How to Stay Out of Debt After the Death of Your Spouse
The last thing you want or need to be worrying about after the passing of your spouse are finances and fielding calls from debt collectors.
Death in itself can be overwhelming and will only be exacerbated by the many tasks and arrangements you will need to take care of. Fortunately, there are steps you can take to minimize your financial stress during this time.
1. Ask For Help
Adjusting to a new normal after the death of a spouse is never easy and can be especially overwhelming when it comes to avoiding debt and figuring out a financial plan for the future. It is important to be sure you have a complete understanding of your current financial situation, consider talking to a lawyer, accountant, and/or financial advisor about how to move forward financially. This is particularly important if your spouse was the one primarily responsible for managing your household’s finances.
Try not to solely rely on professionals. Leaning on your friends and family members for emotional support during this time can help give you the strength to confront financial and legal matters.
Whether you followed a budget during your marriage or not is irrelevant, because it may need a complete overhaul after the passing of a spouse. This can be intimidating if you have never budgeted before or if your spouse was the one who primarily handled finances, but it is easier than you think! Your income to expense ratio may be drastically different after losing your spouse, so it may take a few months of figuring it out. If you are unsure of how to start or maintain a budget, consider some helpful books or tools to keep you on track and out of debt.
3. Don’t Make Any Rash Decisions
Emotions will be running high during this difficult time and it can be tempting to shake things up too soon. Don’t make any big financial decisions like selling your house, quitting your job to travel, or paying off your mortgage without carefully considering how it could impact you in the longer run. Often these decisions can seem like a good idea, but may lead you to unmanageable debt in the future.
Your judgment may be clouded by emotion from the death of your spouse and you may not yet have a complete understanding of your financial situation, so allow some time for the dust to settle before making any big decisions. This is especially true if you end up receiving a large sum of money – whether an inheritance or insurance payout. Don’t rush out to spend it all at once; keep it untouched in your bank account for 3-4 months until you’ve had time to talk to a financial planner about how to best allocate how the money will be used.
4. Settle Their Estate
It is important to note that debts don’t die when someone dies, but heirs or family generally aren’t responsible for paying back those debts out of their own pockets. When someone dies, their assets and liabilities become known as their estate. The estate will have someone, known as the executor (as designated in their will), who is legally appointed to handle all financial matters of the deceased. If you are not in charge of the estate, but are receiving calls from debt collectors, be sure to direct them to the executor. If you are the executor (which is often the case for a spouse), arrange to meet you’re your attorney to begin dealing with the estate and for guidance on what tasks need to be completed like notifying Social Security and filing insurance claims forms.
Dealing with debt and the stress of major financial decisions following the death of a spouse will only make a tough time even more stressful. By implementing these steps, you can begin to take control of your financial situation, which is an important step in moving forward and beginning the healing process. The most important thing to remember is that you are not alone and that there are people and resources to help you through the financial headaches that come with the death of a spouse.