After the devastation of losing your spouse, financial decisions may be the furthest thing from your mind. And if you haven't been closely involved in investing or other big-picture financial decisions, taking the lead on money matters can seem daunting—especially while you’re still grieving. But starting to take control of your finances is an important step in moving forward.

Although women are increasingly active in financial planning, women who outlive their husbands can be caught off guard by the magnitude of the decisions they must make alone, not least those concerning their home.

With the right approach and the right advice, the process need not be onerous.

Here's how to manage the transition:

Find a Confidante

To help you get started, ask a couple of money-savvy friends or family members to act as a sounding board. While it's helpful if your confidantes understand the basics of investing or estate planning, they needn't be professionals. Their role is to help you take the steps you need to make good choices, not make them for you.

Put Your Team in Place

Depending on the complexities of your situation and your financial savvy, you may want to seek out several professionals, including an attorney, tax professional and Financial Advisor.

If you don't have a Financial Advisor, finding the right one is not unlike finding a good doctor or general contractor. Get two or three recommendations from other professionals (e.g. your attorney) and people who have been in similar circumstances. Then meet with them to see which Financial Advisor’s experience, personality and approach best fits your needs.

No matter which route you take, be leery of anyone who tries to sell you insurance or investment products out of the gate. 

Get—and Stay—Organized

An advisor can walk you through all the steps to take to get organized, but you can facilitate the process by tracking down the passwords for the accounts you’ll need to access key documents, including: recent brokerage and bank statements; life and health insurance policies; recent tax returns; loan documents; and Social Security statements.

As you go about gathering these documents, you'll want to update your information—including beneficiaries—and close any bank, credit card, or investment accounts in your spouse’s name alone. You’ll also want to notify the credit bureaus that your spouse has passed away. Tip: Order at least a dozen death certificates, since many institutions will require one to change or close accounts.

Be Smart about Social Security

Upon the death of a spouse, you must notify the Social Security Administration immediately (the funeral home may do this on your behalf). This will stop current payouts and also extend you a one-time benefit of $255. (If your spouse served in the military, you should also contact the Veterans Administration to see if you are eligible for a burial allowance or other benefits.)

After a spouse’s death, you’re also eligible to take their Social Security payments instead of your own. But you need to be strategic about whose benefit you apply for first. If their full benefit will be higher than yours, apply for yours now and switch to theirs when you turn 70; if your full benefit will be higher, apply for theirs now and switch to yours at 70.

Update Your Estate Planning Documents

You’ll also need to start taking steps to protect your assets and your heirs. Among other things, you will want to update your will and any trust agreements and look at life insurance and long-term care needs and policies.

Finally, create an inventory of your accounts and financial interests—everything from bank accounts to recurring bills—and store the information in a safe place, or with your attorney or Financial Advisor. Let your loved ones know that such a document exists and where they can find it.

Take Stock of What You Have, and Need

At the heart of financial planning is understanding your goals and creating a road map to achieve them. A key part of the process is reconciling your income and savings with your spending, and your budget will likely change after the death of a spouse. For this reason, your Financial Advisor will likely ask you to track your spending for several months, either with a spending journal or financial software. 

If you’re inheriting a Roth Individual Retirement Account (IRA), your plan will also need to make some decisions that determine how you have to take required minimum distributions (RMDs) from the account. First, you’ll need to decide whether to keep the account as an inherited account or roll it into your own IRA. If you take the former route and your spouse was younger than 72, you can either delay distributions until your spouse would have turned 72 or empty the account within 10 years. If your spouse was older than 72 and you keep it as inherited IRA, you’ll need to take distributions based on your life expectancy.¹

Be Patient but Proactive

You don't want to delay key steps in the planning process, but you also don't want to rush into decisions. Consider waiting a year before making any life-altering financial decisions, such as selling your house or giving money to your children. 

If you are receiving a life insurance windfall, consider asking your Financial Advisor to set it up, so you are issued a potion each month. Some widows report lump sums slipping through their finders more quickly than they had anticipated. So, unless you have a pile of overdue bills to pay, monthly transfers might be a wiser decision.

Morgan Stanley Financial Advisors can provide the guidance, tools and information to help you navigate through uncertain events like these. Talk today with a Morgan Stanley Financial Advisor. You don’t have to handle it alone.
 

Footnotes:

¹ https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary