Episode 75: Navigating Financial Decisions After Losing a Spouse
In episode 75 of Accessible Finance, we address a heartfelt listener question from someone newly widowed and overwhelmed by financial decisions. The discussion emphasizes the emotional and practical challenges of this difficult situation. Key points include taking time to grieve, organizing financial documents, securing income sources, and protecting against scammers. We also highlight the importance of consulting a trusted financial professional, understanding tax implications, and adjusting beneficiary designations. We stress the significance of social interactions for mental well-being and the need to have a support system during this taxing time. Tune in to get essential advice and reassurance to navigate through this challenging period.
Read the Transcript
Podcast Episode: Navigating Financial Decisions After Losing a Spouse
Rachael:
"Welcome back to Accessible Finance. Today’s topic is one that’s incredibly emotional but also critically important:
‘I am newly widowed and feel overwhelmed with financial decisions. Where should I start?’
Eric, this is such a difficult situation. Losing a spouse is already devastating, and then suddenly, there are all these financial decisions to make—often without much guidance. Where should someone in this position even begin?"
Eric:
"Rachael, first, I just want to acknowledge how hard this is. Losing a spouse is one of the most difficult life transitions, and dealing with finances on top of grief can feel completely overwhelming.
The good news is, you don’t have to figure everything out at once. The key is to focus on what’s most urgent first and tackle things in stages."
Rachael:
"That’s such an important reminder. So, what’s step one for someone who has just lost their spouse?"
Eric:
"The first step is to press pause on big decisions. You don’t need to rush into major financial moves right away—things like selling a house, moving, or making large investments can wait.
Instead, focus on these immediate priorities:
✅ Get organized: Gather important documents like the will, death certificate (you’ll need multiple copies), financial account statements, and insurance policies.
✅ Secure income sources: If your spouse had Social Security, a pension, or life insurance, contact the appropriate institutions to start the claims process.
✅ Cover the essentials: Make sure you have enough money in checking and savings to cover the next few months of expenses while you sort things out."
Rachael:
"That makes so much sense—just focusing on stability first instead of trying to tackle everything at once. But after those first steps, what comes next?"
Eric:
"Once you’ve addressed the immediate needs, you can start thinking about the bigger financial picture. Here’s what I’d recommend:
✅ Meet with a trusted financial professional: A good financial planner can help you sort through accounts, investments, and taxes in a way that protects your long-term interests.
✅ Understand your new tax situation: A surviving spouse often moves into a single tax bracket the year after their spouse passes, which can impact required distributions and tax rates.
✅ Update beneficiary designations: Make sure your accounts—401(k)s, IRAs, life insurance—are updated to reflect your new circumstances.
✅ Review your budget and cash flow: Your income and expenses may have changed, so it’s important to adjust your spending and savings plan accordingly."
Rachael:
"Those are all great action steps. But I imagine there are a lot of emotional decisions wrapped up in this, too. What advice do you have for someone who’s feeling overwhelmed by all of this?"
Eric:
"That’s a great point, Rachael. The biggest piece of advice is: you don’t have to do this alone.
Surround yourself with support—family, friends, a financial advisor, even a grief counselor. The key is to take things one step at a time and not feel pressured to have all the answers immediately.
And most importantly—give yourself grace. It’s okay to take a break when things feel too heavy."
Rachael:
"That’s such an important reminder. Do you have a story of someone who faced this situation and found a way forward?"
Eric:
"I do. We worked with a client, Linda, who lost her husband more rapidly than expected. She was overwhelmed and unsure what to do.
✅ We focused on essentials first—securing life insurance proceeds and making sure her bills were covered.
✅ She worked with us to create a step-by-step plan so she didn’t have to make big decisions all at once.
✅ She waited before making major changes, like selling her home, until she felt emotionally ready.
✅ Over time, she found financial confidence, adjusted to her new reality, and even started traveling—something she and her husband had always dreamed of.
It wasn’t easy, but by taking it step by step, she was able to move forward at her own pace."
Rachael:
"I love hearing stories like that. It’s proof that even in the hardest moments, there’s a way forward.
So, Eric, for someone newly widowed and overwhelmed, what’s the big takeaway?"
Eric:
"The key takeaway is:
🔹 Don’t rush major financial decisions—focus on stability first.
🔹 Get organized and secure income sources before worrying about investments or estate planning.
🔹 Work with professionals and lean on your support system—you don’t have to do this alone.
Small steps now will set you up for long-term financial confidence."
Rachael:
"That’s such great advice, Eric.
