Coping with a Spouse’s Death

Introduction

It is often very difficult to cope after the death of a spouse.  In addition to the many personal struggles, you have to manage the finances in order to ensure that your spouse’s estate is properly administered and to protect your financial future.

Below are some of the most common steps you should consider to take after the passing of your spouse that deal with managing the financial aspect of your loss.

Locate the Will

Locate your spouse’s will and take it to your Chartered Accountant and estate lawyer to discuss how to proceed.  There may be a need for probate, which is the legal process of certifying that the will is the last and valid will of the deceased.  Often, institutions will ask to see the probated will before releasing assets to the deceased’s estate.  The will outlines the beneficiaries of your spouse’s assets.  It is the responsibility of the executor to make sure that the assets are distributed per the deceased’s intention.  The living spouse is often the sole executor of the will or one of the executors.

Seek Support of Family And Friends

Surround yourself with your children, other family members and friends who can help you through this process.  They can support you emotionally and assist you in getting through the financial aspect, which you will find burdensome at this time.  Their support may be their greater knowledge of personal finances, experience with their own spouse’s death, or referrals to knowledgeable professionals, such as accountants and lawyers.

Obtain the Death Certificate

Obtain copies of the death certificate as you will require them to present to various institutions or government authorities to deal with your spouse’s assets.

Listing of Assets

Make a list of all of your spouse’s assets to make sure that you deal with all of them, and to determine the key person to contact in order to facilitate the transfer of the assets to the beneficiaries.  The 4 most common assets:

a) Bank Account(s)

If you and your spouse’s names are both on the account, then you will continue to have access to the account and sole ownership of it is automatically passed on to you.  (Most joint accounts have a right of survivorship which allows for this smooth transition).  Ask the financial institution where your bank account is held to remove your spouse’s name from the account.  If your name is not on the account, then the account will pass on to the beneficiary named in the will.

b) Safety Deposit Box

The same process above applies to your safety deposit box.

c) RRSP / RRIF

If you are named as the beneficiary of your spouse’s RRSP, then it will be transferred to you.  It will remain in an RRSP account until you decide to withdraw it.  Similarly, the RRIF account will be passed on to you and it will maintain its RRIF status.  You will get the RRIF payments the same way as your spouse would have.  However, if you are under the age of 71, then the RRIF account can be changed into an RRSP account with no tax repercussions unless you withdraw funds.

d) Life Insurance

The financial institution that holds the life insurance policy of your spouse will need to see a copy of the death certificate in order to pay out the insurance to the beneficiary.

Analyze Your Cash Flow

Make a list of all your daily expenses and make sure that you have sufficient funds and income coming in to cover them.  This is a necessary step because you are now in charge of paying all of the bills, and need to make sure you do not default on any of them.  Your savings may cover your current expenses for a little while, but you need to assess if the income funds will allow you to continue to pay that amount of expenses.  As some income may be reduced, you may need to adjust your lifestyle to what you can afford. You may also be receiving some lump sum payments as it is important that you budget so that your incoming funds last as long as possible.  It is worthwhile to consult with a financial advisor to help you assess your cash flow and show you how to make your funds last longer.

Send Notification of Spouse’s Passing

It is critical to notify certain key organizations of your spouse’s passing so that their benefits get passed on to you.

CPP and OAS

You need to apply to Service Canada (www.servicecanada.gc.ca) to get the CPP survivor’s pension.  They will require a copy of the death certificate and the marriage certificate.

Company Pension

Contact your spouse’s company pension provider and let them know of his or her passing.  Depending on the terms of the company pension, you may continue to receive the payments for a certain period of time, you may get a lump sum payment, or you may not receive anything at all.

Review Debt Outstanding

Your spouse may have credit cards in their name.  In this case, their estate is responsible and must pay the outstanding balances on them.  If the credit cards are in both your names then you are liable for the entire amount and you should keep making payments on time so that your credit rating is maintained.  Tell the credit companies to change the cards to your name only.

This applies to any debt that is held by your spouse, either in only their name or in both your names such as mortgage, utilities, telephone, cable, to name a few.  Make sure to keep on top of the debt obligations and other payments that are in both your names so that you do not default on the payments and you continue to get the services you need.  Also, change accounts to your name only.

Filing the Final Income Tax Return

The final income tax return must be filed for your spouse.  It may prove very useful to see a Chartered Accountant about this as you may be able to reduce your spouse’s taxes and their estate’s taxes.

Revise Your Will

You have inherited assets from your spouse so you should update your will to include those assets.  Also, you may have included your spouse as a beneficiary in your own will.  At this point, you will have to remove your spouse from the will and reassess who your beneficiaries will be.

Important Lessons Learned

Dealing with the financial aspect of your spouse’s death will teach you a lot on procedures with financial institutions, the government, and other entities.  You may also identify some inefficiencies in obtaining your inheritance, or tax minimization opportunities that arose which you could not utilize as insufficient estate planning was done.  Doing your own estate planning will minimize income taxes, and ease the transfer of your estate to your beneficiaries.

Conclusion

If you have any questions regarding any issues of Coping with Your Spouses’ Death or any income tax or business issues, do not hesitate in calling Joe Truscott at 905-528-0234 or email Joe at joetruscott@josephtruscott.com.