4 Common Mistakes Grieving Spouses Make

October 16, 2017

The death of a spouse is one of the most traumatic experiences we can face, no matter what the circumstances. Not only is it hugely upsetting on its own; the ordeal can impair our ability to think clearly, assess choices, and make decisions — at a time when there are a lot of potentially impactful ones to consider. Other than critical first steps like contacting your estate attorney, gathering important documents, and alerting your insurance agent, there are other longer-term decisions that should be put off for at least six months to a year, according to financial experts. Here are four of the most common money mistakes surviving spouses make, and how to avoid them:

  • Making Rash Property Decisions: Many widows and widowers tend to act impulsively on the home front, whether because of financial concerns or sheer panic at the thought of managing a big empty house. Selling the house right away, spending large chunks of insurance money on home improvements, paying off mortgages – these are all examples of quick decisions that can seem wise in the short term but can lead to serious cash flow problems down the road. Instead: defer any non-essential financial decisions for at least six months, and always consult a financial planner.
  • Trusting the Wrong People: Grief experts warn that we’re often at our most vulnerable after losing a spouse, with our guard down and judgment impaired. Unfortunately, this can also be the time when well-meaning friends and family members – or worse, predatory agents – approach with investment ideas. A long-lost cousin offering a friend and family business opportunity might sound harmless enough, but tough to evaluate at this stage. More common are the phone calls from investment companies offering what they pitch as sound financial opportunities – often with steep hidden fees you’re likely to miss. Instead: Say no to any and all investment pitches for at least a financial quarter, or defer them to your financial planner.
  • Spending Too Much Too Soon: Grief spending is a real thing, involving people in the early aftermath of loss who spend money in self-soothing ways, or in well-meaning gifts to children or other dependents. It’s understandable for sure, particularly considering the large life insurance payouts that can arrive after a spouse passes. But for the majority of widows and widowers who are retired and relying on fixed income sources, this kind of impulse spending is hugely problematic. Instead: Place any large sums or insurance payouts into a savings account for a minimum of three months. Restrict any discretionary spending to small-ticket indulgences like dinner out with a friend, or taking a class.
  • Switching Financial Planners: According to a recent study by Fidelity Investments, nearly 70% of widows dismiss their financial planner within a year after their spouse dies. While it might be tempting to switch things up at a time when it feels good to regain some control, hiring a financial planner should be a decision taken with the utmost care, best made with a clear head free of distractions. Instead: by all means, schedule a meeting to review all assets and strategies, particularly if your deceased spouse has been the primary point of contact. But refrain from severing ties for six months to a year.

For more advice on how to navigate these issues, head to Bankrate.