Listeners, if you or someone you know is going through this, we hope today’s episode provided some clarity and reassurance. And if you have questions or personal stories to share, we’d love to hear from you.
Thanks for tuning in to Accessible Finance. We’ll see you next time!"
ACTUAL TRANSCRIPT
📍 Welcome to episode 75 of Accessible Finance. Let's dive in.
Rachael
All right, so Eric, we actually got a listener question. Um, it is very, very broad, so there's a lot to talk about here. Um, okay. So I'm newly widowed and feel so overwhelmed with financial decisions. Ouch. Where should I start? So today's topic is one that is incredibly emotional, but incredibly important.
Um, it's such a difficult situation. Losing a spouse is already so devastating and now there's all these financial decisions, all of this information that's kind of happened and oftentimes you. Don't have very much guidance. Or you might, on the flip side, depending upon how large your state is, find yourself with far too much guidance.
Um, so where should someone in that position even begin?
Eric
So first, let's acknowledge that this situation is impossibly difficult. It's gonna be terrible. Um, the last thing you're gonna wanna care about is saving on taxes right now. Um, but it's true. You know, decisions have to be made. You have to kind of find a way and try to push forward one step at a time.
So it's brutal. Um,
Rachael
I think that's a hugely important reminder though, is that it doesn't all have to happen immediately.
Eric
Correct.
Rachael
Um, chunking things, breaking things down into steps, um, is so very important. So for someone who's just lost their spouse, like, what would you say step one should really be?
Eric
Pause, um, pause. Big decisions. Don't feel like you need to do anything immediately, right? Like, just take inventory, whether that's a couple days, couple weeks, figure out, you know, where you are, where you wanna be, what you have. Like essentially account for all of your things. Oops, playing with a pen. Sorry.
That's just how it is always. Um, but yeah, get organized. Um, secure your income sources, right? So if you have life insurance policies, you're gonna just file, uh, on the decedent file paperwork for that. Um, make sure the beneficiary transfers start to, you know, happen as soon as you've obtained death certificates.
Always get a ton of those, especially if you have a large estate. You're always gonna need more than you think you will. Way more.
Um, so make sure you have a ton of copies of the death certificate and start interacting with the institutions that you're aware of for accounts. So like compile statements is what kind of what we mean when we say get organized.
Rachael
Yeah.
Eric
Compile statements, compile insurance policies.
Rachael
Yep.
Eric
Everything you can get your hands on. Try to make sure that you've got a, a complete idea of what the estate entails. Yeah. And all the organize it. Yeah. All the current assets. All the current accounts.
Rachael
That's a really, really good point. Um, and I do think that, um, you know, we've seen, um, kind of predatory behavior happen. From bad actors on people who are in emotionally vulnerable states. So
Eric
it's unfortunate 'cause the scammers and, you know, phishing attempts are typically targeted at elderly individuals. Yep. And then they're the most likely to be in this spot where you've lost your spouse. And then another thing that, that does tend to be, I don't know, the reality of our culture that we live in, typically the males are gonna go first.
And typically for what, for better or worse? I mean, this isn't always true, but a lot of the time it's frequently true, at least for, you know, the generation that we'll be passing. Now, the males are typically the ones that handled the finances.
Rachael
Correct. I will say, you know, in the majority of cases that, um, we have worked with either directly or tangentially, um, it has been the female that has been the, uh, widow and.
Um, there are varying levels that we've seen of, you know, comfort and competency with where their finances were.
Eric
Mm-hmm.
Rachael
Um, but also sometimes you know everything, but you don't necessarily know where all the passwords are kept and, and all of that. There's so many details that you don't think about. I mean, even like, I reflect a lot, you know.
With everything we've been going through, I think it's, it's hard for us not to reflect often on, um, you know, what life would be like if I was to pass away, um, you know, early or vice versa. And so I do think about that and despite being,
Eric
I don't think about that, that's terrible.
Rachael
Yes, you do.
Eric
No.
Rachael
Um, but despite being what I would say like. Fairly well versed in, you know, the financial landscape, um, generally speaking, and then also our personal financials. Um. There's still so much, um, uncertainty and, and yeah, like dread that comes with, oh my gosh. Like if I needed to get into this account, um, I don't know if I would be able to, like, I would need your phone for the two factor authenticator, like there's so many little. Steps that are there that they're intended to protect you. Um, but that really make it, yeah, they can become incredibly difficult.
Eric
Yeah. They can become hurdles,
Rachael
yes. To access things and then you have to reset passwords and then you're resetting them at a time where you don't know what you reset to what, and you have to reset them again.
