What to Do Upon Death of a Spouse

Forbes' recent article, "What To Do After The Death Of A Spouse," provides a thorough list of topics to address when a spouse dies.

Paying Bills. See how the bills are being paid from joint bank accounts, your spouse's, or your own account. The funeral home will usually inform the Social Security Administration. It is also essential to notify current/former employers since it is common to have employer-provided life insurance, stock options, and other benefits that may require your attention.

Asset Titling, Beneficiary Elections, and Probate. Your spouse hopefully had a will. Assets owned by your spouse individually that don't pass through a beneficiary designation, like on a retirement account or life insurance policy or through a transfer-on-death or payable-on-death arrangement, will likely go through probate. Get help from an experienced elder law attorney.

Retirement Accounts. If you're the primary beneficiary of an IRA, 401(k), or other type of retirement account, work with your attorney to discuss your options. Surviving spouses have many choices after inheriting a retirement account.

Social Security. A surviving widow(er) who is at least full retirement age will typically receive 100% of the highest benefit you or your spouse were receiving. If you both received Social Security, you'll only get one check going forward (the highest one). You should also remove your spouse's social security number from joint accounts and close any of their spouse's individual accounts to avoid income tax complications in the future.

Consider Your Housing Options. Look at housing options, like selling or keeping the home or downsizing. Mortgages aren't transferable, even if both your names are on the loan, so you'll need to pay the mortgage off or refinance into a new loan supported by your assets and income as a widow(er). If you decide to sell your marital home, you'll have two years from the date of death to sell and keep the entire $500,000 federal gain exclusion for married couples.

Filing Taxes For The Year of Death. When a spouse dies, the surviving spouse may need to file taxes for both them and their deceased spouse for that tax year (by April 15th of the following year). Ask your attorney if you need to file a federal or state estate tax return (due nine months after death). Note that some non-retirement assets owned by your spouse will also be eligible for a step-up in basis to the fair market value at the date of death.

Losing a spouse is an emotionally challenging time, and the myriad of financial and legal tasks that arise can be overwhelming. This article has provided a comprehensive guide on the essential steps to take, from addressing immediate bills to considering long-term housing options and understanding tax implications. Ensuring that all assets, benefits, and legal matters are managed appropriately to secure your financial future is crucial. If you find yourself uncertain or overwhelmed by any of these tasks, don't hesitate to seek professional guidance. An experienced Austin estate planning attorney can provide invaluable assistance, ensuring that all matters are handled correctly and efficiently. If you have any questions or concerns, we strongly encourage you to book a call with an expert who can guide you through this challenging time.

Reference: Forbes (April 20, 2023) “What To Do After The Death Of A Spouse”