Love and Loss: How Death of a Spouse Can Affect Your Finances

death of a spouse

When you take your marriage vows, you make a commitment of “till death do us part.” Yet, when you’re young and in love, you might think that day is decades away and something you can push into the back of your mind.

Unfortunately, death can come at the most unexpected of times — not just when you’re old. And dealing with the death of a spouse can have a major impact not only on your life but also your finances.

Here’s one woman’s story about becoming a young widow, and how you can prepare financially for the death of a spouse.

Emily and Frank’s story

I met Emily Liedel, a freelance writer, and Frank Omier, an artist in Portland shortly after I moved there. We all bonded over our love of traveling, the Spanish language, and our passion for art.

A few years ago, I attended their wedding and celebrated their union. Then, about one year ago, I heard the heart-breaking news from Emily. Frank had passed away after a seven-month battle with lymphoma at the age of 43.

As if the death of a spouse wasn’t hard enough to deal with, Emily was now on her own to support their two-month-old child.

At 32, Emily was a widow. And as you can imagine, the emotional toll was all-encompassing. But there was a financial impact, too.

Handling finances after the death of a spouse

Unfortunately, the death of a spouse can mean a loss of income, support, and much more.

“Most couples share financial responsibilities in some way,” says Liedel. “If your spouse contributes half of your rent/mortgage, your car payment/insurance, your utilities, childcare, etc., [then] he or she dies, you will lose that support.”

“[You’ll] either have to pay double your previous expenses or change your lifestyle dramatically,” Liedel adds.

Aside from the immediate financial implications of the death of a spouse, there’s also the toll it takes on the spouse that is left behind.

Grief is a big part of losing a spouse, which can have a ripple effect on other areas of your life. After all, the death of a spouse is the number one stressor in the Holmes-Rahe stress scale.

“I’d compare the grief of losing Frank to a temporary mental illness,” says Liedel. “I was unable to work for many months after his death. I flaked on some work I had previously lined up because I couldn’t focus on it. This is common among people I’ve spoken to.”

“Losing a spouse probably means at least a 3-month period of not working at all,” Liedel explains.

If you have children, the burden can be even worse. Going from a two-parent household to a one-person household is tough — and costly.

“If you have kids, the difference between having to pay for every minute of time you don’t spend with your kid(s) versus sharing childcare duties with a spouse is enormous,” says Liedel.

All in all, the death of a spouse is more than just an emotional loss. It’s a financial one, too. While there are some things you simply cannot prepare for, there are some steps you can take to lessen the financial burden of losing a spouse.

How to prepare (financially) for the death of a spouse

When you’re in love and happy in your relationship, talking about death can seem rather morbid.

However, it’s imperative to talk about what might happen after the death of a spouse. Consider the following:

  • How would it impact your financial life?
  • What are your final wishes?
  • How would assets be divided up?
  • What are important passwords to financial accounts that you should know?
  • Where is important paperwork held?
  • What medical care would you like to receive, if you were suddenly incapacitated?

You should talk about all of these matters so that if something were to happen suddenly, you know how to proceed. And you aren’t left with any other surprises.

On top of discussing these matters, you’ll want to create a will and get all of this information in writing. You should start by creating at least two different types of wills.

  1. A simple will, which illustrates how you would like your assets to divided up and names who will be the executor of your estate.
  2. A living will, which sets up instructions for medical treatment in the event you become mentally or physically incapacitated.

Additionally, you may want to get a life insurance policy. Especially if you have kids, are the primary income earner, or have debt.

A life insurance policy provides death benefits for spouses in the form of financial assistance to make up for the loss of income after a loved one passes away.

“Life insurance makes all the financial stuff easier,” notes Liedel. “Money doesn’t bring back your dead spouse, but it will make a lot of things easier and help you rebuild your life in a healthy, non-desperate way.”

Dealing with the death of a spouse could mean losing half of your income, taking on debt by yourself, and having to deal with burial costs. Funeral arrangements alone could cost between $7,000 to $10,000.

And if you’re unable to work for a few months, the financial support with life insurance could keep you afloat.

There are death benefits for spouses available through the Social Security Administration as well. For instance, there is a lump sum payment of $255 a surviving spouse or child may receive if they meet certain requirements.

There’s also a survivor benefit amount you could receive. The actual amount of money does depend on some factors, including the earnings of the person who died and how much they paid into Social Security.

While Social Security death benefits for spouses can help, they likely won’t cover all of your expenses.

That’s why it’s best to calculate how much assistance you might need should your spouse pass away. Then, purchase a life insurance policy that would cover your expenses as well as any final arrangements.

Final thoughts

The death of a spouse is one of the most painful and stressful experiences one can go through. Yet, dealing with the financial implications of losing your loved ones can make matters even worse.

We all want to think we’re young and invincible and that love will prevail. However, sometimes life has other plans.

In this case, being financially prepared can make a world of difference, allowing you to grieve and process. Without the additional stress that comes with worrying about money.

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