It can be so overwhelming. So give yourself permission and grace to just take care of your emotional. State first. Mm-hmm. Um, so that's a really, really good point. And there's no need to ru, there should be no major financial situation or move that needs to happen right away. Mm-hmm. Um, and so you may have somebody coming and trying to pressure you into selling your house or invest with their firm or whatever the case might be.
You don't have to.
Eric
Yeah. So once you've addressed the immediate needs. You can start thinking about the bigger financial picture because it is important. There are a significant amount of decisions that can be made. Mm-hmm. Particularly when you've lost your spouse because you're about to go from married filing jointly to single, which means your tax consequence, your tax liability is gonna increase substantially, significantly because the brackets are gonna be cut in half.
it's, it's not something you want to think about, it's not something you want to do, but you really want to make a lot of the moves quickly. Also, you will receive a step up in basis. Upon the death of the spouse, particularly from if you're in Louisiana. Yeah. The, it's a community property state.
What that means is if I have stock that, you know, maybe we bought stock together and it's in a brokerage account, it's in a taxable account.
Rachael
Mm-hmm.
Eric
And I bought it for $10, but now it's worth a hundred dollars. Okay. Maybe I don't love the position, but I didn't, I wasn't super excited about paying $90 of capital gains per share.
Yeah. So may it, it's, it's a great time to rebalance. With impunity, you're not gonna have that tax liability. 'cause what happens is if there's a death of a spouse, you get a full step up in basis. Now, my $10 basis in this a hundred dollars market value share goes up to the market value, no doubt, on the date of my spouse's death.
So it's gonna go up to a hundred, and then I could, you know, shift positions if I, if I wanted to.
Rachael
Yeah,
Eric
right. So unfortunately it's not, it's again, terrible time. Probably the worst time of your life and. Um, there's, there are a lot of planning opportunities that exist that would bring me to my next point, which is, I guess you could call it a shameless plug, meet with a trusted financial professional.
Bri, look, I'll say the, I'll say a couple things, right? Because I've said on this podcast before I. I don't trust a lot of financial professionals. I would bring people that you trust yes. To the meeting percent. Don't go alone, especially not in a vulnerable state when you're, and, and even more, especially if you're not used to handling financial things, if you think they're gonna talk over your head and you're just gonna have to, you know, wheel and deal with the first charlatan that you interact with.
No, don't do that. That's great.
Rachael
That's really advice.
Eric
Bring people that you care about and you believe care about you. Mm-hmm. And have your best interest at heart. Mm-hmm. Bring them to the meeting.
Rachael
Yeah.
Eric
Because if a financial professional can't speak to you, honestly, and in front of third parties, then they're not your guy or gal.
Rachael
Yes. And they should be very welcoming of that as well.
Eric
Agreed. If, if no, I would, I would ask people to do it.
Rachael
We have asked people to do that. Mm-hmm. And I think that a, somebody who truly has your best interest at heart. Right. It's not to say that a financial planner who's working with you is not getting something beneficial out of it.
Sure. Right. They certainly should be. But you know, we are certainly in the business and we tell our clients we wanna work with people who wanna work with us.
Eric
Right.
Rachael
And it's a very, very positive relationship that we like to maintain with our clients. Mm-hmm.
If something devastating was to happen in any of their lives, we would welcome, And encourage them to come and see us if for nothing else, just to talk through everything that's kind of going through their heads.
Eric
Right?
Rachael
Um, and we absolutely would recommend that they bring anybody else. And in all honesty, when you're going through something, you know, speaking quite candidly, when you're going through something that is um, hard, that is devastating.
Um. It's nearly impossible to remember what happened in that conversation when you leave.
Eric
Right?
Rachael
So having somebody else there to help guide the conversation if needed, to help ask the questions that you've talked about with them, that you're gonna forget to ask. Mm-hmm. And then to help remember and recount the answers when you have left and you realize that like you're kind of a weird bystander of your life right now.
Right. Um. There will be times where you feel like you're just kind of like watching everything happen. Absolutely. Bring somebody trusted. That is excellent.
Eric
And then you and or your friend that's coming with you can listen to episode 71 where we talk about which questions you might wanna ask.
Rachael
Excellent. That's true. Very like legitimate shameless plug though here.
Eric
Yeah.
Rachael
Um, that episode was huge and received and so important. Received well. And it's one that um, you know, we ourselves. Have experienced, right? Like we have seen and worked with
Eric
Yep.
Rachael
Financial planners, um, who aren't actually financial planners.
