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Death of a Spouse

The death of a spouse can be devastating. Sudden losses can be even harder. If your spouse managed the majority of the financial responsibilities, even just paying bills can seem overwhelming. But you can work your way through it. It is manageable.

Try not to make any long-term decisions right away. Take your time. Emotional times are not the best times to make decisions.

Paperwork
Gathering the proper paperwork is the first step in settling your spouse's affairs. Start with the following:

  • Death Certificate The death certificate will be needed for many financial procedures you will encounter. You should request several copies from the funeral director or county health department.
  • Insurance Policies These will help you determine benefits you are entitled to.
  • Marriage Certificate If you can't find your marriage certificate, you can usually get a copy from the courthouse of the county you were married in.
  • Birth Certificates for Dependent Children.
  • Certificate of Discharge from the Military If your spouse was in the military, you may need his or her certificate of discharge to collect benefits.
  • The Deceased's Will
  • Complete List of all Property

Many of the documents you need may be held in a safe deposit box. If you can open this safe deposit box before your spouse's death, take out all the contents of the box. Some states seal the boxes after a death, even if the box is registered in both your names. If your spouse has already died and the box is sealed, consult your attorney about getting court permission to access the box.

Get Your Finances In Order
If you receive a life insurance benefit, save that money. Put it in an interest-bearing account such as a savings account or money market fund. But keep it liquid. You may need it.

Make sure you have health insurance. Call your spouse's company to see if you're still covered and for how long. If you're not, get medical insurance right away.

Use the paperwork you gathered to claim the following:

  • Life Insurance Benefits Most likely, the company will pay the proceeds directly to the named beneficiary in either lump sum, fixed payments or as interest payments on a larger amount. It may take several weeks for you to receive payments. If your spouse is named as your beneficiary on your life insurance policy or retirement plans, you should take this time to name another beneficiary.
  • Social Security Widows are eligible for a $255 death payment designed to help pay for funeral costs. You may also be eligible for survivor's benefits, depending on your age and if you have any dependent children.
  • Employee Benefits Your spouse may have had life insurance, a 401(k) plan, vacation or sick pay, and other benefits to which you're entitled. Contact the human resources director at your spouse's workplace for a list of benefits. If your spouse was employed by a large company, you will still be eligible for health insurance under COBRA legislation for 18 months after your spouse's death.
  • Veterans' Benefits If your spouse served in the military, contact Veterans Affairs. You may be eligible for burial expenses, money toward a plot or headstone, as well as disability benefits if your spouse already was receiving such payments. Veterans are also eligible for free burial in a national cemetery.
  • Miscellaneous Benefits If your spouse belonged to a credit union, a labor union, the American Legion, a college alumni group, or other organizations, you may be eligible for insurance coverage or assistance programs.

Taxes
This is just a brief introduction to some of the tax issues facing you. Taxes can be quite complicated and you should consult a professional tax advisor for more help.

Within nine months, you are required to file an estate tax return if the assets of the estate exceed the threshold for taxability. Your spouse's estate will not be subject to estate taxes if its net worth is less than the current exclusion amount for the year of death.. That threshold will rise each year until the complete repeal of the estate tax in 2010. Taxes, which can be as high as 50 percent, must be paid on any amount above the threshold amount. You also are required to file annual income tax returns reporting any income earned by the estate.

The Unlimited Marital Deduction allows you to avoid estate tax completely if your spouse has left everything to you in his or her will and you are a U.S. citizen.

You must file a final federal and state income tax return for your spouse on income earned that year up to the date of death. As with your return, this is due by April 15th. You can file a joint return as long as you do not remarry prior to the end of the year he or she died. If you have a child still at home, you can use the joint tax rates to figure your income taxes for two additional years.

Some Smaller Details
Review your will and make adjustments to reflect your new situation. You'll probably need to change who will inherit your assets and you may need to decide on a new executor. Change accounts and jointly held property into your name including credit cards, deeds, etc. You do not need to go through the process of applying for new, individual credit card accounts.

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