Losing a spouse or partner is devastating and can disrupt the comfort and security you and your family count on. Though finances may be the furthest thing from your mind during this painful time, it’s essential to make certain decisions that will allow you to continue to heal without worry. Following these important steps will help you build a stable financial future as you adjust to a new way of life.
Consolidate your banking and investments
When the time is right for you to sit down and focus on your finances, consider consolidating and simplifying your accounts. Fewer accounts make your life less complicated and easier to manage.
"The most important step is to get a holistic view of your assets and liabilities," says Justin Waring, Investment Strategist Americas, UBS. "In most relationships, one spouse takes primary responsibility for managing the finances, which can leave the widow or widower somewhat disoriented. Make sure you take stock of all of the accounts—checking, brokerage, retirement—and all of the liabilities such as the mortgage and any credit cards."
To keep things simple, you only need one checking account and one savings account, and then you can have all of your investment accounts with one financial institution. Waring suggests those who need a little extra help not hesitate to reach out to a financial advisor or tax advisor. "You should speak to [them] to plan how you will finance your spending. You will want to make sure that you have a tax-efficient spending strategy that accommodates for your retirement accounts."
File life insurance claims
Though it may be challenging to think about, if your spouse had a life insurance policy or multiple policies, you will want to file claim forms as soon as possible. This helps you receive any money that can aid with bills, expenses, and future security.
Gather any needed paperwork, like the claim form and death certificate, for a quick resolution. In most cases, life insurance proceeds are not taxable, but consult with a tax advisor if you have any doubts.
Resolve outstanding debts
"Widows and widowers may need to recalibrate their financial plans," says Waring. "First, take stock of your expenses and income, and work with your financial advisor to incorporate any life insurance or survivorship benefits." In many cases, that recalibration should include settling any outstanding debts.
Pay off credit cards and other loans with a balance, if possible. You may even want to use life insurance or other large account balances to pay off a mortgage. Some creditors may try to make a claim on the estate, so getting debts resolved can alleviate even more stressful and challenging situations.
Build a new financial plan
"While it can be difficult to move forward," acknowledges Waring, "it's important to take advantage of your healthy years. You may want to plan more time traveling with your family, or consider moving to a more manageable living space or retirement community. These are important decisions to incorporate into your updated plan.”
"Make sure that your estate plan is up-to-date and consider planning ahead for your legacy,” Waring adds. Leaving funds for children, grandchildren and favorite charities may be important goals, but they require organized effort.
Though losing a loved one is undoubtedly difficult, it’s vital to build a new financial plan that can sustain your future. Once you've regained stability, you can take all the time you need to heal, spend time with family, and adjust to a new way of life. If you need an extra hand, UBS is standing by to help you reach your financial goals.