Budget Basics
Financial Steps to Take After the Death of a Spouse What to do First - Before Debt Piles Up
Organize YourselfLosing a spouse is a very stressful event and usually the last thing on a person’s mind is getting their financial situation organized. This can be an overwhelming task, especially if the spouse who has passed on did not keep an organized record of his or her financial affairs. It is also very important not to do anything rash; make a plan first because you will be going through a time of adjustment, personally and financially.
You may want to enlist the help of a few trusted family members to help you with this daunting task, but be very careful because your private affairs should be kept confidential. Start by making a comprehensive list of every financial element and source of debt that will need to be focused on.
For example:
• Funeral service and burial costs
• Estate, will and trust matters
• Income and employment matters (such as pensions,
or social security benefits)
• Investments (IRAs, mutual funds, CDs)
• Tax documents (income or property tax related)
• Current bills (rent, mortgage, credit cards, etc.)
• Miscellaneous expenses
Once you have created this all-inclusive list of every financial consideration, determine the resources that can assist you in managing them. This means making another list of the professionals you will need to contact, such as attorneys, tax accountants, investment advisors, credit counselors, etc. You can then determine what elements on your list are most pressing and need to be taken care of right away, and what others are not. This is simply prioritizing these items. If you think that you will have a hard time paying off your unsecured debts (credit card debt, old utility bills, unsecured loans, and personal debts) in a timely fashion, a credit counseling service can help you manage your debt, pay your creditors, and teach you how to create a budget that is best for your financial future.
Become EducatedReputable consumer credit counseling services focus on educating their clients on their finances and try to enlighten them on the legal matters that may be entwined in their personal matters. Don’t be afraid to ask for help from a credit counseling agency or legal advisors.
The more you educate yourself on your rights and the nuances of your personal financial circumstances the better off you will be in the long run. You certainly don’t want to be surprised or blindsided by debt that you are not prepared to pay.
Here are some items that you should take into consideration:
Are there any outstanding debts on any credit cards that you have co-signed? Some creditors may write off the debt acquired by a deceased customer, this is not the case if a co-applicant is on the account. If you are a co-applicant, then you will become exclusively responsible for the outstanding debt upon the death of your spouse. Remember that by law, creditors cannot close a joint account automatically. Many times the creditor will ask the surviving applicant to file for a new application. Based on the surviving applicant's credit history, the creditor will decide if they want to extend credit to the surviving applicant or if they do not want to extend credit.
Do you live in a community property state? In community property states married couples are considered to own their property, assets, and income jointly. In community property states, credit accounts opened during marriage are automatically considered to be joint accounts. This could obviously impact what you will have to pay back to your creditors, especially if your spouse incurred a maximum amount of debt on his or her credit cards.
The following states are community property states:
o Arizona
o California
o Idaho
o Louisiana
o Nevada
o New Mexico
o Texas
o Washington
o Wisconsin
Dealing with financial matters during this stressful time is never pleasant, but it is important to take matters into your own hands to avoid a financial disaster. One of the things you can do, if you already have not done it, is establish a strong credit record in your own name. This will not only help to build up your credit prowess, but it can also save you from many potential problems in the future.
Try to create an emergency budget to help with debt management issues as they come at you. A credit counseling agency can help you build a budget that fits your financial situation.
Who should you contact after the death of a spouse? Some are obvious but it is good to make a list. Call family, friends, and relatives; church and funeral home; executor named in spouse’s will and/or trustee of spouse’s trust—there may be funeral or other special instructions.
Next, you need to list who to call after the funeral. You will need to check on retirement or other funds; spouse’s employer to check on wages, accrued and unpaid vacation time, sick pay, death and retirement benefits; Social Security office for benefits; insurance agents on policies and claim forms; banks, brokerage houses, and other financial firms for account status and ownership; trustee of any trust; Department of Veterans Affairs if applicable; lawyer to determine if a probate is needed (if living trust or nonprobate transfers occur, or in a small estate, a probate may not be necessary); credit card companies.
Also, cut up your spouse’s credit cards. As stated earlier, you may use credit cards held in both your names, but the company may request a new application. Some credit card companies provide death benefits.
