The death of a loved one is a reality that affects thousands of people each year. As cold as it may sound, one question that everyone who shares income with another person should ask is what will happen to your income after a loved one passes? Having helped individuals sort out their financial positions after the death of a loved one, I have found that the unfortunate reality of the financial situation more often than not comes to light when it is too late. Many individuals that have lost a loved one have seen their incomes drop by 50 to 70 percent or more. When you lose a loved one, you not only have to face the emotional loss and morning and grief process, but also a period of time when handling your finances correctly and making smart money decisions is critical to you and your family. There are steps that you and your loved one can take now to take charge of your financial situation and be prepared.
Things You Will Need
Solid financial advice
There are a number of questions that you should determine the answers to. Will you still get your loved one's pension and if so will it be reduce and by how much? If there are health benefits will they continue and for how long? Where the investments are? What are the monthly and other expenses that will continue? These are just samples of the type of questions that should be asked and answers determined.
Prepare a loose leaf notebook that includes a copy of each others wills including living wills, bank and other investment account numbers, insurance policies, contact information and any other pertinent financial information. The notebook format allows for easy updating on a regular basis as things change.
Evaluate your short term situation to see how much cash you have available and compare it to how much you owe on things like your mortgage or rent, credit cards, other monthly expenses, and car and other loans. This process should be repeated periodically. Purchase sufficient life insurance to cover these plus additional living and funeral expenses.
Be prepared to take immediate steps to reduce spending should the unthinkable happen. With less money coming in, take steps to reduce your household expenses. Review the items that you are spending money on each month and look for ways to reduce them. Examples are if you eat out several times during the week, cook and eat at home more. If you go to movies, rent them. If you have premium cable channels, take basic cable. If you mostly use your cell phone and rarely use a house phone, disconnect it. There are a number of things that can be completely eliminated and others that can be reduced to save money.
Take advantage of any resources available to you. Most local communities have organizations that provide support both individually and in group settings to assist those that experience the loss of a loved one.
The death of a loved one is a reality that people need to be prepared for. There are steps that you and your loved one can take now to take charge of your financial situation and be prepared.
Tips & Warnings
Life insurance proceeds pass to the beneficiary tax free.
Investigate prepaid funeral plans.
Wills should include burial/cremation wishes.