This is a cross-post from Type-A Mom, but the advice is so good I wanted to share it here as well.
So far, all of the articles I've written for Type-A Mom have been based on my own experiences as a widow and mom. While I hope that they have been helpful, I want to be able to provide you with some really practical information that can help your journey as a widow be a little less bumpy. So, I'm going to ask the experts. This article is going to address a few legal questions, I have one lined up with a friend who will answer a few tax questions, and I'm hoping to get a few other content experts to share their knowledge with us.
Meet the Expert
I find that there are quite a few common questions among widows when we are first faced with our new lives. An entire category of those questions have to do with money, legalities, and bills. I've been following Alexis Martin Neely on Twitter for a while, and have been intrigued by her approach to law and giving back to the community. When I started thinking about the content experts I wanted to give advice to widows, Alexis is one of the first people I thought of. As America's Personal Family Lawyer, Alexis guides you to see every legal agreement, challenge and conflict as an opportunity to be more of who you are or as she says, "legal matters are your chance to be the change you want to see in the world." In fact, Alexis sees your legal life in general as a reflection of your inner life. She's the single mom of 2 kids and despite experiencing a challenging divorce she has built not one, but two million dollar businesses and now manages her growing mompreneur empire from her home by the ocean and runs everything with a completely virtual team.
I did a telephone interview with Alexis (with her landscapers going outside and my son asking to color), and asked her several basic questions. We talked for more than an hour, so I'll try to distill our conversation in a useful way. A couple of things to remember when you take any of the following advice to heart: (1) this advice is general advice and certainly doesn't apply to all situations or people, so you really have to get advice for your particular situation, and (2) most laws vary by state, so while a lot of this information may be applicable to most of us, please check with local resources to find out if it's true in your state.
Questions and Answers
Q: A lot of widows are left with giant hospital bills after their spouse dies. How do we handle that? What are we responsible for?
A: Resist the pressure to pay the hospital right away. Just tell them, "As soon as I know how much I have I will call you." You aren't trying to get out of paying legitimate bills, but many times the costs of hospital treatment can be so large they can bankrupt you. You can not put the hospital bills before basic needs.
You have to look at every bill you get, you can't ignore them. If your spouse had health insurance, you have to match up every bill with the insurance company and make sure that they are paying everything they are responsible for.
Do not pay for anything with the hospital until you have pursued every avenue of payment (including health and life insurance). Familiarize yourself with the hospital records because if your Social Security number is not on the records, you may not be liable for the bill.
Sometimes it can take a while to work through all of the avenues to get the bills paid. Because of this, there are cases where the hospital sues for payment before the survivors of the patient have exhausted all options of payment. If you haven't already gotten a lawyer involved before this point, now is the time to find one.
Q: Many widows get a lump of money after their spouse dies. The sources and amounts of money vary greatly. How should a widow decide what needs to be done with that money? For instance, do you pay off the house, the hospital bills, invest it?
A: When a widow is given a sum of money, she should look at it as an opportunity to be in control of her financial future.
First, don't pay off the house or the hospital bills right away. Assess your needs by figuring out how much you need every month to meet your housing, food, utilities and any other necessities. Before you think of paying off any major bills or buying anything new, make sure you have enough to meet those basic needs.
Second, after you have established the costs of your basic needs, figure out where your money is. Find out if there is retirement, what the value of your home is, what your liabilities are. We recommend a Family Financial Freedom Notebook that can help you organize that kind of information, but finding all of your expenses and all of your resources is key. Once you know your monthly expenses, you need to consider where your income will come from. Will you start a business? Invest the money you do have in income generating investments? Or will you keep your money in CDs and get a job?
Third, get some advice. If you have a Personal Family Lawyer® in your community, start there. If not, find a trusted advisor who will guide you objectively and not based on the commissions they'll be paid for your buying decisions. Make sure you've got your own financial house in order and don't expect to be able to know everything yourself.
