Financial Planning after Losing a Spouse

Financial planning after losing a spouse
Samson Maxbauer

Losing a spouse, whether through death or divorce, can be devastating both emotionally and financially. The loss can take months or even years to adjust to since there is no way to prepare for death or divorce despite having discussed contingencies with each other or their financial professional.

When it comes to financial decisions, some things need to be taken care of almost immediately. But leaving decisions with long-term consequences for when the mind is clear is best, despite a broken heart. Items that require timely updates and beneficiary changes after losing a spouse:

Work Place Benefits- 401(k) and Employer Health and Life Insurance. Employer retirement savings and life insurance plans will both require new beneficiary designations. If the beneficiary were a spouse, a new beneficiary would need to be named. If the former spouse provided health insurance through their employer, the remaining spouse would need to find new insurance coverage. A death certificate may be required to remove a spouse as a beneficiary upon death or a divorce decree to remove a spouse after the divorce settles.

Joint Accounts- Brokerage, Bank and Bank Loans, and Credit Cards. All joint accounts will need to have the spouse removed (if death) or divide per terms of the divorce decree. In most instances, loans will need to satisfy or new loans underwritten to request a spouse’s removal.  

In the event of death, a death certificate removes the spouse as co-owner of bank accounts and joint owner of investments held together. For divorcees, contact your lender or brokerage account custodian for their specific requirements on joint accounts.

Joint Assets- A Primary Residence, Vehicles, and Other Real Estate Property. You will be required to retitle all property into your name alone or pay off loans to remove your spouse. Additionally, you may need to qualify for a new loan based on your income alone.

IRAs and Annuities- If your spouse were your beneficiary, you would need to name a new beneficiary on your IRAs and Annuities.

Social Security Benefits- Notify the Social Security Administration of the spouse’s death (divorce requires no notification). If the remaining spouse is already receiving Social Security retirement benefits, they will now receive their deceased spouse’s retirement benefits. Suppose the surviving spouse is not receiving retirement benefits but raising young children. In that case, the deceased spouse’s Social Security Benefits would have received later will provide benefits to their children until they are age 18, or still in high school.

Losing a spouse is never easy, but planning for your future alone is essential. Start by dealing with what needs to be taken care of now. Work with your financial professional for investment advice and financial planning as you move forward without your spouse.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

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