Death of a Spouse
Here are the financial steps to take to ease the burden after the death of a spouse
Losing a spouse is a very stressful event and usually the last thing on a person’s mind is getting their financial situation organized. But despite the level of grief and mourning, finances must be addressed in order to avoid making a heartbreaking situation worse.
Having a plan in place can help ease the difficulty and will allow you to start moving forward.
Get help and get organized
You may want to seek out help from a trusted family member or friend to help you through this overwhelming time. We also recommend speaking to a lawyer so that you receive advice that is legally sound. You should start by making a comprehensive list of every financial element and source of debt that will require attention.
This might include:
- Funeral service and burial costs
- Estate, will and trust matters
- Income and employment matters (such as pensions or social security benefits)
- Investments and mutual funds
- Tax documents (income or property tax related)
- Current bills (rent, mortgage, credit cards, etc.)
Make another list of the professionals that you might contact for guidance, including accountants, and investment advisors. If you are concerned about your ability to pay unsecured debts such as credit card debts, consider contacting a trained credit counsellor to explore your debt relief options.
Tips to help avoid financial difficulty
If you have not done so already, it is important to establish a strong credit profile in your own name; this will protect you from hardships down the road.
You should also try to create an emergency budget to help with debt management issues as they arise. A credit counselling agency can help analyze your budget and create a plan that works for you.
Make a list of who to call after the death of a spouse. Some may be obvious but it’s important to make a list so that you don’t miss anything during an overwhelming time.
You should contact:
- Your spouse’s employer to check on wages or retirement funds and other benefits
- Canada Pension Plan
- Old Age Security
- Insurance agents on policies and claim forms
- Banks, brokerage houses, and other financial forms for account status and ownership
- Department of Veteran Affairs (if applicable)
- Lawyer, to determine if a probate is needed (if living trust of non-probate transfers occur, or in a small estate, a probate may not be necessary)
- Credit card companies
Documents to gather
The amount of paperwork involved in a spouse’s death might be overwhelming, so we have compiled a list to help guide you. You will want to make sure you make copies and pay attention to the ones that need to be notarized, like marriage and death certificates.
Collect the following documents:
- Will, trust, and letters of instruction
- Life insurance policies
- Retirement plans and CRA information
- Birth certificates
- Military discharge papers
- Marriage license
- Deeds on property owned by your spouse
- Vehicle registrations for motor vehicles, trailers, and recreational vehicles
- Recent bank and financial account statements
- Recent tax returns
- Loan documents, including mortgages and other loans
- List all outstanding debts, as of date of death, such as credit card bills and utilities
- Copy of the most recent bills received after date of death
- Social Insurance card
- Financial statement or list of assets as of date of death
As a general rule, property you receive by inheritance comes free of income and estate taxes. To avoid paying an immediate income tax on retirement funds, be sure to review your options to roll over or receive periodic payments.
The year your spouse dies, you still receive favourable joint return tax rates and standard deductions. An estate tax return has to be filed with the CRA if the estate (including probate and non-probate assets) exceeds $600,000.
Pay only the bills you should pay
Before paying any bills, determine if it is your debt, your spouse’s debt, or a joint debt. You are responsible to pay your debts and joint debts. You aren’t responsible for your spouse’s debt, since your spouse’s estate will pay those debts.
Loan agreements you have signed with your spouse, credit cards held in both names or used jointly, property taxes on property you both owned, and household expenses are joint debts. Hospital bills, funeral expenses, and legal fees incurred because of your spouse’s death are estate debts.
Planning for the future
It’s very difficult to move on after the death of a spouse, but it’s in the best interest of both you and your family members to plan for the future.
Examine your own will or trust and evaluate your estate. Make sure someone has power of attorney in the event that you become disabled or incapacitated. Examine your income and ensure that you have enough for now and the future.
Dealing with debt?
If the death of a spouse has put you into debt, you may have some options to recover. Call a trained credit counsellor at 1-888-294-3130 to get expert advice, for free.
The death of a spouse may be as confusing and as complicated as it is heartbreaking. We recommend that you seek a trusted advisor or lawyer so that you have the proper advice in matters of the estate. It is always good to be proactive and ensure you have a will in place. Experts recommend that you review your will once every three to four years to make sure that it accurately reflects your wishes, responsibilities and financial position.