Death Of A Spouse

The death of a spouse is devastating. Accompanying financial losses can compound the devastation.

If your spouse managed the majority of the financial responsibilities, even just paying bills can seem overwhelming. But you can work your way through it. It is manageable.

Try not to make any long-term decisions right away. Take your time. Emotional upheaval does not leave you in the best frame of mind for solid decision-making.

Paperwork

Gathering the proper paperwork is the first step in settling your spouse's affairs. Start with the following:

Many of the documents you need may be held in a safe deposit box. If you can open this safe deposit box before your spouse's death, take out all the contents of the box. In some cases, safe deposit boxes are sealed after a death, even if the box is registered in both your names. If your spouse has already died and the box is sealed, consult your attorney about getting court permission to access the box.

Get Your Finances In Order

If you receive a life-insurance benefit, save that money. Put it in an interest-bearing account, but keep it liquid. You may need it.

Make sure you have dental and drug benefits. If your coverage was courtesy of your spouse's company, inquire to see if you're still covered and for how long. If you're not, you might look into private coverage.

Use the paperwork you gathered to claim the following:

Taxes

This is just a brief introduction to some of the tax issues facing you. Taxes can be quite complicated and you should consult a professional tax advisor for more help.

You must file a final income tax return for your deceased spouse. In general, what happens is that your spouse's capital assets -- things like land other than a principal residence, stocks, bonds and the like -- are "deemed" to have been sold at fair market value on the date of death. Any resulting capital gains must be included in the deceased's income for tax purposes for the year of death. Those gains are added to the income (salary, etc.) received by the deceased person prior to her death during the tax year. The amount of tax payable can therefore be quite substantial and the rules for calculating the gains (and any losses) and figuring out the tax are very complicated. That is why you are well advised to obtain professional assistance.

Some Smaller Details

Review your will and make adjustments to reflect your new situation. You'll probably need to change the name of your beneficiary and you may need to decide on a new executor. Change bank accounts, credit cards, deeds and jointly held property into your name alone.

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