Death of a Spouse – 10 mistakes to avoid


Over the years, I have helped countless survivors wrestle with important financial decisions in the wake of their spouse’s death. Some questions include; should I pay off the home loan, what lifestyle can I afford, can I retire, or do I need a new will?  



It’s hard enough to figure out where to locate the car keys let alone make big, financial decisions. This barrage of questioning can be all consuming when you are grieving. 

Here are 10 common financial mistakes in the aftermath of loss and my advice to survivors:

1. Making Investment decisions too quickly. 

Advice: Making a decision too quickly on investments that are now owned by you can work against you. Immediately cashing in monies can be a costly mistake. Factors such as the current market, conditions of the economy, and specific tax implications should be analyzed by a professional. 

2. Failing to File Tax Returns in a timely matter. 

Advice: Even when no estate tax is due on the Federal or state level, such filings on SOME title transfers are important.  This establishes the new tax cost basis should it be sold at a later date.

3.  Review Beneficiary Names. 

Advice: Be sure to change the names on retirement accounts or life insurance to a living beneficiary.

4. Separating assets, liabilities and expenses. 

Advice: Have your professional spell out the process for you. It is prudent to understand what is available and still pending in the settling of the estate. In addition, an additional tax entity may need to be set up to help you with tax savings.

5. Not determining Fair Market Value of Assets.

Advice: Determine the value of each account at the date of death. If you inherit money, this establishes the new cost basis for the future.  

6. Failing to disclaim part of the Inheritance.  

Advice: If you qualify*, disclaim the assets that you inherit to avoid the possibility of paying hefty estate taxes. If your spouse who passed has a will that does not take advantage of the exemption you receive on an estate you can place these inherited assets back into your spouses estate. Seek legal council for specific advice. *For example an estate will not be taxed on the Federal level a long as the total estate value is below $5 million.  In the state of Minnesota, you can pass up to $1 million without estate tax due.  

7. Not knowing about all the assets and life insurance policies.  

Advice: Carefully search all records and leave nothing unturned.  Old policies, retirement plans etc… can be found after-the-fact more frequently than you think. A “Details” list and other helpful tips can be found here. 

8. Investing your Inheritance.  

Advice: Wait! First things first; it is important to understand your risk to the market and economy, but also an understanding how to balance this out for future income later in life. A trusted planner will lay this out for you before you ever take the first step. If you’re feeling pressured to invest…my advice is to wait until you feel like a good plan has been tailored to your unique situation. 

9. Failure to take advantage of Tax-deferral.  

Advice: Open a Spousal IRA and transfer your spouse’s IRA accounts, 401(k)’s, 403(b)’s, SEP’s so that you avoid paying income tax. However if you must take a distribution from any of these retirement accounts, ordinary income tax is due in the year it is taken!

10. Failing to contact the Social Security Administration.  

Advice: Immediately contact the SSA if the spouse who passed was retired. If so, you, the surviving spouse are entitled to the decendent’s higher social security benefit.  

As always, it is important to have a professional you trust that can bring together bankers, insurance specialists, and attorneys. This will be advantageous in making sure your interests are taken care of first and foremost.

Have a question? Need to speak with a professional planner and advisor? I’d love to help. Email me today at