Securing your financial future following the death of your spouse

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As a widow or widower, you may face financial challenges that didn’t exist when your spouse was alive. You may now have less (or more) money than you had in the past or you may need to plan a new financial strategy to provide for your children.

Estate planning
It’s time to discuss estate-planning issues with your attorney or financial advisor. Start by updating your own will. You may need to rethink how you want your assets distributed at your death and to name a new executor (if your spouse was named in your original will). You may also need to name new beneficiaries and guardians for your children. You should also write new planning documents, such as letter of instruction, power of attorney, health care proxy, and living will.

Retirement planning and investing
If you were the beneficiary of any retirement plans owned by your spouse, you may have to choose new investment vehicles if you receive the distribution outright. If you had named your spouse beneficiary of any retirement plans you own, request beneficiary change forms from your employer or the plan administrator. He or she can help you project your retirement income requirements and formulate a new retirement-planning strategy.

Insurance
If your health insurance was provided through your spouse’s employer, find out if you’ll be covered automatically or if you’ll receive continued coverage through Consolidated Omnibus Budget Reconciliation Act (COBRA). You may need to buy a new life insurance policy or designate a new beneficiary.

Filing taxes
As a surviving spouse, you may have to file several tax returns, including federal and state final income tax returns, and fiduciary income tax returns. To do this, you may need to seek the advice of a tax professional.

Filing status
If you meet certain requirements (including remaining unmarried and maintaining a household for a dependent child), you can file your federal income tax return as a surviving spouse for two tax years following the year in which your spouse dies. This normally means you will pay less tax than if you filed either as single or head of household. In the year in which your spouse dies, you do not file a tax return as a surviving spouse but can instead file as married, filing jointly. This way, you’ll file, and you and your spouse’s executor will sign the return for your spouse, following Internal Revenue Service guidelines.

Taxes on retirement plan distributions, insurance proceeds, and benefits
Retirement plan distributions are considered taxable income, while life insurance proceeds and government benefits (such as Social Security) are generally not taxable. However, the tax consequences of survivor’s benefits may depend, in part, on how you choose to take the distribution or proceeds (in the case of IRAs or life insurance) or on whether your income exceeds a certain level (in the case of Social Security). Consult your tax advisor.

 Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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