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A guide to financial planning for widows + financial checklist

Becoming a widow is something that few expect and nobody can truly prepare for. Especially if the loss was sudden, you may not know where to start. In this practical guide, learn about financial planning for widows and gain the tools you need to deal with all the unexpected decisions confronting you.

Before we get started, we are financial advisors in Utah. One of our specialties is financial planning for widows. We’ve written the following blogs that you may enjoy:

Financial planning for women

Estate planning basics for women

The complete guide to losing a spouse who owns a business

What is financial planning for widows?

Financial planning for widows is focused on helping a woman transition to a new era of financial strength following the loss of a spouse.

Some of the financial challenges a widow may face include:

  • Gathering information about bank account, investment accounts, and credit cards
  • Handling the sale of a business owned by spouse
  • Managing debt, liens, or other financial obligations
  • Being a fraud target
  • Managing an inheritance or insurance proceeds
  • Selling a car or home
  • Filing and managing taxes
  • Obtaining access to Social Security survivorship benefits
  • Modifying your estate plan
  • Managing expenses with income changes

Everyone’s situation is different. Some women may face none or a few of these challenges, while others may be overwhelmed by a large number of them. Whatever the situation is, a financial plan specifically tailored to your needs as a widow can help you transition to the next step with minimal stress.

The role that secondary losses play

As a financial advisor for widows, we often hear our clients say that the stress of the primary loss of spouse is compounded by all the associated secondary losses that make the transition difficult to handle (Modern Widow’s Club, 2022).

Such secondary losses may include:

  • Loss of income
  • Loss of financial security
  • Loss of social outlets and friendships
  • Loss of memory (widow’s fog)
  • Loss of parenting partner

All of this can have a compounding effect, making it hard to handle important decisions that you never expected having to make, all on your own. In some cases, the stress can lead to mental illness and other health issues.

Getting the right support is a critical part of your financial plan as a widow. There are many venues you can tap; one of the first steps is sitting down an making a list of all the tasks to be handled. This widow’s financial checklist below may be a good place to start.

A widow’s financial checklist

A financial checklist is an essential part of a widow’s financial plan.

#1 Protect identity

The unfortunate truth is that widows are often preyed upon by unscrupulous people. Identity theft of a dead person is a “thing”, believe it or not. For this reason, protecting your dead spouse’s identity is first on the list.

As a general rule, we suggest that widows only give out information on a need-to-know basis. You’ll need to notify the essential professionals (which we’ll get to later on in this checklist), but other than that, it may be a good idea to gracefully keep mum about all details related to your deceased spouse.

While it may seem strange to hear, we also urge caution when writing the obituary. Be meaningful, but keep it as vague as possible as these notifications are one of the places that fraudsters tend to look to find victims.

To prevent someone taking out debt in your spouse’s name. Contact all three credit bureaus, Equifax, Experian and TransUnion, to place a notification on the credit report that says “Deceased – do not issue credit.” Order the credit report to monitor for identity theft

Call the Division of Motor Vehicles to cancel their driver’s license.

#2 Gather documents

There is no way to compose an exhaustive list of all the documents a widow needs to gather after the loss of a spouse. Here are some of the major ones:

  • Insurance policies
  • Bank account statements
  • Investment account statements
  • Credit card statements
  • Paystubs
  • Tax returns
  • Will/trust documents
  • Healthcare proxy
  • Title documents for house or car
  • Social Security card/number for yourself and spouse
  • Birth certificate of yourself and spouse
  • Death certificate of spouse
  • Military discharge papers (if applicable)

If your spouse owned a business, you’ll need these documents as well:

  • Articles of incorporation or organization
  • Business charter
  • Buy/sell agreement
  • Employment contracts
  • Vendor contracts
  • Rental leases
  • Title and deed documents
  • Company bylaws (if a corporation)
  • Operating agreement (if an LLC)
  • Non-disclosure agreements
  • Non-compete agreements
  • Financial statements (checking account statements, income statements, balance sheets)
  • Tax returns
  • Merger/acquisition agreements
  • Insurance policies
  • Licenses
  • Company policies/handbook
  • Depending on the type of business there may be online accounts you need to gain access to

#3 Pay bills

It’s unpleasant to think about the practicality of having to pay bills at a time of loss. However, the reality is that the more you can stay on top of paying off obligations when they are due, the more financially healthy you will be in the long run.

Often widows ask if they are responsible for their spouse’s debt. This is a complicated legal question that may require the advice of an attorney. Regardless of whether or not you are, it’s a good idea to be aware of all financial obligations that your spouse had.

#4 Notify necessary professionals

The list is long, but here is a start.

  • Spouse’s place of work
  • IRS
  • Social Security Administration
  • Accountant
  • Attorney
  • Financial advisor
  • Doctors
  • Dentists

#5 Collect benefits

You may be eligible to receive survivorship benefits from the Social Security Administration, an inheritance, or insurance proceeds.

If your spouse served in the military, check with the Veteran’s Administration to see if you are eligible for any benefits.

