If you’re reading this soon after a death, we’re sorry. You don’t need to understand everything here today.
Many people who lose a spouse were not the one who handled the money, and suddenly feel they must learn it all at once. You don’t. A few steps protect you in the first weeks. The rest can be done slowly, with help.
The first few weeks
- Order a good number of certified death certificates. You’ll need them for banks, insurers and agencies.
- Keep paying the mortgage or rent, utilities, insurance and credit cards so nothing lapses.
- Notify Social Security. The funeral home often does this, but confirm.
- Find the will, any trust, recent statements and insurance policies. A recent tax return lists most accounts.
- Call the life insurance companies to start claims.
- Don’t sign anything significant, sell anything major, or lend money until you’ve had time and advice.
Social Security survivor benefits
| What to know | |
|---|---|
| One-time payment | A $255 lump-sum death payment to an eligible surviving spouse |
| Earliest age | Reduced survivor benefits can start at 60, or 50 if you’re disabled |
| If you already receive benefits | You receive the higher of your own benefit or the survivor benefit, not both |
| A timing choice | You can often take one benefit first and switch to the other later, when it’s larger |
The order in which you claim can make a significant difference over a lifetime, especially if one of you had much higher earnings. It’s worth a careful look before you file.
Accounts and retirement money
As a surviving spouse, you have the most flexible inherited IRA options. You can roll your spouse’s IRA into your own, or keep it as an inherited IRA.
If you’re under 59½ and may need the money, keeping it as an inherited IRA lets you withdraw without the 10% penalty. You can roll it into your own later. This choice is easy to get wrong in a hurry.
- Joint accounts usually pass to you directly. Ask each bank how to retitle them.
- Accounts with you as the named beneficiary pass outside the will.
- Your spouse’s pension: check the survivor benefit, if one was elected, and what you need to file.
- Update your own beneficiaries, will and powers of attorney when you’re ready.
Taxes in the year of the death
- You can generally file a joint return for the year your spouse died.
- If you have a dependent child, you may be able to use the joint rates for two more years as a qualifying surviving spouse.
- Many inherited assets get a new tax basis at death. In New York, that usually applies to your spouse’s share of jointly owned property.
- If you sell your home within two years of the death, you can generally still exclude up to $500,000 of gain, if you otherwise qualify.
What can wait
Selling the house. Moving. Big gifts to children. Paying off the mortgage. Changing investment strategy.
These are often the right moves eventually, but they’re easier to regret than to undo. A common piece of advice is to avoid major, permanent decisions for six months to a year unless you must. Put the money somewhere safe and let yourself catch up.
How Morrowgate helps. Greg starts by listing what you have and what’s coming in each month, so you know you’re secure. Then, at your pace, he helps with the survivor benefits, the inherited accounts and the plan for what comes next, alongside your attorney and CPA. Accounts are held in your name at Fidelity, with Schwab available.
Questions people ask
How soon should I claim Social Security survivor benefits?
It depends on your age, your own benefit and your spouse’s. Starting early means a permanently reduced survivor benefit. Look at the options before filing.
Should I roll my spouse’s IRA into my own?
Often, eventually. If you’re under 59½ and might need the money, keeping it as an inherited IRA first can avoid early-withdrawal penalties.
Do I have to sell the house?
No. And there’s usually no rush. If you do sell within two years, you can generally still use the larger home-sale exclusion.
I never handled our finances. Where do I start?
With a list: what comes in each month, what goes out, and where the accounts are. Everything else builds from that.
Where this guidance stops
This article is general education on finances after the death of a spouse: how the rules and the options generally work.
It is not tax, legal or investment advice, and nothing here is a recommendation for your situation. Rules change and outcomes turn on the facts, which is why a CPA and an attorney look at a family’s own numbers before anything is done.
Sources
- Social Security Administration: Survivors benefits
- IRS: Retirement topics, beneficiary
- IRS Publication 523: Selling your home
- IRS Publication 501: Filing status (qualifying surviving spouse)