Q: When a widow is ready to change records over, how does she make sure that she's caught all the accounts (everything from bank to credit cards to titles) that have her husband's name on them? Once you find them, how do you make sure everything gets changed over to just her name?
A: This is another instance when working with a trusted advisor, like a Personal Family Lawyer®, is a time and money saver. If all of your accounts were held jointly with your spouse or best yet, in a Trust, you may avoid the court process altogether. But, if accounts were held in your spouse's name alone, you may have to open up a probate with the Court.
Begin by contacting each of the account holders (banks, brokerages, credit cards, etc.) and let them know your spouse has died and ask them what to do. Each account custodian will send you paperwork to complete. If you are confident completing the paperwork on your own, you can. If not, contact a Personal Family Lawyer® in your community for guidance.
Q: Many widows qualify to receive widow benefits, and the children qualify for survivor's benefits, from the Social Security Administration. What's the best way to go about getting those benefits set up?
A: The Social Security Administration has a great web site that gives you all the information you need about collecting survivor's benefits. If you do end up getting survivor's benefits for your children, and don't need to use the money for daily necessities, you may want to look into tax-favored college savings plans for your children, such as a 529 plan. A 529 Plan is a great way to save for college because the money you put into the plan accumulates tax free. Alternatively, you will want to set up a guardianship or trust account for your children to receive their benefits.
Q: How quickly does a widow need to set up a new will?
A: You can really answer that question yourself by asking "What would happen to my kids right now if I died?" If there is no plan, especially a legal one, you need to visit a lawyer. At the minimum, even if you do not have any financial assets yourself, you need to have a Kids Protection Plan to provide for the care of your children in the short-term and the long-term in case something happens to you, and a power of attorney for financial matters and a health care directive/living will for health care decisions for yourself. A good lawyer will guide you to make the very best financial and legal decisions for your family throughout your lifetime without charging you hourly fees and not just set up a set of documents for you and send you on your way.
Q: Obviously, it's important to have a relationship with an attorney. How do you establish that, or even just find a lawyer?
A: If you go to my web site www.personalfamilylawyer.com, you can find a lawyer in your area who has gone through my training and works with clients in a whole new way. A Personal Family Lawyer® will be there to help you make the best choices for your life on an ongoing basis and provide objective, trusted guidance without charging you any hourly fees. Our most difficult job is finding lawyers who are willing to work in this new client-focused way, so if we do not yet have a lawyer in your area, get our free article with 7 Things to Ask Before Hiring a Wills, Trusts or Estates Lawyer from our site.
Q: What other advice would you give widows?
A: There are some practical things I'd like to offer.
- Find an insurance advisor you trust, this is as important as a trustworthy lawyer. You need an insurance advisor who learns about your entire situation before selling you insurance, you don't want one who is just an order taker or doesn't treat you like a person. You want a strategic advisor so you know your family will be covered if something happens, but know that you are buying unnecessary insurance. Always have your personal lawyer double check the insurance recommendations before you buy - it's best to have two sets of eyes on your situation and that one of them is not going to get a commission based on what you buy.
- For most of the things you need to do, like getting your husband's pension or applying for Social Security, start with the phone call where you say, "My husband has died, I need to know what to do now." If you can't make that call, have someone make it for you and get the basic information out of the way.
- When you are ordering death certificates for your husband, order 10-20 because there are many times when you will have to prove death.
- It may seem the opposite, but if you have a fairly complicated situation (a lot of accounts with your spouse's name on them, an estate going through probate, etc.), having good legal counsel will end up saving you both time and money.
- The biggest thing to remember now is to be prepared for anything.
I appreciate the time and knowledge Alexis shared with me so that I could share them with you. You can connect with Alexis on Twitter at @alexisneely and if you fan her on Facebook she'll give you her monthly Play a Bigger Game Mindset and Motivation audio program free.
You can connect with Sherry Carr-Smith on Twitter @prCarrS