The emotional toll of losing a spouse is incalculable. Unfortunately, bereavement is not the only trouble that death brings. It may not even be the most lasting.
The surviving spouse often must deal with significant financial as well as personal loss. While this can impact both sexes, women tend to outlive men, and men tend to out-earn women, so the economic impact falls disproportionately on widows.
Fortunately, financial assistance for widows is out there. Little to none of it lasts forever, but it can be a lifeline for those who suddenly find themselves in need. It’s about more than finding sources of money.
Learning to manage your money, obtaining professional help if you start sinking in debt and knowing how the financial decisions you make affect Social Security are part of the equation.
What Financial Help is Available for Widows?
Before reaching out for assistance, widows need to know what they have, not only from their deceased spouse’s personal life insurance policies and savings accounts, but through his former employer. Find out what he had in retirement accounts and if he had a life insurance policy through the company.
Financial help for single parents can be found through several government agencies, nonprofit organizations, churches and community groups in the form of grants for low-income widows and professional financial guidance that includes debt management advice.
Of course, the most obvious place to seek help is from those closest to you: your family. A single child can give a widowed mother up to $14,000 with no tax ramifications either way. If the child is married, the limit jumps to $28,000.
Family members also might provide a loan at no or low interest. Naturally, any such loan should have repayment terms written out. That helps avoid both hurt feelings and more complicated problems when the widow dies and her will goes to probate.
Social Security Widow Benefits
Social Security is an important resource available, but to claim them, you must make an appointment with the local SSA office. You can’t apply for benefits online.
A one-time payment of $255 can be paid to the surviving spouse if he or she was living with the deceased; or, if living apart, was receiving certain Social Security benefits on the deceased’s record.
Monthly Social Security benefits may be available to a widow or widower age 60 or older (50 or older if disabled), a surviving divorced spouse in some circumstances and a widow/widower of any age who is caring for the deceased’s child who is under age 16 or disabled and already receiving benefits.
If the deceased worked long enough under Social Security, the widow/widower can receive full benefits at the full retirement age or reduced benefits as young as 60. The amount of the benefit depends on the earnings of the deceased. The more they paid into Social Security, the greater the benefits.
Grants for Widows
Let’s start with the bad news: There are no government grants specifically for people who lose a spouse. There are, however, grants to address specific needs, including needs that the widowed often encounter. A good place to start is www.benefits.gov, which provides links to government benefits in every state.
Housing assistance is available through the U.S. Department of Housing and Urban Development (www.hud.gov). In addition to public housing that provides affordable apartments for low-income tenants, HUD provides what’s known as Section 8 vouchers that can pay for all or part of rent, and also helps apartment owners offer reduced rents to low-income tenants.
Widows looking to improve their long-term finances through higher education may be able to get Pell grants of up to $6,095 that are available through the Department of Education’s Federal Student Aid office.
Charities and Church Assistance for Widows
Most of the nonprofit organizations, churches and community groups that offer assistance to widows can be found online. They usually offer help on a one-time basis for things like food, housing, clothing, furniture and other basic needs.
Some grants are available through private organizations. The Liz Logelin Foundation (www.thelizlogelinfoundation.org) provides short-term financial help to young families with dependent children during the first year after death to assist with rent or a house payment, utility bills, a child’s activity fees, lessons, school clothes, a special family outing or gifts for the children. The Ted Lindeman Outreach Foundation (www.tedlindemanoutreachfoundation.com) has a similar program.
Many Catholic churches have a ministry called the St. Vincent de Paul Society that deals specifically with people in a financial crisis. Their assistance usually is on a one-time-only basis for needs such as rent, utilities and food.
Not all the needs are financial, and there are organizations that help with the social and emotional loss of widowhood, including The Modern Widows Club, The Widow Connection, Hope for Widows Foundation and The Sisterhood of Widows. The American Widow Project is a similar organization for military widows.
Financial Assistance for Widows of Veterans
When military personnel die as a result of their service, their spouses are entitled to a death gratuity, which currently is $100,000. It is free from federal and state income taxes for any service member who dies while on active duty or while performing authorized travel to or from active duty.
Dependency and Indemnity Compensation is a tax-free benefit paid to eligible survivors of military service members who died in the line of duty or eligible survivors or veterans whose death resulted from a service-related injury or disease.
For details and other benefits, visit Spousal Survivor Benefits.
What Happens to Debts?
Although many of the concerns widows must face involves lost income, there’s also the matter of debt the deceased spouse had. Is the surviving spouse expected to pay?