#6 Retitling

Begin the process of changing titles on assets or accounts to your own name. Every financial institution has a different process. And it can be slow and tedious. Enlist help from an after loss professional or financial advisor if needed. While you are in this process, you should also update your beneficiaries as most likely it is your spouse. Close any unneeded accounts. It helps to gather all documents first and then keep everything together and take notes.

Every situation is different, this is not an exhaustive list:

  • Bank accounts
  • Investment accounts
  • Retirement accounts
  • Credit cards
  • Property titles
  • Car registration and titles
  • Subscriptions
  • Home and auto insurance
  • Medical insurance
  • Bills
  • Email accounts -close or monitor*
  • Online accounts*
  • Cancel upcoming appointments

Here are some assets you may not have considered to look for

  • Points or miles on credit cards or with airlines and hotels. See if they are transferable
  • Check for a safe deposit box
  • Search state agency and unclaimed property sites (may need to do this several times over the next few years)
  • Digital Assets – do you want to preserve any digital records*
    • Social media accounts
    • Photos
    • Text messages/voicemails
    • Music or video

*The ability to transfer digital assets is dependent on the policy of each company. For example Google requires that there be a will to give access. Facebook has the option to name a person to manage a legacy account.

#7 Address longer term tasks

Once you address the more immediate needs, you’ll move on to the less urgent (but still important) items that are a part of your financial plan as a widow.

Taxes/accounting

As your tax situation has definitely changed, you should meet with your accountant.

Estate plan

Changes in family structure necessitate a modification of estate planning documents. Your spouse may likely have been the holder of key roles such as executor of your estate, the contact appointed on your healthcare proxy, etc.

You may also need to modify the titling and beneficiaries on your investment and bank accounts.

Financial plan

To set you up for financial success in the long term, you’ll want to think about putting together some semblance of a plan. Financial planning for widows typically encompasses some of the following elements:

  • Budget
  • Cash flow plan
  • Retirement strategy
  • College funding (if applicable)
  • Tax planning
  • Risk management

While setting all of this up may seem daunting, it’s useful to note that most people don’t need all of these items in full. There is no cookie cutter model to follow, and the person putting together this plan should customize it to your needs.

Financial planning for widows: examples

The loss of your spouse is also the loss of your life and financial plans. You are reinventing your life and money is a big piece of what that life will look like. A financial plan can help guide you on what this new life could look like.

Sara’s husband, Kyle, died very unexpectedly from an undiagnosed heart condition. Sara and Kyle had built their dream home, a space for entertaining and having their children visit. They were 10 years away from retirement and both in jobs they loved. Their kids had moved to other states and were just starting their own families. So part of Sara and Kyle’s plans were to travel a lot to visit family or pay for them to visit home. With Kyle’s death, Sara realized the dream home and career she built were not important anymore. She sold her house and moved closer to her kids. She took a big pay cut in changing jobs, but with downsizing her home and lowering some expenses she stayed on track to retire and be able to spoil her grandkids.

May’s husband died while they still had very young children at home. Her husband had been a minimalist and May liked helping him live that way, but it was his planning that helped them live minimally. It allowed them to travel a lot. He worked for himself and she stayed at home to take care of the children. When he died she realized she was ready to move into a new phase of life. She didn’t feel as able to travel as a solo parent and instead decided to dedicate more money to a comfortable home and things like bikes and books as a way to spend time with her children. This was a more expensive lifestyle. A financial plan helped her plan how to use and invest the life insurance money and proceeds from the sale of his business, and create a return to work plan for May when her children started full time in school to sustain her new lifestyle.

Working with a financial advisor for widows

As I have talked to widows, many of them have expressed to me that it been helpful to get the right support. For some it is working with a life coach or going to a seminar that helped them get confidence again and rebuild their life. They have also mentioned other support systems like a good financial advisor and accountant (especially if their husband owned a business).

It’s important to recognize that the transition a widow goes through may be very far-reaching and extend over long time periods. Many widows need support years later when they are back on solid ground and experiencing life events such as getting remarried, navigating a prenup, setting up a trust, merging finances, etc.

There are many items on the widow’s financial checklist, but you don’t have to address them alone. While there are many factors that determine if a financial advisor is right for you, it may be a good idea to find one who has experience with financial planning for widows.

At Rock House Financial, a fee-only financial advisor in Farmington, Utah, we have a financial advisor for widows as a prominent member of our team.   If you would like to speak with us, please reach out.

Disclaimers

The opinions expressed herein are those of the firm and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of author, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated.

Case studies presented are purely hypothetical examples only and do not represent actual clients or results.  These studies are provided for educational purposes only.  Similar, or even positive results, cannot be guaranteed.  Each client has their own unique set of circumstances so products and strategies may not by suitable for all people.  Please consult with a qualified professional before implementing any strategy discussed herein.  No portion of these case studies is to be interpreted as a testimonial or endorsement of the firms’ investment advisory services.

Sources

Modern Widow’s Club [Modernwidowsclub]. July 30, 2022. The Secondary Circles of Loss. [Instagram Image] Retrieved from www.instagram.com/p/Cgn1EfsuSVt

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