When Clare Friedrichs, 46, a Smith Barney financial consultant in New Orleans, was widowed, her world went haywire. Even with her business background, she hadn't taken the time to find out where all of her husband's financial papers were kept. Worse, he didn't have a will, and straightening out his estate was a nightmare.
No one wants to think about losing a partner. Even people who are most forthright about money and investing will dance around the discussion of death. The simple task of writing a will is problematic for some people.
If you are not prepared, the onslaught of paperwork that will hit you after your spouse's death may seem overwhelming. It is tough to get through it even when you are prepared. Here's your to-do list:
1. Get a grip on your assets. To find out what you have to work with, gather copies of your joint tax records for the past five years, records of both your husband's and your own retirement plans, all insurance policies, bank and brokerage accounts, and the deed to your house. Bundle the documents in one big file that you keep in a safe but accessible place, such as a locked drawer.
2. Obtain death certificates. You'll need to make about two dozen copies of your husband's death certificate to send to credit card companies, the company that holds the mortgage on your home, and insurers to verify his death.
3. File for benefits. Notify your husband's employer and file for any benefits owed you, such as pension income, life insurance and health insurance coverage. To do so, talk to the person in charge of employee benefits (the human resource department can direct you). You may need to talk to more than one employer if your husband qualified for more than one plan. Find out about settlement options. Some plans ask you to choose between a lump-sum payment or annuitized payments, which are made every year.
4. File insurance claims. Alert your husband's life insurance company and file a claim. Your insurance agent should have all the policy information you will need and be able to help you obtain the necessary forms.
5. Notify government offices. The Social Security Administration (www.ssa.gov) will need to be notified. You must have been married for at least nine months before your spouse's death to be eligible for benefits, unless his death was the result of an accident or military service. Also, you should contact the motor vehicles bureau in your state to change his car registration to your name.
6. Contact financial services providers. Any joint accounts should be transferred to an account in your name. (You will need a copy of the death certificate to do so.) In many cases, you will be able to renegotiate the terms of any outstanding loans with your banker if your financial status is shaky. If your husband had a brokerage account, ask his broker to give you a value on his account at the time of his death. Your estate taxes will be based on the evaluation of assets in all his accounts.
7. Update your insurance policies. If your spouse worked for a company that has a health plan covering 20 or more employees, by law, the plan must continue to offer you and any dependents coverage for at least 18 months but can be stretched up o three years if you have dependent children. Also update any life or disability insurance policies.
8. Put your money someplace safe. This is not the time to be taking hot stock tips from anyone. Most financial planners recommend that you refrain from investing any lump-sum insurance or pension payout for at least six months, and ideally a year, after your husband's death. Stash any cash into liquid money market funds, or short-term certificates of deposit or Treasury bills.
9. Figure out a budget that works. You already assembled the important documents. Now you need to decide how to allocate your new income to satisfy your needs as well as investing your money for retirement, for your children's education, and so forth. Subtract what you owe -- say, on your mortgage, credit cards and outstanding loans as well as any tax obligations -- from your total assets (including your investment accounts, income, and life insurance payouts). How much income do you have? How much do you spend each month? Determine which bills must be paid and which are optional, such as your health club membership or vacation. Then you have your budget priorities.
10.Take it slow. After you have negotiated through the must-do list and found the crucial documents, take a break. Don't be pressured to make big financial decisions. When you are ready to take action, it's a good idea to set up an appointment with a financial adviser to help you develop a short-term and long-term investment plan. Ask friends and family for recommendations, or call an organization such as the National Association of Personal Financial Advisors, 1-888-FEE-ONLY, for a list of planners in your area.
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