Nobody Lives Forever
If a Spouse Dies
About 13.7 million Americans living today have experienced the loss of a husband or wife.
Funerals can range in cost from $5,000 to $10,000 or more, depending on your location and the services you choose. And if your spouse was sick before death, you may have medical expenses to pay, as well. A financial advisor can help you to prioritize bill payments when necessary.
Losing a spouse in middle age—whether unexpectedly or after a long illness—is a devastating experience. Of course, it's never easy to lose your wife or husband, but experiencing this loss in middle age instead of old age can be particularly distressing.
Suddenly, you're no longer a part of a couple. You've lost the person to whom you could turn for advice or consultation. Along a practical line, you've lost the other half of the team that shared financial and household responsibilities. Your children have lost a mother or father, and especially if they're young, you may feel that you need to help them through that.
If your husband or wife dies in middle age, you'll need to pay close attention to financial matters. This is an extremely difficult task to accomplish as you're mourning the death of a spouse, but it's necessary to your future financial health. Hopefully, you and your spouse have addressed the possibility of premature death, and have planned for the eventually. At the very least, you should have a comprehensive will (more about that in You Do Have a Will, Don't You?).
Probably the first matter you'll need to deal with following the death of a spouse are funeral expenses. If you haven't preplanned and prepaid, this can be trying, especially if you don't have much extra money.
Many surviving spouses use benefits from their husband or wife's life insurance policy to pay for funeral expenses. And, many funeral homes are willing to wait for payment until the insurance policy has been processed and benefits paid. You can discuss this matter with personnel at the funeral home you plan to use. Or better still, designate someone else to handle these types of matters.
Assuming you and your spouse had a will, you'll need to settle your husband or wife's estate, according to the terms of the document. You should work with your family lawyer or a trusted financial advisor on this matter. It's probably not the best idea to hire someone you don't know well to settle an estate, particularly if you don't plan to be overly involved in the process. It's best to be able to hand the matter over to someone you trust in order for you to be able to work through your grief and concentrate on other matters.
Another matter you'll need to pay attention to is resolving any debt that you and your spouse, or your spouse alone, had. In some states, creditors must work through the probate process in order to collect debts that were the deceased's alone. If you and he had joint debt, however, you'll still be responsible for paying it.
Some credit card companies and retail stores will waive the late fees for debt incurred by someone who dies. They probably, however, will continue to charge interest on the money owed. You can check, or have someone else check, with creditors to see how payments after a death are handled.
Another financial matter you'll need to look into is your spouse's health care and retirement benefits. If your spouse dies while you and your children are covered by his employer's health-care plan, you may be eligible to buy temporary extended health care coverage for up to three years. You'll have to pay for it, but the cost probably would be lower than that of coverage you'd get on your own.
If your spouse had a 401(k) plan, you'll need to find out the terms of the plan so that you can plan accordingly. If he had a pension plan at work and is vested in the plan, you should be eligible to receive a percentage of the monthly benefit he earned up to the time of his death. Check with the human resources department at his place of work, or ask your lawyer or financial advisor to give a call.
You also should know that if your spouse dies, leaving you with dependent children, you might be eligible for monthly survivor's benefits from Social Security. Contact your local Social Security office for more information, or ask your lawyer or financial advisor to look into it.
After the immediate financial issues that occur after the death of a spouse have been resolved, you'll need to think carefully about what, if any lifestyle changes you'll need to make. You should develop a new budget that reflects your changed circumstances, listing sources of income, savings, and expenses.
Again, it's usually best to work with a trusted professional on these issues. Dealing with the death of a spouse consumes your time, energy, and emotional capacity. It's a good idea to get help with financial matters to assure that they get resolved if you're not entirely able to do so yourself.
More on: Family Finances
Excerpted from The Complete Idiot's Guide to Personal Finance in Your 40s and 50s © 2002 by Sarah Young Fisher and Susan Shelly. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.
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