When you become solely in charge of your financial future by death or divorce, the decisions you face likely seem overwhelming. The flood of emotions you experience may affect your decision-making capabilities, no matter how strong or independent you were as a partner.
In most relationships, responsibilities are shared. You may or may not have been the bill payer or the asset organizer. Now these, and myriad other roles, are all on your shoulders. You need the Oxford Dictionary’s definition of “triage” — “the assignment of the degrees of urgency.” Normally the term is used when referring to a medical disaster, but it’s also applicable to your finances during times of personal crisis.
As you begin the process of rebuilding your life, here are the first steps to take:
Financial Issues to Work Out
- A cash-flow analysis will be an important step to determine your financial obligations and your current sources of income.
- Establishing an emergency fund, if you don’t already have one, should be a top priority. Once any immediate expenses are covered, positioning some of your funds for supplementing your reduced monthly income should be the next priority. After your current situation has been addressed, establishing a long-term plan for life insurance proceeds or assets designated for retirement is the final goal.
- Updating all annuity, life insurance and retirement plan assets with your new primary and contingent beneficiary arrangements will ensure that your wishes are met.
Tax Issues to Consider
- What could be the most beneficial way to file your current year taxes? For those who are divorced, filing separately, jointly or married filing separately are all potential options, each with their own advantages and disadvantages. For widows and widowers, the year of your spouse’s death is the last year you are eligible to file jointly and take advantage of the expanded tax brackets and benefits.
- Quarterly estimates may need to be adjusted to reflect your new income situation.
Legal Issues to Consider
- You must ensure you follow the directions set forth in your deceased spouse’s will. This includes determining who will be handling the estate settlement duties. Once the executor or personal representative of the estate is established, there are several actions needed, such as notifying Social Security, pension providers and creditors.
- Your current will, trust and/or powers of attorney documents will need to be revised based on your new situation.
Don’t Forget to Take Care of Yourself
During such stressful times, you need to take a moment to consider your own needs so you can put yourself in a position where you’re strong enough to help yourself. Remember:
- Emotional and spiritual triage go hand-in-hand with financial triage.
- Turn to your friends, family and your higher being for support.
- Stay busy, exercise, meditate, pray, visit family or go to a support group. Find what works for you.
Words of Caution
Once you get started picking up the financial pieces, it’s important to protect yourself while you’re still vulnerable.
- Don’t be in a rush to change existing investments.
- Avoid impulsive emotional decisions like buying a new car or moving.
- Wait until you have healed and then put a holistic plan in place for your future.
If the to-do list of financial, tax and legal tasks seems overwhelming to accomplish on your own, good news, there are professionals trained and prepared to help you. Between financial planners, CPAs and attorneys, the resources are there to take care of the urgent and allow you time to get your feet on the ground before tackling the next chapter of your life.
Know that you are strong. Work at finding peace, and nurture your soul. Rebuilding your life is a process that goes beyond urgency. Take the time to rediscover yourself, be positive, get a vision and outline new goals for your happiness.
Ali Swofford, Ph.D., CLU, ChFC, President of Swofford Financial, minimizes risks and createssolutions enabling retirement focused clients to live, love and leave a legacy.
Aleen M. (Ali) Swofford, PhD, CLU, ChFC, is a founding partner of Prosperity Partners Wealth Management, takes her 33 years of planning, investment and client-partner leadership experience and focuses on creative tax-advantaged solutions designed specifically for each client's unique financial situation. Ali specializes in solving problems and minimizing risks for retirement focused clients so they may concentrate on living, loving, and creating a legacy. What some may view as work is truly Ali's passion.
Nine Financial Tips These Experts Wish They Knew a Long Time Ago
Would you have made different decisions with the knowledge you have now?
By Kiplinger Advisor Collective Published
FDA Approves Zepbound, the Latest Weight-Loss Drug: The Kiplinger Letter
The Kiplinger Letter Eli Lily’s Zepbound will undercut its rivals’ pricing but still costs over $1,000 a month.
By John Miley Published
Six Ways to Prepare for Widowhood and Protect the Surviving Spouse
No none wants to have to plan for losing their spouse, but having plans in place and knowing what to do when the time comes can alleviate at least some of the stress.
By Tyler Hill, Investment Adviser Representative Published
Creating a Blended Family? Three Key Steps to Consider
Blended families can make your finances and estate extra complicated, but you can head off some of those issues with careful planning.
By Adam Frank Published
Do You Need Disability Insurance?
If you work for a living, the answer is yes, so don’t overlook protecting your biggest asset. Open enrollment season is the perfect time to assess your options.
By Frank J. Legan Published
Retirement Planning in a Time of Inflation and High Interest Rates
Today’s challenges make retirement planning even more complicated than usual, but it’s not all doom and gloom.
By Ken Moraif, MBA, CFP®, CRPC® Published
Not Confident About Retirement Despite Financial Success?
You’re not alone. Uncertainty related to interest rates, government debt, long-term care and market volatility is making everyone uneasy. What can you do about it?
By Barry H. Spencer, Registered Investment Adviser Published
The Best and Worst Ways for Retirees to Give on Giving Tuesday
Cash donations are certainly the most convenient, but you could be overlooking significant tax advantages by taking the easy way.
By Evan T. Beach, CFP®, AWMA® Published
From Breadwinner to Retiree: How to Manage the Transition
Many people arrive at retirement with mixed emotions, including anxiety. Making the transition involves a profound shift in your mindset.
By Erin Wood, CFP®, CRPC®, FBSⓇ Published
It’s Giving Tuesday: Charity Strategies the Wealthy Can Apply
When markets are down and interest rates are high, philanthropy can take a hit. Here are some ways that affluent consumers can make the most of their charitable giving.
By Karen Harding, CFA Published