by Gary Foreman

As a surviving spouse, what financial questions will you likely have and need to answer after losing your spouse? We turn to an expert to get you answers.

It’s a hard time and an emotional time. When your spouse dies, you’re surrounded by questions, concerns, and decisions to be made. Many of those decisions are financial in nature.

To help us understand what the surviving spouse should know about financial issues when they lose a spouse, we turned to Gregg R. Wind for help. Mr. Wind is a CPA and Partner in Kallman + Thompson + Logan, LLP in Los Angeles.

Q: Losing a spouse is traumatic, but some financial affairs demand immediate attention. What are they?

Mr. Wind: After the grieving period, it may be necessary to prepare a list of all community assets and liabilities and review trust and estate documents. These documents may provide that assets are to be set aside (for beneficiaries or for charitable purposes) on behalf of the decedent. It may be necessary to consult with an estate planning attorney, perhaps the individual that drafted the original trust and estate documents, if they are still practicing. If the community estate is greater than $11,580,000 (for 2020), it may also be necessary to file an estate tax return for the decedent, although no estate tax, if applicable, is generally payable until the second passing.

Q: Often our health insurance comes from a spouse’s group plan at work. Is there any chance that the surviving spouse could continue with that insurance?

Mr. Wind: If you’ve been receiving health insurance and pharmaceutical benefits through your spouse’s employer, contact the plan administrator to find out if you can retain this coverage. Generally, you can. At the least, COBRA rules typically allow a widow/widower to remain on the former employer’s plan for up to 36 months. This will allow for time to obtain a new health insurance policy, if needed.

Q: A surviving spouse may be eligible for Social Security benefits. How is the amount of the benefits determined? And, how does the surviving spouse apply for them?

Mr. Wind: It is best to stop by or make an appointment at a local Social Security office to discuss your individual situation with a knowledgeable representative. A widow or widower can receive reduced benefits as early as age 60 or full benefits at full retirement age or older. A spouse can also receive benefits as early as age 50 if he or she is disabled and the disability started before or within seven years of the death.

Q: Beneficiary rules are different for IRAs and 401(k)s. Please explain how they work.

Mr. Wind: It is best to speak with a CPA or ERISA attorney to obtain authoritative information. When you open an IRA, you should complete the beneficiary designation form. Whoever is named on the form when the IRA owner passes away receives the funds, and it could be an ex-spouse or a disinherited child. A will won’t override this. With 401(k)s, if you’re married, the law says that your spouse will receive the account. Even if you’ve been legally separated for years and now live with somebody else, your spouse is entitled to the account on your passing. The only way around this is to have a spouse sign a waiver agreeing to be disinherited.

Q: Are there certain things that a surviving spouse should not do in the months following the loss of their mate?

Mr. Wind: Please see reply to the first question above. These issues should generally be addressed as soon as possible (within 60 days) after a spouses’ passing.

Q: Not everyone does sufficient estate planning. Are there one or more tasks that are most commonly overlooked or forgotten?

Mr. Wind: It is important to have a Trust, particularly if you own property or have substantial assets. In some cases, an estate will be subject to “probate” if there is no Trust and this can involve considerably more administrative cost and a longer period in which to complete the administration. Folks often forget to review their documents periodically (we suggest every three years) to make sure all information is still relevant.

• Common Estate Planning Mistakes and How to Avoid Them
• What Happens to My Debts When I Die?
• End-of-Life Planning Everyone Needs to Do
• What Is a Revocable Living Trust?
• What a Spouse Should Know About Your Finances
• Helping an Elderly Parent When Their Mate Dies: Financial Chores

Reviewed August 2021

About the Author

Gary Foreman is the former owner and editor of the After50Finances.com website and newsletter. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com.