Four pitfalls for widows — in particular — to beware

There are few more wrenching events in life than losing your spouse. But to make matters worse, the death of a life partner also unleashes a torrent of financial tasks. And more often than not, it is a widow who must take them on.

In the rush of emotions, it's easy to make mistakes.

Here are four things widows (and widowers) should keep in mind.

THE RUSH. Some financial tasks you must do within a month or two of a spouse's death. Keep paying the bills, including any quarterly tax charges. Make sure you understand how your health insurance works, if it comes from your dead spouse's employer. Collect on any life insurance policies, especially if cash is running low.

Just about everything else can wait a little longer.

Financial planner Jennifer M. Murray has a rule for her widowed clients: no irreversible decisions soon after the death of a spouse.

Many surviving spouses immediately crave secure investments offering regular income that never runs out. So you'll no doubt hear from people selling all manner of annuities, which have the tendency to enrich the salesperson at your expense.

THE HOME. One problem with rushing to, say, pay off your mortgage is that it may not ultimately be wise to remain in a house.

Even if the mortgage and real estate taxes seem manageable, there is the lawn and the endless repairs that go along with home ownership. "All of these are expenses that most women don't seem to anticipate until they happen," Ms. Murray said.

THE PURSE. It isn't just annuity salesmen who see widows as a source of income. People much closer to her may have the same outlook.

Adult children may see an opportunity to request an advance on their inheritance. Saying no will not be easy. If you have a financial planner or accountant helping, you can let that professional be the stingy one. And if you succumb to the advance request, put it in writing so there's no confusion later on why one sibling is getting a different share of any future estate.

There are also not-always-gentlemen callers. Wily widows of means are wary of men seeking "purses" (or nurses, for that matter).

THE GHOST. Once you're a widow, your budget and long-term planning needs will almost certainly change. Oddly enough, however, many men try to dictate financial advice from the grave. Their last wishes may demand, for instance, investments only in certain stocks that did well for them — when they were alive.

People do this with the best intentions, but it can be misguided. Solving this emotional trap can be simple, though. It is possible, after all, that the late husband was right at the time and that the stock has done well and paid dividends. So your desire to take fewer risks isn't tantamount to declaring his investment plan a failure.

Four pitfalls for widows — in particular — to beware 09/03/11 [Last modified: Friday, September 2, 2011 6:03pm]

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