Widowed or Divorced
Get financial protection when you need it the most
When you are dealing with the death of a spouse or a divorce, taking care of your finances may be the last thing on your mind. The stress of these transitions can often leave you feeling overwhelmed and out of control.
But protecting your interests and organizing your finances can make things a lot easier for you in the future.
Organizing your finances after the death of a spouse
Losing a spouse is difficult enough, but when you add to it the pressure of having to settle the estate and organize finances, it can often feel like too much to handle. Fortunately, there are steps you can take to make it a little more manageable.
When your spouse dies, your first step should be to contact anyone who is close to you and your spouse and anyone who may help you with funeral preparations. Next, you should contact the following to find out how you can file for benefits:
- Your attorney and any other financial professionals
- Life insurance companies and government agencies
- Your spouse's employer
Getting expert advice when you need it is essential:
- An attorney can help you go over your spouse's will and start estate settlement procedures.
- Your funeral director can help you obtain copies of the death certificate and applications for Social Security and veterans benefits.
A Financial Advisor can assist you with the claims process and can help you organize your finances.
Locate important documents and financial records
Before you can begin to settle your spouse's estate or apply for insurance proceeds or government benefits, you will need to locate important documents and financial records such as:
- Birth certificates
- Marriage certificates
- Life insurance policies
- Financial account statements
Evaluate short-term income and expenses
When your spouse dies, you may have some immediate expenses to take care of. Even if you are expecting money from an insurance or estate settlement, you may lack the funds to pay for those expenses right away. If that is the case, don't panic—you have several options:
- If your spouse had a life insurance policy that named you as the beneficiary, you may be able to get the life insurance proceeds within a few days after you file.
- Try to negotiate with creditors to allow you to postpone payment of certain debts.
- As a last resort, use credit cards or even cash advances against credit cards, but be aware that the interest rates on cash advances can be above 25%.
Avoid hasty decisions
The death of a spouse is an emotional time that can trigger emotional decisions. During this time, it is important to avoid making hasty decisions. Follow these tips to help keep your finances secure:
- Don't think about moving from your current home until you can make a decision based on reason rather than emotion.
- Don't spend money impulsively.
- Don't cave in to pressure to sell or give away your spouse's possessions.
- Don't give or loan money to others without reviewing your finances first.
You may also want to learn more about managing an inheritance.
If protecting your assets means that you want to keep all of your money, property, and possessions out of your soon-to-be ex-spouse's hands, you are probably out of luck. Any assets acquired during marriage are considered marital property and must be divided according to state law:
- If you live in a community property state (ie, California, Texas, or one of eight other states), you and your spouse must split any marital assets equally.
- In all other states, assets must be divided equitably (fairly) rather than equally.
Your best protection is to make sure that your interests are represented. Hire an experienced attorney who will help you negotiate a fair settlement.
Save time and money by doing your homework
Before meeting with a professional divorce attorney, compile as much of the following information as you can:
- Each spouse's date of birth and social security number
- Names and dates of birth for the children, if you have any
- Date and place of marriage and length of residency in present state
- Existence of prenuptial agreement
- Information about any prior marriages, children, etc
- Date of separation and grounds for divorce
- Current occupation and income; name and address of employer for each spouse
- Education, degrees, and training of each spouse
- Extent of employee benefits for each spouse
- Separate and joint assets and liabilities of each spouse
- Life (and other) insurance for each spouse
- Financial records
- Family business records
- Information on collections, artwork, and antiques
If you're uncertain about some of these areas, you can obtain the necessary information through your spouse's financial affidavit and/or the discovery process, both of which are mandated by the court.
You might also want to think about the following questions before your meeting:
- If you have children, what are your wishes regarding custody, visitation, and child support?
- Whose health insurance plan should cover the children?
- Do you earn enough money to adequately support yourself, or should alimony be considered?
- Which assets do you really want, and which are you willing to let your spouse keep?
- How do you feel about the family home?
- Will you have enough money to pay the outstanding debt on whatever assets you keep?
In addition to an attorney, you may want to seek counseling to help you clarify your wishes, express yourself more clearly, and deal with any child-related issues. Such counseling is typically covered by health insurance.
Divorce is never easy, but with the right preparation you can be better prepared for your financial future.
Now, read about managing finances when you are marrying again and blending families.