They don't plan anything. But we also, there are. So many things that can go wrong, um, that it is really, really important that you feel very empowered to control the things so that things can go right. Um, so yes, uh, episode 71 does have some really, really great questions as you're going in.
Eric
So a couple of things as you get your bearings right.
We said, meet with a trusted, um, financial prof or meet with a financial professional with someone you trust. Yes. Preferably. Okay. You're gonna have a new tax situation. Mm-hmm. Right? Like when you have these, these, you know, unfortunate spouse, spouse to, um, unfortunately passes away, you're in a spot where next year, um, it's things are gonna change.
So small time window. So let's articulate real quickly what we're talking about, the Mary finally jointly bracket that you're currently enjoying. You won't anymore. Right? You're gonna be catapulted to single that year. Mm-hmm. But however, for the remainder of the year that your spouse like dies. If my spouse dies January one in 2025, then for 2025, I'm married, finally jointly.
Yeah. Does that make sense? So. Um, we're good to go for that year and therefore there are significant planning opportunities there. You have a much larger tax bracket than you will in the future,
Rachael
and you can't retroactively take advantage of those either. So it's very important, right, that you have the mental wherewithal or have somebody in your corner that has the mental wherewithal
Eric
Correct.
Rachael
To be able, yeah, you don't have to care.
Eric
I mean, I would, I would recommend you shouldn't actually be that focused on this kind of stuff right now. I mean, to be fair, you've, we've already said you've taken a couple days, weeks, months, whatever it's gonna take to try to Yes. You know. Get, get your bearings again, as much as you're gonna be able to, I don't think I, I truly don't believe you'll be able to fully put yourself back together.
I, I, I'm not going to, so I'm not gonna say that you should do that. But the point is that, you know, you, you might wanna try to move. And when you start trying to move, these are the things that you're gonna wanna think about.
Rachael
And I, and I do think to that end, especially with the shift in tax brackets, um, or I mean, sorry, tax filing status.
Mm-hmm. It's incredibly important to know. That, like Eric said, if your spouse dies January 1st, 2025, you have a bit more time. Mm-hmm. My dad passed away October 20th. Right. So we were under a really, really tight window. Things had happened, her to help my mom and um, we made things happen, but because. We're in the business of having the mental wherewithal to be able to do said things.
Eric
Mm-hmm.
Rachael
I was not my best mental self. Um, my mom was not her best mental self, my husband, fortunately was. Um, and this again is why it is so important to have somebody who's able. To kind of help steer or guide that ship, because if you're talking somebody passing away in November mm-hmm. Right. That time window is super short.
Eric
It's narrow. Yeah. It's narrow. Right. If it happens in December, it's even worse.
Rachael
Okay. So meeting, um, so with a trusted financial professional Yeah. Tax situation.
Eric
So another thing, tax situation. So we're, we're changing, um, tax filing status. Yes. Right. We're also going to be inheriting their RMDs. So if they've already begun taking RMDs, really good point, then they have to continue to take RMDs from that account.
You're gonna want to, if the surviving spouse is younger, typically what you'll want to do is convert their, the decedent's accounts, their tax deferred accounts, or those are the ones you have to take the RMDs from. Right? So like traditional IRA rollover, IRA 401k, that kind of thing. Okay. Yeah. Um, you're gonna convert those to your name so that the RMDs are lower, but note that the RMDs are gonna be bigger, right?
Like typically bigger. Um. Than they were because now you're combined, you're gonna take an RMD based on both of your accounts. Mm-hmm. Or rather, I guess I shouldn't say they're, the RMDs don't necessarily have to be bigger. They typical would be smaller immediately because they're going to a younger, um.
Surviving spouse, however, the tax consequences of those RMDs are larger simply because of the filing status change. Correct. So a larger percentage of your taxable income now is gonna be composed of your RMD. Does that make any sense?
Rachael
Yes.
Eric
I probably said that in the most convoluted way I could.
Rachael
You did.
Eric
I didn't mean to, so I apologize.
Rachael
You did.
Eric
But the point is, you're gonna want to change the owners and the titling of the tax deferred accounts.
Rachael
Yes. And, and that kind of touches on what you were saying earlier about, you know. Breathe. You're gonna be inundated with paperwork and stuff. Gather it in one single location so that when you are ready to tackle everything that needs to be tackled, whatever professional you're working with or whatever trusted advisor you are working with, has everything in one place to be able to start helping you with those title changes and things like that.
Eric
Yeah. Another thing you're gonna want to do, beneficiary designation. That's so typically like my beneficiary, my individual account beneficiary designations. Or Rachel. Mm-hmm. If Rachel passes, I need to ha I need to update them to our children. Yeah. Right. So I'm gonna, you would have to go in and make those changes so that you know.
