How to Handle Finances When a Spouse Dies

(This article previously appeared on Gobankingrates.com.)

Losing a spouse is one of the most devastating events one can face. Yet at a time when you feel unable to carry on with life’s tasks, you’re hit with financial burdens that require your immediate attention.

Coping with overwhelming emotions while you handle the financial side of death is no easy task.

Here’s a general guide for what you’ll need to do after the loss of a spouse:

You will need numerous documents in order to get death benefits, handle your late spouse’s assets and debts and manage finances on your own, including the following:

• A death certificate  You can get this document from the funeral director, medical examiner or county health department. Get 15 to 20 certified copies because you’ll need them to claim benefits and access accounts.
• Your spouse’s will  Make sure you have the actual will and its most recent version, not a copy.
• Your marriage license
• Your spouse’s last Social Security statement
• Your spouse’s insurance policies
• Your spouse’s certificate of discharge from the military (if there was one)
• Your spouse’s last veteran’s benefit statement (if spouse was a veteran)
• Your spouse’s bank, brokerage and retirement account statements

“Your first financial hurdle is the funeral,” said Jerry Love, a Certified Public Accountant (CPA) in Abilene, Texas, and a member of the American Institute of CPAs’ National Financial Literacy Commission. You’ll have to pay for it out of pocket unless your spouse paid for a funeral in advance with a pre-need plan.

The average cost of a funeral is more than $7,000, according to the National Funeral Directors Association. That doesn’t include cemetery and monument or marker costs and items such as flowers.

If your spouse had a life insurance policy, the payout could help cover the cost of a funeral. Typically, you’ll need to show the funeral director your policy or provide contact information for the insurance company. Usually, the funeral home will work directly with the insurer to be paid through the life insurance proceeds, Love said.

If you and your spouse had joint bank accounts or your spouse had payable-on-death (POD) accounts that designate you as the beneficiary, you shouldn’t have trouble gaining access to them.

If you had separate accounts without a POD designation, you will likely need to go through probate to settle the estate, Love said. If your spouse did not have a will that named you the executor of his or her estate, you’ll have to ask the court to appoint you as the administrator.

Love said you’ll need to receive letters issued by the court stating that you are the executor of your spouse’s estate and have the right to act on its behalf. You’ll then need to provide them to your financial institution to gain access to your spouse’s accounts.

In the best-case scenario, your spouse created a list of all of his or her financial accounts, insurance policies and other assets. If not, you’ll have to track them down on your own. “You’re really in an Easter egg hunt at this point,” Love said.

If you know your spouse had a life insurance policy, contact the insurer and be prepared to provide a copy of the death certificate. Typically, the benefit is paid within two weeks of a death claim, said Nina Benton, a Certified Financial Planner with Prudential.

If you’re not sure your spouse had a life insurance policy or any other insurance policies that might pay death benefits, look over his or her bank statements for any recurring payments to insurance companies.

Also, check with your spouse’s employer to see if he or she had any policies through work, including a group disability policy that might pay benefits for accidental death, said Armando G. Roman, a CPA and wealth manager with AXIOM Financial Advisory Group in Scottsdale, Ariz.

Roman also recommended checking your spouse’s credit report (you can get it free through AnnualCreditReport.com) to identify accounts.

Look at your tax return to identify assets such as interest-bearing accounts or dividend-paying stocks.

Any assets your spouse had, aside from insurance benefits paid directly to beneficiaries or POD accounts, will go through the probate process and be distributed by the court. Nothing will be distributed until all estate bills and debts are settled. However, the court will usually allow you to set up an estate account to pay ongoing expenses, Benton said.

When you’re reviewing your spouse’s bank or credit card statements, also look for recurring payments for services that might need to be canceled, such as your spouse’s auto insurance policy or prescriptions that are automatically refilled each month, Benton said. Notify your spouse’s health insurer or Medicare of his or her death to stop premium payments.

Before you cancel any joint credit card accounts, though, make sure you open your own account first if you don’t already have one, she said. Otherwise, if you report your spouse’s death to the card issuer, the account might be closed. Then you’ll be left without access to credit.

If you relied on your spouse’s income for support, you’ll need to look for ways to replace that income. Here are several common sources and how to access them:

Social Security Survivor benefits Notify the Social Security Administration as soon as possible after your spouse dies by contacting your local office or by calling 800-772-1213. If your spouse was receiving Social Security benefits, you must return the benefit check he or she got during the month of death or ask the bank to return any direct deposits to Social Security.

As the surviving spouse, you’ll receive a one-time death benefit of $255. If you’re 60 or older (50 if you’re disabled) or caring for a child younger than 16, you might be eligible to receive monthly survivor benefits if your spouse worked long enough to collect benefits.

Survivor benefits are worth 100 percent of what your spouse was collecting or was entitled to collect at the time of death if you are at Full Retirement Age when you claim benefits, said Mary Beth Franklin, a Social Security expert and contributing editor at InvestmentNews. The maximum monthly benefit in 2015 for someone at Full Retirement Age is $2,633. Your benefits will be reduced as much as 28.5 percent if you claim them before your full retirement age.

You won’t need to apply for survivor’s benefits if you’re already receiving Social Security spousal benefits. Social Security will automatically adjust your monthly benefits. However, if you get retirement or disability benefits based on your own record, and not your spouse’s, or aren’t receiving any Social Security benefits, you will need to apply for survivor benefits. Here are the documents you might need to provide when you apply.

Military benefits If your spouse was an active member of the military, you’re entitled to certain benefits, including burial benefits and Survivor Benefit Plan payments that are equal to 55 percent of what your spouse’s retirement pay would have been if he or she retired at 100 percent disability.

You might receive a one-time tax-free $100,000 death gratuity payment if your spouse was on active duty or was a Reserve of the Armed Forces at the time of death.

And you can apply to receive a Dependency and Indemnity Compensation benefit if your spouse was a military service member who died in the line of duty or whose death resulted from a service-related injury or disease. For more information, see the Defense Department’s A Survivor's Guide to Benefits.

If your spouse was a retired military member, you’ll need to contact the government’s Defense Finance and Accounting Service as soon as possible to establish a Survivor Benefit Plan annuity and to avoid any overpayment of your spouse’s retirement pay. That service will provide instructions on how to report a military retiree’s death.

Pension payments If your spouse was receiving pension payments through a former employer, you’ll need to notify that employer of your spouse’s death and find out what forms you’ll need to fill out to receive those benefits if you’re a beneficiary, Love said. The process varies from employer to employer.

Retirement accounts If your spouse had a retirement account such as a 401(k) or IRA, he or she likely named a beneficiary for the account. If so, the money in the account will go to the designated beneficiary, regardless of what your spouse’s will states, Love said.

You’ll need to contact the account administrator to start the process of transferring the funds. If your spouse had a workplace retirement account, the company’s human resources department should be able to put you in touch with the account administrator. If your spouse had an individual account, you’ll need to track down account statements to find a contact.

You’ll likely need help from others to get through this process. If you or your spouse had been working with a professional such as an accountant, financial planner or attorney, turn to that person first for help, Love said, because he or she will be familiar with your financial or legal affairs.

If you need help finding a professional in your area, you can use the Find a CPA tool on the American Institute of CPAs site or find a fee-only financial planner through the National Association of Personal Financial Advisors.

For advisers who do pro bono work, check with your state financial planning association or with grief counselors who might know professionals in your area, Benton said.