I’m usually not a big proponent of procrastination. The longer one takes to act, the more difficult the decision usually becomes.
Unless you’ve just lost a spouse or significant other.
When that happens, there are many fears and concerns. Will there be enough income to pay all the bills? Should I put the house on the market? What about our health insurance or supplemental Medicare plan? Do I change financial advisors?
After the death of a loved one, it seems that the world becomes unhinged. Normal routines are no more. After the flurry of the funeral with family and friends surrounding you is over, meals are often spent alone, meaning that there is too much time to dwell on all of the fears and insecurities that arise. On top of that, it’s difficult if not impossible to think clearly through the mourning and grief.
So what I’m advising is to not make major decisions during this emotional and difficult period – unless you absolutely have to.
Don’t put the home on the market.
Don’t change financial, legal and tax advisors.
Don’t sell all the investments and go to cash.
Don’t buy that new car that you’ve been eyeing.
This is not to say that you should put everything on hold. There will be tasks that you have to complete within a time frame. If your spouse’s will or trust has to be probated or administered, visit with your attorney and get that going. Waiting too long could result in adverse legal or tax consequences, for example. Provided that you have confidence in your attorney, let him or her guide you through the process.
Let your attorney help you make death claims such as life insurance, annuities, VA or other government benefits. Make sure that the checks are deposited in the correct accounts if you or your spouse created a revocable trust. If a federal estate tax return is going to be due, make sure that you ask for a Form 712 from the insurance company when they pay the claim, as your CPA will need that.
Don’t rush to transfer joint accounts into individual name, either. Sometimes checks will arrive made out to the deceased. If a joint account isn’t still open, the only way to deposit that check may be to open a probate, which is time consuming and expensive. If a probate is not otherwise necessary, (the usual case when the deceased owns a fully funded revocable trust, for example) then it is important to have a place to deposit the rogue checks made payable to the deceased that may come in over the next few months.
Provided that you are over 59½ let your financial advisor help rollover any 401(k) or IRA accounts. If you are under 59½ and if you were relying on IRA distributions that your spouse was taking prior to his or her death, don’t roll over the account right away. If someone under 59½ rolls over the IRA account into his or her own name, then he or she generally can’t take distributions before that age without incurring an excise tax penalty.
Certainly if financial realities require a change in spending habits or force the sale of certain assets, you can’t wait too long to make certain financial decisions. Here you may lean on your CPA and financial advisor to create budgets and to lay out a prudent plan to keep you living in reasonable comfort.
Aside from those situations, nearly everything else can wait. The advice of most mental health professionals is to wait a year before making any major decisions. That amount of time allows one to process the grief and loss of a loved one, and return to a state where logic and careful thought are more likely to govern your actions.
While family and friends may have the best of intentions, try to take their advice with a grain of salt. Even if something works for them, it may not work for you as everyone’s individual circumstances is different. Surround yourself with an excellent team of professionals and rely on them.
It’s always tragic when we lose a loved one. Try not to compound the tragedy by making difficult decisions on your own and too early.