Coping with your finances after your spouse passes away

The challenges and distress arising after your spouse passes away can easily leave you feeling overwhelmed and vulnerable, but it’s important to take practical steps to protect your finances.

The death of a spouse is an incredibly difficult time in anybody’s life, affecting you emotionally and potentially leaving you feeling vulnerable. But there are also financial implications to deal with and consider at a time when you might be mentally unequipped to make sound decisions.

The first thing to note is there is no expectation, from a bank, government department or otherwise, to deal with anything financial immediately. Even if the death of your partner was somewhat expected, everybody needs time to digest the impact of this life-changing event.

Once the initial shock has passed, there are some financial matters you should deal with quite quickly and others that can wait until you feel ready to think more about your financial future.

In the first camp are any bills, policies or accounts in your late partner’s sole name that might expose you to late payment fees, debt collection or a lack of insurance coverage. Banks will typically freeze accounts upon learning of a death while most insurance policies terminate on the death of the main policyholder. This would leave you unprotected should anything happen.

Informing the relevant companies of your partner’s death and changing payment and policy details should be a priority task. Meanwhile, when it comes to informing government departments and agencies of your partner’s death, the Tell Us Once Service makes it easier in England and Wales by letting you tell several authorities at once, including HMRC and DWP.  The government have some helpful guidance about what to do when someone dies - What to do when someone dies: step by step - GOV.UK (www.gov.uk) and some charities can offer bereavement support - www.cruse.org.uk.

Pause for breath

The other important step to initiate once you are in receipt of your partner’s death certificate is getting a grant of probate. Assuming a will was in place, it’s a simple process but can take several months to complete so the sooner you apply the better. If there’s not a will in place the process will be much longer and more expensive, just one reason why a will is so important.

There are a small number of instances where you might not need probate or letters of administration to deal with an estate, but your financial adviser or solicitor will advise if this is the case.

“Beyond applying for probate, there’s no need to rush into anything or launch into finance mode until a number of weeks have passed,” says Mark Rodgers, Independent Financial Adviser at Ascot Lloyd. “A client who has just lost a partner, what they really want is little more than reassurance. Something phenomenally major has happened in their life so by definition that person is now vulnerable. By and large people just want to know that everything will be ok.

“If there is anything pressing to deal with in regards to the will, or perhaps inheritance, we can offer to speak to your solicitor and handle matters professional to professional. At a difficult time, it can be a large help to someone grieving to take such administrative matters off their hands.”

Confronting the change

Weeks or perhaps even months down the line when you feel mentally ready to confront the financial implications of the death and the practical steps you now need to take, your financial adviser will look to arrange a meeting. Armed with all the facts, they will delicately propose certain adjustments that need to be made for you to financially cope with the change.

As part of this process, your financial adviser will look at what you’ve got both in terms of assets – savings, investments, pensions, property etc. – as well as liabilities such as mortgages and other debts, and the overall financial impact of your partner’s death. Frequently the key changes tend to revolve around income, particularly if your spouse died earlier than expected, leaving you feeling uncertain about how their lost income affects your previously crafted financial plans.

“Essentially, we almost start again with assessing your finances, going through the advice process afresh because we know there has been a significant circumstance change,” says Rodgers. “How can you use your assets to support your lifestyle as it is moving forward, as opposed to what it was? What are the impacts and what recommendations can we make to counter any of the negatives?”

Your adviser will take it subject by subject. For instance, the Additional Permitted Subscription (APS) allowance allows you to make contributions up to the value of your spouse's ISA holding upon death. If your deceased spouse has a pot of money in an ISA, that could be reregistered into your ISA subject to the provisions of the will but there is a generous allowance of time to do this. The pension might need to be moved into a nominees drawdown or if the deceased had a defined benefit arrangement, the pension is likely to reduce significantly, often by half. Are there any tax implications to consider?

“Hopefully by the end of that meeting, or a couple of meetings if required, we've been able to navigate that process of change and put you on a positive path forwards,” Rodgers adds. “Ultimately the objective for us as advisors is to be able to say, having made these changes, financially speaking you are now secure. If necessary, and as might often be the case if a spouse's partner has passed away, we will have an interim six month review, rather than the usual annual review, just to make certain that any recommendations we made are bedding in.”

Arm around your shoulder

While many of the tasks required to cope with your finances after your spouse dies are largely administrative and not particularly difficult to navigate, the sheer volume of things to think about when you are already grieving and having to make other arrangements can be overwhelming. Pushing these tasks away for a prolonged period can negatively affect your financial future.

An independent financial adviser will not only guide and support you through the changes that need to be made, breaking it all down into more manageable bite-sized chunks, but also provide something which to many people is the thing they need most after a spouse dies: reassurance.

“It’s a very emotive time so one of the most important things we can offer as financial advisers is that metaphorical arm around the shoulder to help you through the inevitable change and provide reassurance that it's all going to be fine,” says Rodgers. “Just having a simple conversation with an empathetic adviser, knowing everything’s in hand financially, can release a lot of burden and stress from your shoulders during this emotionally vulnerable time in your life.”