a passion for lifetime learning. After earning a BA in Mathematics and Economics from Regis College, Robin continued her advanced education by obtaining an MBA in Finance from Hofstra University and an MS in Accounting from Adelphi University. Her relentless pursuit of excellence has led her to obtain additional professional designations, including Certified Financial Planner (CFP), Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) and Accredited Domestic Partnership Advisor (ADPA). Her decades of professional experience, including as a Senior Benefits Consultant at one of the Big Four accounting firms, PriceWaterhouseCoopers, equipped her as she launched her own retirement planning and wealth management firm, Greenleaf Financial Strategies, Inc. As Founder and CEO of an independent retirement planning firm, Robin is able to put her clients’ interests first, without pressure to promote products from a particular financial firm. You can learn more about her services at http://www.greenleaf-financial.com/our-team.