updated 5/3/2005 5:43:50 PM ET 2005-05-03T21:43:50

You'll always have the fond memories, but after the death of a spouse, there are several basic steps you need to take to prevent the memories from being overwhelmed by financial difficulties.

"Everything has the potential to change after the death of a spouse," says M. Sophie Beckmann, a certified public accountant and certified financial planner at A.G. Edwards in St. Louis. "How much depends on the stage of your life."

It's not unusual for the surviving spouse to experience bouts of depression and periods of crushing inertia. Paying attention to small details and taking it one step at a time sometimes helps.

First, locate all of the important documents needed to sort things out, including insurance policies, deeds, stock and bond certificates, and bank and brokerage statements. Dig out your will, too.

Next, identify the retirement money available to you. Check with your financial adviser for the most advantageous method of taking possession of the money or distributing assets.

Also, recalculate your cash-flow needs. The death of a spouse may mean a sharp reduction in income, but this won't be a crusher if you're still working. Make sure you have enough for the basics, including mortgage, utility, food and medical expenses, and then make cuts as necessary.

Make a complete statement of your net worth. This will help you identify what you have and what you owe, giving you a better understanding of how you'll meet short- and long-term spending needs, Beckmann says.

Long before it's needed, high net worth individuals might consider setting up an A-B trust to ensure the surviving spouse's financial future and to bequeath more to heirs, typically children.

Two separate trusts are created upon the death of the first spouse. The purpose of the A-B trust, also known as a "by-pass trust," is to keep some assets out of the surviving spouse's estate and, therefore, exempt from federal estate taxes upon that person's death.

In general, up to $1.5 million — the current estate-tax exemption amount — is placed in an A-B trust upon the first spouse's death. (The exemption amount will increase to $2 million in 2006.) The surviving spouse draws income earned on these assets for life. When the surviving spouse dies, the assets are distributed to beneficiaries, often the couple's children.

A-B trusts can be tricky, so check with your financial adviser and attorney to make sure that the documents are drafted appropriately for your situation.

There are many Internet sites offering financial tips to families, including A.G. Edwards & Sons, T. Rowe Price, Merrill Lynch, Goldman Sachs and Morgan Stanley. Major banks also offer solid information, including Wells Fargo, JPMorgan Chase, Bank of America and Citigroup.

The key to financial security after the death of a spouse is to take a fresh look at everything and then rebudget as needed. Getting the money right won't ease the pain of losing a loved one, but it will take care of the day-to-day matters of living.

© 2012


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