Amid the emotional upheaval that comes with a divorce or the death of a spouse, there are also many financial changes to consider when you become suddenly single. Unfortunately, these things happen and being prepared is helpful through what is often a very difficult time.
Update your estate plan, including your power-of-attorney and power-of-healthcare. Every state has different legal requirements, so make sure your documents reflect the laws of your state.
Once your documents are updated, make sure to update the titling on each of your taxable accounts. (This is often overlooked)
Tax deferred accounts like IRAs and 401(k)s are disbursed according to the beneficiary(ies) named on the account. It is a good idea to review the beneficiaries on these accounts every few years.
Don’t forget to update the titles of your homes as well. If you own homes in multiple states, verify what is needed in that state.
Know where your money is. Things to know include
Names of financial institutions
Account numbers & titles
Advisor names and contact information
Company benefits’ logins as well as a contact at your spouse’s place of employment
Review your financial accounts. You may need to change the ownership, titling, and beneficiaries at your bank, brokerage, or other financial accounts.
Divide or roll over retirement assets. You may need to transfer or inherit your spouse’s retirement accounts, such as 401(k)s, 403(b)s, and IRAs. You should also be aware of the tax implications and required minimum distributions of these accounts.
Check your life insurance policies. You may need to claim the proceeds from your spouse’s life insurance policy or update your own coverage and beneficiaries.
Update your health insurance policy. You may need to find a new health insurance plan if you are covered by your spouse’s employer-sponsored plan or enroll in Medicare if you are eligible.
Investigate the Social Security benefits you are entitled to receive. You may be eligible for survivor or spousal benefits based on your spouse’s work history, or your own benefits based on your own work history.
Adjust your budget and spending habits. You may need to live on a reduced income or manage your expenses differently. Review your debt, savings, and investment goals.
Seek professional and personal advice. You may benefit from the guidance of a financial advisor, a lawyer, an accountant, or a therapist to help you navigate the emotional and practical aspects of being suddenly single.
Losing a spouse, whether by choice or unexpectedly, is usually a very difficult time in one’s life and minimizing the resulting financial upheaval allows one to focus more on emotional healing.
For more information and resources please check in with us.
This material is not intended to provide investment, legal or tax advice as these materials are for general educational purposes only. Please consult your legal, tax or investment professional for advice on your particular situation. This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. It is not intended to be a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results.