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:
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Final Thoughts
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.
-
Trade Uncertainty Sparks Whipsaw Session: Stock Market TodayVolatility is making a cameo here in mid-October, a generally positive month marked by its historic stock market events.
-
How to Add Your Passport to Google WalletTravelers can now store and use their digital passport on Android for faster, more secure airport experiences.
-
Medicare Open Enrollment: Why You Need to Pay Extra Attention to Part D, From a Financial AdviserThe lowest premium for prescription drug coverage might not actually save you the most money. Make sure you take copays into consideration and do the math.
-
How the One Big Beautiful Bill Will Change Charitable GivingTaxpayers who don't itemize will be able to take a bigger deduction for donations, which could boost giving. However, high-income donors could see their tax benefits reduced.
-
A 'Fast, Fair and Friendly' Fail: Farmers Irks Customers With Its Handling of a Data BreachFarmers Insurance is facing negative attention and lawsuits because of a three-month delay in notifying 1.1 million policyholders about a data breach. Here's what you can do if you're affected.
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth AdviserTo help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs InMany employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
-
Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very LikelyConventional wisdom dictates that you save in a 401(k) now and pay taxes later, but turning that rule on its head could leave you far better off. A financial planner explains why.
-
More Retirees Are Renting: Should You? A Financial Adviser Weighs InIn some ways, renting is cheaper, more flexible and easier, but unless you understand the implications for your taxes and health costs, it might not be for you.
-
I'm an Insurance Pro: Everyone Needs to Prepare for Earthquakes, Even if You Don't Live Near a Fault LineHere are my tips for what to do before, during and after an earthquake. The more prepared you are, the more you'll be able to keep your wits about you if it happens.
