Taking the Helm After a Spouse's Death
The loss of a spouse can leave the survivor in not only emotional, but also financial turmoil. However, there are important steps you should take following your spouse's death to help secure yours and your heirs' future.
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Ann Lockhart was 45 years old when her investment banker husband died. Almost immediately, she got a huge lump-sum payment from the insurance company. "It just appeared on the porch," said Ann. Not knowing exactly what to do with the money, Ann decided to spend a portion of it on her Fairfield, Conn., house, even though she knew she wasn't going to stay there forever. The house was hers, though she was still making mortgage payments. She put hardwood floors in the living room and boosted the resale value of her home.
She did less well with her late husband's 401(k), which came in the form of stock in his bank. The stock had been turning in a mediocre performance, but for sentimental reasons, Ann wanted to pass on the stock to his daughters. She lost it all when the bank folded, leaving her holding worthless certificates. "I was passive about it," she says. "My vision was too short-term." She sold almost none of her late-husband's assets and avoided paying capital gains taxes.
One thing she doesn't regret is the way she handled the bizarre $225 check for "burial expenses" that arrived from the Social Security Administration. Ann went out and bought a new set of golf clubs for herself with the money. "Bruce would have approved of that."
ThirdAge Money Insider Jeff Fleming Advises:
 What to Do Immediately Following a Spouse's Death
How to Avoid Financial Turmoil After Your Spouse Dies
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