You're not gonna, so that those assets that you're trying to have beneficiary designations on so they don't pass through probate Yeah. Are now no longer gonna, so now they will continue to not pass through probate and be distributed more quickly and you know, seamlessly.
Rachael
Correct. Now some accounts do have the, um, ability to put a primary beneficiary and then have secondary beneficiaries.
Mm-hmm. That can help kind of bridge that gap. But again, best practice would be to go, you always wanna review it and still update.
Eric
Exactly. You typically wanna review beneficiaries like once a year.
Rachael
Yeah.
Eric
Um, and then you're gonna wanna look at your budget and cash flow. Think about what the impacts are there.
Yeah. Are you provided for, considering you're probably gonna have one, you're probably, your social security benefits probably gonna be reduced. Yeah. It's usually not cut straight in half 'cause you're taking the larger of the two. Right. Not getting, but you're gonna have, getting the larger of the two benefits, but you're not gonna have both.
Right. So if I'm 2,500 and Rachel's 1500 and then Rachel passes or I pass, now I've only got 2,500. We're still losing
Rachael
15.
Eric
Yeah, exactly. You're still losing the smaller, the two benefits. Correct.
Rachael
Um, but it's also important as well to look at your budget and how that may affect expenses that you have. Um, typically we will see that.
Um, going, I mean, you're still gonna have the same kind of general household expenses and, and things like that. Yeah. So it's not
Eric
gonna be cut in half.
Rachael
And that I think is a mistake that some people make, right? Is that they assume that while their income's cut in half, their expenses are, and the reality is that unfortunately, people who are, um, single filers for taxes tend to have pretty similar expenses to those married filing jointly.
People without the. The benefit of two incomes and a little,
Eric
a little non Exactly. Financial, um, tidbit to add here is social spending is, um, proven or in in studies, right? In psychology studies and in finance studies, um, to have the most positive impact. So typically like social spending, like going out to meals with your friends, um, and going on vacations like with your friends and family.
Those have the most. Um, positive impact on happiness in retirement rather than buying like things, big cars, big houses and things like that. Social isolation. Conversely is incredibly bad and has one of the most profoundly detrimental impacts on your mental health and cognitive decline and all those things in retirement.
I say that because at this point in time when you're, you know, trying to pick the pieces of yourself up off the floor, you're in this rough spot. Lean on friends, lean on family, and be willing to adjust your budget, adjust your spending so that you are leaning, you know, more on the social aspect of it.
Don't just, you know, don't just hole up and things could deteriorate pretty quickly at that point.
Rachael
That's a really, really, really good point. And I think, um, it's gonna be hard to do until it's less hard to do. Um, I think that's. A shockingly good point coming from you. So, not that you don't make good points, but the, the socialization aspect is not necessarily your strong suit.
You're growing. Um, well, we try. So Eric, I think that's excellent and I think, you know, this is such a tricky episode because there's so much, um, minutia that we could really dive into. Yeah. Yeah. But at the same time, it's really important that you don't feel like you have to dive into the minutiae immediately.
So it's a really weird balancing act, and hopefully you have people in your life, whether they are professional or personal, um, that can kind of help you have a, a nice balance of those two. Um, right. So I think, you know, you've been talking about how even in the hardest moments there should be a way forward.
Mm-hmm. Um, so what. You know, for someone newly widowed, overwhelmed trying to navigate all of this stuff, like what are your key takeaways here?
Eric
Yeah, so start slow, get organized, no big decisions. Okay. That's, I guess, the first component. Organize slow. Yeah. No, huge decisions. Take a deep breath. Um. Secure your income streams and anything that might be time, re time sensitive.
Okay. So locate policies. Mm-hmm. Like insurance policies, life insurance policies, things like that, that might pay out. Um, you know, communicate with the, um, funeral home and get a bunch of copies of the death certificate. Do those kinds of things, start sending that out.
Rachael
Mm-hmm.
Eric
And then really you, this is one of the more complicated financial times in your life.
You probably should consult a professional. Again, we would advise you do it with somebody that you trust. So love that. Those are my takeaways.
Rachael
Excellent advice, Eric. So listeners, if you or someone you know is going through this, we hope today's episode helped provide some clarity and some reassurance. Um, if you have any questions or personal stories you'd like to share, please do not hesitate to reach out to us at podcast@equilibriumfp.com.
Eric
Thanks guys,
Rachael
till next time. 📍
