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A financial to-do list for the recently widowed

By Jason Alderman

Losing your spouse is one of life's most stressful events. Ironically, it's during that time of grief, when you're probably not thinking clearly or focusing on such matters, that you're expected to make many important financial decisions that will impact the rest of your life.

Although there are certain actions you must take right away to ensure your current financial security, several major decisions with long-term consequences should probably be postponed until you've had a chance to reflect on how – and where – you want to spend the rest of your life.

If your spouse primarily handled the finances or you're not up to the task alone, ask a trusted relative or friend to help you sort out the following information:

  • Gather legal and financial documents that will give a better sense of where you stand financially, including: wills, trusts and powers of attorney; mortgage and car title; tax returns; bank, loan and credit card statements; safe deposit box contents; insurance plans; and income sources.
  • Compile outstanding bills and monitor due dates to avoid late charges or penalties for: utilities; mortgage/rent; health, auto and homeowners insurance premiums; car, student and personal loans; and credit cards.
  • If your spouse was still working, contact his or her employer regarding unpaid salary, benefits, life insurance and retirement accounts. This is particularly important if they provide your health insurance.

Other critical actions to take within the first month or two include:

  • Contact companies where you have joint accounts and convert them to your name only. Also close any accounts that were in his or her name only that you don't wish to maintain.
  • If your spouse was eligible for Social Security, you and your children may qualify for Survivor Benefits. Call (800) 772-1213 or visit www.ssa.gov.
  • Similarly, if your spouse was a veteran, contact the VA regarding possible survivor benefits (www.vba.va.gov/survivors).
  • Pay attention to income tax filing dates, particularly if you file quarterly estimated taxes. While the IRS may waive penalty fees on a late filing or underpayment related to your spouse's death, you're still responsible for any taxes or interest owed. Call 800-829-1040 or read "Filing Late and/or Paying Late" at www.irs.gov.

Don't make irreversible financial decisions until you've had a chance adjust to your new status. For example, some people rush to pay off their mortgage, only to discover later that the house is too large or they can't afford the taxes and upkeep. Others feel pressured to move closer to family members, only to discover that they miss their former life.

Other long-range planning suggestions:

  • Rewrite your will and other documents that outline how you'd like your financial and health matters handled if you die, become disabled or become seriously ill.
  • Until you have a better handle on your new living expenses, live frugally – especially if you're used to having two incomes.

And finally, an update on my recent column about repaying overdue income taxes. The IRS just announced that for 2011 taxes due April 17, 2011, it will offer a six-month grace period on failure-to-pay penalties for certain taxpayers facing economic hardship. They also doubled the threshold for filing a streamlined installment repayment agreement (where you don't have to supply a detailed financial statement) from $25,000 in taxes owed to $50,000.




This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

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