Allison Berger and Grace Kvantas are stepping in for Mike this week. In our conversation, we discuss how to navigate through a life crisis, specifically financial considerations after the death of a spouse. It’s hard to think financially after such a terrible emotional blow, but proper financial planning can help ensure that you will have less to worry about in the years to come. Listen to this episode to hear our top 5 financial planning opportunities to think about after the death of a spouse.
How to prepare your taxes after the death of a spouse
There are so many financial questions after the death of a spouse. This is an overwhelming time and it can be scary to move forward on your own. Having a checklist of things that need to be done is a fantastic idea. One area of confusion for widows and widowers is how to file your taxes. In the year of the death of a spouse, it is important to continue to file married filing jointly to take advantage of the lower taxable income rate.
This exemption often goes overlooked
Many people don’t even realize that they should file for portability of the deceased spousal exemption, but even if you’re not a millionaire you should still file. This exemption doubles the rate that your heirs will be taxed so that when you pass they have a larger amount of tax-free inheritance. You may not have this kind of money now, but you never know what the future may bring. It’s always a good idea to be on the safe side and file this exemption while you have the opportunity. Listen to this episode to hear all the details why and how you should file for this exemption.
What should you do with life insurance proceeds?
It can be tempting to pay off all your bills and even the house with the proceeds of life insurance. But before you do this, you should look at some alternatives. What kind of savings do you have set up for your future? Would the proceeds be more beneficial to you by maxing out your 401k contributions or even a put into a 403b? This is a good time to build your net worth as tax-free as possible. If you have surviving minor children ensure that there is a trust provision in place for them so that they don’t receive a large sum at the still so young age of 18. If you are wondering what you should do with life insurance proceeds, then listen to this episode to get some ideas.
How much are you eligible to receive through social security?
You can never assume that the Social Security Administration is giving you the right amount of money so it is important that you ensure that you are receiving the correct amount of spousal social security benefits. If you have surviving children many widows and widowers feel the need to save this money for when they are older. But the Social Security Administration actually stresses that you use the money to care for your children’s needs right now. If you have any questions about social security, this episode may provide the answer. Listen in to hear all about social security as well as 4 other important financial concerns to consider after the death of a spouse.
Outline of This Episode
- [1:27] What are the top 5 planning opportunities for widows
- [3:40] How to file your taxes
- [5:48] File for portability
- [9:48] Life insurance proceeds
- [14:29] Survivor benefits for social security
- [18:49] To pay off the house or not?
Resources & People Mentioned
- IRS Form 706
- BOOK – Moving Forward on Your Ownby Kathleen M. Rehl
- BOOK – Happy Money by Elizabeth Dunn
- Article – 11 Great Reasons to Carry a Big Long Mortgage
Connect With Chad and Mike
- https://www.financialsymmetry.com/podcast-archive/
- Connect on Twitter @csmithraleigh@TeamFSINC
- Follow Financial Symmetry on Facebook
