15 Financial Challenges After Your Spouse Dies That Could Surprise You

As a couple, you’re doing everything you can to ensure you have a stress-free retirement. But are you prepared financially if you outlive your spouse? 

It's crucial to understand the financial burdens after the loss of your spouse and take proactive steps to prepare so that you're not overwhelmed during a period of mourning.

Here are 15 financial challenges you could face after your spouse passes away.

If your spouse had a life insurance policy, you’ll need to notify the insurer as soon as possible. This will help identify the policy's beneficiaries and expedite payouts. You may also want to update your own life insurance, particularly if you have no other dependents.

If you get medical insurance through your spouse’s work, you must make other arrangements when they die. You can continue your spouse’s coverage via COBRA for up to 36 months, though other options may be less expensive. 

To elect COBRA coverage, you’ll need to request it within 60 days of your spouse’s passing.

In 2023, the median price for a funeral was $9,995, according to the National Funeral Directors Association. However, this doesn’t include additional expenses such as transportation of the body or the burial plot. 

If your spouse has specific wishes for their funeral, bear in mind that these may come at an additional cost.

When you experience an upheaval, such as the death of a spouse, you’ll likely need to take time off from work if you’re still employed, which can have financial implications. You may also need the help of a grief counselor or therapist, which can be an additional cost.

If you’re an authorized user on your spouse’s credit card rather than an owner, immediately stop using the card, as this can constitute fraud. Notify the credit card company of the death immediately, and be prepared to send a death certificate. 

You can likely keep the account open, but you may have to submit a new application in your name.

In the year your spouse passes away, you can still file under the Married Filing Jointly status. For the next two years, you can file as a Qualifying Widow or Widower, granting you essentially the same status as Married Filing Jointly. 

After that, however, you must file either as Single or Head of Household, likely putting you in a higher tax bracket.

Once you move into a higher tax bracket, you can switch up some of your retirement holdings to minimize your tax burden. For instance, you can systematically convert some of your IRA or 401(k) funds to Roth funds each year, which can reduce your taxable income.

Your spouse was likely the primary beneficiary of your life insurance, bank accounts, and other financial accounts. After they die, you’ll need to designate a new beneficiary or beneficiaries.

If you’re already receiving Social Security spousal benefits when your partner dies, yours will convert to a survivor’s benefit. 

If you’re receiving Social Security as part of your own retirement, you can only apply for the survivor’s benefit if it’s greater than what you currently receive.

If you’re eligible for Social Security but haven’t applied yet, you can apply for either retirement or survivor benefits now and switch later if you want.

If you had a will previously, you’ll need to make changes that reflect the fact that your spouse can no longer inherit anything from you. Consider how you want your assets divided after you’re gone.

If you had a joint lease with your spouse or entered into any other contracts with them, you’ll need to let the other parties know about your partner’s passing so they can update the paperwork. You may need to redraft the lease or contract to remove your spouse’s name.

When your spouse dies, typically, their estate is responsible for settling their debts (other than student loans, which are discharged at death). 

If you live in a community-property state, know that the executor of your spouse’s estate could be ordered to sell marital property to satisfy the debts of the estate.

If you held the car, house, or bank account as joint tenants with rights of survivorship, the asset should pass straight to you upon your spouse's death. 

However, you may need to call the county, lender, or Department of Motor Vehicles to ensure that your spouse’s name is removed from the deed or title. 

This is essential if you ever get a new mortgage on a house or sell the car, as your deceased spouse cannot sign for these new documents.

If you have a joint phone plan with your spouse, you can call the phone company and pare down to a single line. 

The same is true if you had subscriptions like Netflix or Hulu for your and your spouse’s devices.  Ensure you’re not still paying for additional services your spouse no longer needs.

In many marriages, one spouse is chiefly responsible for the housework, the yard work, the finances, car repairs, and many other chores. Once your spouse passes, you’ll need to either add these items to your to-do list or outsource them to professionals.

If your spouse held the home’s utilities in their name, call the city or utility company to switch the account and deposit to your name. This will allow you to call the utility company for service and make financial changes to the account in the future.

Pondering the death of a spouse is not something anyone wants to do, but acknowledging the financial implications of this possibility can put you in a better position to handle them should this situation come up.

If where you and your spouse stood financially was good compared to others, you may find that finances can be a struggle when you’re suddenly single. 

Preparation during a time when this isn’t a difficult reality is key to making sound financial decisions in the event of your spouse’s death.