NEW YORK (9/14/11)--If you were faced with the sudden loss of your spouse or life partner, would you be able to make sound financial decisions? Here’s one consistent piece of advice from experts and from those who’ve experienced a devastating loss: Don’t move too fast
(The New York Times
Sept. 2). It’s hard to resist the urge to move forward on important decisions, but committing to a decision-free zone of six months may be your best move (Kiplinger.com
Aug. 29). Don’t try to sell your house. Don’t give a lot of money to your children or to charity. And don’t let a salesperson convince you to buy financial products. Grief and emotional stress theoretically can reduce our brain power by as much as 20%, keeping us from thinking clearly, according to experts (CBSDFW.com
July 22). To cope, make three lists: things you need to do right away, things to do soon, and things that can be done later. The “right away” list includes finding all relevant accounts and paying bills, but the “soon” and “do later” lists--typically decisions about the home and financial planning--are where many people make costly, often irreparable mistakes. Surviving spouses--who may be in uncharted waters emotionally, spiritually, and financially--may benefit from these recommendations:
* Gather documents and passwords. Items you’ll need right away include birth and marriage certificates, Social Security numbers, current financial statements, company benefit and retirement papers, car titles, powers of attorney, and military discharge papers. Ask the funeral director for up to 25 copies of the death certificate. * Assemble a financial support team. Get referrals for accountants, estate planning lawyers and financial planners. Contact the National Association of Personal Finance Advisors at napfa.org (847-483-5400) for a list of fee-only planners. * Take stock of income and expenses. If your husband had been receiving a Social Security benefit and you were receiving a 50% spousal benefit, your spousal benefit will cease. On the other hand, some expenses will disappear, such as your spouse’s Medicare premiums. * Call the deceased’s employer. The benefits administrator can tell you about benefits you’re entitled to, such as pension benefits, unpaid salary and bonuses, stock options, accrued vacation and sick pay, insurance, and leftover funds in medical flexible spending accounts. With the advice from your financial adviser, consider rolling money from a 401(k) into an individual retirement account (IRA) using a direct transfer. * File a claim for life insurance benefits. Read the fine print, and turn down any option that places your funds in the insurance company’s own money-market funds and gives you a checkbook. Instead, place the money in a federally insured account at the credit union. Get advice from a financial adviser or lawyer if you’re considering guaranteed monthly payments for life. * File a claim for Social Security benefits. Widows and widowers can claim a benefit equal to 100% of the deceased spouse’s benefit, but only if the surviving spouse waits until full retirement age to collect. Before that, the benefit is reduced permanently. You can “step up” to a survivor benefit if you were collecting a spousal benefit before your spouse’s death.
For more information, read “Turning Points: Rebuild Your Life After a Life Partner Dies” in the Home & Family Finance Resource Center