A good financial advisor for a widow or widower does three things in the first year: separates the decisions that have deadlines from the ones that can wait, claims the right survivor benefits, and plans the tax years that follow. A fee-only planner charges a median $2,000 for a one-time plan or $4,500 a year for ongoing help. The best ones are in no hurry to move your money.
What can wait and what can’t
Most money decisions after a death can wait months. A few have dates attached, and an advisor’s first job is to sort them.
What has a deadline:
- Social Security’s lump-sum death payment of $255 goes to a surviving spouse who lived in the same household. You generally have to apply within two years of the death.
- The home sale exclusion. A surviving spouse who hasn’t remarried can exclude up to $500,000 of gain on the home, rather than $250,000, if it’s sold within two years of the death and the other ownership and residence tests are met.
- Portability of the estate tax exemption. Your spouse’s unused federal exemption can pass to you, but only if it’s elected on an estate tax return (Form 706). Estates that don’t otherwise need to file can use a simplified IRS procedure up to the fifth anniversary of the death.
- Health insurance, if your coverage came through your spouse’s job.
What can usually wait: selling the house, moving investments, buying an annuity or insurance, paying off a mortgage, and lending or giving money to family. Decisions made in the first months are often the hardest to undo.
What the situation demands of an advisor
Survivor benefits from Social Security
A widow or widower can take a reduced survivor benefit from 60, or from 50 if disabled. At your full retirement age for survivors, which is 67 for anyone born in 1962 or later, the benefit is generally 100% of what your spouse was entitled to. Remarrying after 60 doesn’t end it.
You may also have your own retirement benefit. The order you claim the two in can change what you collect for the rest of your life, so an advisor should model the choice rather than default to the earliest date.
If you or your spouse earned a pension from work not covered by Social Security, such as some teaching or government jobs, recheck any old estimates. The Social Security Fairness Act repealed the Government Pension Offset and the Windfall Elimination Provision for benefits payable for months after December 2023. Older plans may assume a cut that no longer applies.
Inherited retirement accounts
If you’re the sole beneficiary of your spouse’s IRA, you can treat it as your own, roll it into your own IRA, or remain a beneficiary. The choice matters if you’re under 59½. Withdrawals from your own IRA before then generally carry a 10% additional tax. Distributions to a beneficiary are an exception. A spouse who needs to draw on the money before 59½ may do better staying a beneficiary for now and switching later.
An advisor should look at every account, including 401(k)s and pensions, before anything is rolled or cashed out.
The tax years ahead
You can file a joint return for the year your spouse died, as long as you haven’t remarried by the end of it. If you have a dependent child at home, you may use qualifying surviving spouse status, with joint-return rates, for the two years after. After that you file as single or head of household, with narrower tax brackets, often on much the same income. A good advisor plans for that jump, for example by spreading Roth conversions or IRA withdrawals over the years when your rates are still lower.
Two rules usually help. Property you inherit generally takes a new cost basis equal to its value on the date of death, so selling soon after can trigger little or no capital gains tax. And life insurance paid because of a death generally isn’t taxable income.
A pension’s survivor benefit
If your spouse had a pension, what you receive now was largely set by the survivor option chosen at retirement. An advisor should confirm what’s being paid and fold it into your income plan. Advisors in the pension planning specialty work with these elections every day.
One plan, now for one person
The rest is a new plan for one household: income you can rely on, beneficiaries updated on your own accounts, a new will and powers of attorney, and investments that fit how you feel about risk now. That last one often changes.
Questions to ask an advisor
| Ask | A good answer includes |
|---|---|
| What should I decide this year, and what can wait? | A short list of dated items and a longer list that can wait |
| When should I claim survivor benefits, and when my own? | A comparison of claiming orders for your record and your spouse’s |
| Should I treat the inherited IRA as my own? | An answer tied to your age and when you’ll need the money |
| How will my taxes change after the joint-filing years? | An estimate by year, with steps to soften the change |
| How are you paid, in dollars a year? | One figure, and no commissions on annuities or insurance |
The last question matters here. People who have just received a life insurance payout or inherited an account are often offered annuities and insurance, which can pay the seller a commission. A fee-only advisor isn’t paid that way. Our list of questions to ask a financial advisor covers the rest.
What it costs
US medians from prices firms publish on their own websites
Source: Wellspent fee report
A one-time plan suits the first year well: you get the deadlines, the benefit choices and a tax plan in writing, and decide later whether you want ongoing help. Hourly planners suit a single question, such as the IRA choice.
If an advisor charges a percentage of assets, the median is 1% a year, so a $500,000 insurance payout and inherited account placed with them would cost about $5,000 a year at that rate. There’s no rush to hand over new money. Ask what the plan costs on its own first.
How to find one
The public graph doesn’t have a separate specialty for widows. The work sits across a few: estate planning, retirement planning, tax planning and pension planning. If you’re already retired, start with advisors for retirees or retirement planning specialists. Our guide to a financial advisor for retirement covers the income plan in more depth.
Every record shows how the advisor is paid and what they focus on. Talk to two or three. Choose the one who asks the most about your life before talking about your investments.