The important answer is: No, unless you co-signed a loan and the most obvious examples of that are a loan for a house, a car or a credit card. As co-signer, you are liable for the debt.
If you aren’t on the loan agreement, you are not personally obligated to pay it off.
However, in community property states (Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), a husband and wife are each equally responsible for paying each other’s debts as long as one of them acquired the debt during the marriage. Consult an attorney.
Credit Card Debt
Was your name on the credit card as a co-signer? Then, the debt is yours, no matter how often you actually used the card. If you don’t pay on the card, your credit score will take a big hit, and you can expect regular calls from a collection agency.
However, if your name is on the account simply as an authorized user, you are not responsible for the debts, but the estate is. If money is available when the estate is settled, it will go toward paying the balance of the credit card debt.
Again, the community property exception applies here. Check with an attorney.
If your spouse dies and the mortgage has not been paid, the responsibility typically falls to you. Assuming you want to keep living there, you’ll need income or assets to keep up payments.
If the deceased had a life insurance policy, you might use the proceeds to keep paying on the mortgage, or even retired the debt. Another option could be selling the house to satisfy the debt, though that means finding another place to live.
If you or anyone else in your family is unwilling or unable to make payments, the lender can foreclose on the loan and sell the home through a sheriff’s auction.
This depends a lot on where you live. In general, a spouse is not obligated to pay the medical bills of another spouse. However, you would typically have to pay if you live in a community property state, or if you signed a document stating that you would be responsible for payments on a medical bill when your spouse was admitted to the hospital.
Some states have what’s called “doctrine of necessities.” This makes a spouse liable for the “necessary” expenses incurred by the other spouse during marriage. Medical bills are almost always deemed “necessary.”
Even in states where those rules don’t apply, the creditor could still seek payment from the estate of the deceased.
Professional Financial Help for Widows
The melancholy irony of widowhood is that in your time of bereavement, it’s important that you don’t try to tackle the big issues all by yourself. That’s true even if you correctly consider yourself a capable, independent person. The issues are too important.
What issues? Pension options. Social Security spousal benefits. Life insurance. Paying the bills. Changes to your house title and other assets. Bringing your own will and estate plans up to date.
This is a time for trustworthy advisers, both for immediate decisions and ones for the long term. Expert advice from an attorney, financial advisor and accountant can help you get through the tough decisions to make your future smoother.
Consult an Attorney
Using an attorney through the probate process is a good idea, even if the issues appear simple, and especially if they do not. A probate attorney can manage the process, enabling you to make decisions about your future.
Attorneys also can modify your own will and other documents in keeping with your needs and your new situation. Additionally, your attorney will be able to make adjustments to estate planning documents such as financial powers of attorney, healthcare powers of attorney and living wills.
Depending on the complexity of the estate, the legal process can take a few weeks to several years to complete. You absolutely need someone to guide you through that.
Hire a CPA
Taxes can be complicated enough in a normal year. The death of a spouse adds more variables, which makes a CPA a good person to have in your corner.
Some of your benefits may be taxable. Some may not. When filing taxes, you’ll want someone who can get the most out of deductions and plan for what you’ll owe. Unless you’re a tax expert yourself, hiring a CPA is a good move. Do so within the first month after your spouse’s death to make sure you meet tax filing deadlines for the estate.
Hire a Financial Planner
It’s hard to know where you’re going unless you know where you are, and that’s especially true of finances. A financial planner can assess your situation and the impact of your spouse’s passing on your future.
A planner who studies your assets and obligation can put together a financial strategy or update any existing plans to help your life become what you want it to be in terms of retirement, education, travel, charitable giving, among a wide range of possibilities.
That way, you can secure your financial future and avoid any unnecessary risks or sacrifices to your current lifestyle.
Consult a Nonprofit Credit Counseling Agency
Perhaps you’ve been widowed for a while, and you’re having a hard time paying your bills, much less saving for the future. The balance on your credit cards keeps growing, and you can’t seem to get on top of your finances.
There are reputable, nonprofit counselors that can help. Their services are available by phone or online. Find one by using your favorite search engine.
Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals. But take note: Nonprofit doesn’t necessarily mean free, and it’s best to check with online review sites, your state attorney general or local consumer protection agency to make sure they’re legitimate.
Reputable credit counseling agencies can give advice on managing money and debts, help develop a budget and offer free educational materials and workshops. Their counselors are certified and trained in consumer credit, money and debt management, and budgeting.
Obviously, losing a spouse is difficult. Finding people to help you navigate the issues you’ll face will go a long way of making things better.
About The Author
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
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