The death of a spouse is devastating. Losing a spouse unexpectedly as a result of a natural disaster, accident or pandemic can be especially difficult. During such an emotional and difficult time, even just paying bills can seem overwhelming – but it's important to ensure the deceased spouse's financial wishes are carried out and the surviving spouse is covered financially.
Gathering the proper paperwork is the first step in settling your spouse's affairs. Start with the following:
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. 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. Check on your health insurance if you were covered under a joint plan. Call your insurer or your spouse's company if you were covered under your spouse's work insurance plan to see whether you are still covered and for how long. If you're not still covered, find a new health plan as soon as possible.
Use the paperwork you gathered to claim the following:
Taxes can be especially complex and difficult after an event like the death of a spouse, and it's wise to consult a professional tax adviser for assistance. However, there are a few basic things you should know before you get started.
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. 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, these are 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.
Reassessing Your Finances
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 to be in your name, including credit cards, deeds, etc.