Giving Every Dollar a Job: A Widow’s Guide to Life Insurance, Banking, Utilities, and Investment Account Administration After Loss

 

In this solo episode of Widow Life and Money, I walk through the administrative side of the financial picture that follows the death of a spouse, the practical steps and logistics rather than investment advice. Consider this a checklist companion, with a PDF guide available on the website, and note that not everything here will apply to every listener. I frame much of this around the now, soon, and later decision buckets we return to often on this show, since these tasks land at very different points in the grief journey.

I start with life insurance and annuities, and the most important distinction to understand: filing the claim is a separate act from deciding how to receive it. Insurers typically offer a lump sum, structured installments, or a company-held interest-bearing account, and that decision does not have to be made the day you file. The death benefit itself comes to you tax free, though any interest earned after the date of death will show up on a 1099-INT the following tax year. I talk through what to do if an insurer won’t speak with you because you may not be the sole beneficiary, how to track down policies you don’t know exist through old tax returns and the NAIC’s policy locator service, and why a tool like Max My Interest can help spread a large payout across multiple FDIC-insured accounts while you take time to decide. Annuities carry their own wrinkles, including spousal continuation options that preserve tax deferral and surrender charges that may or may not apply to a death benefit, so confirm everything in writing rather than assuming. I also spend a moment on the very real, very mixed emotions that can come with receiving this money, since for many of us, myself included, the instinct is simply wanting our spouse back rather than the payout meant to replace their income.

From there I move into banking, which can feel like a treasure hunt if you weren’t a joint holder on every account. I cover how to track down accounts through old statements and tax forms, what to bring when you visit a bank in person, how a payable-on-death designation can help accounts avoid probate entirely, and why I generally recommend keeping a deceased spouse’s name on your joint checking account for about twelve months so that stray checks or refunds still have somewhere to land. I also walk through setting up a fresh checking account for full control going forward, using text alerts to catch large or unexpected transactions, and the value of eventually consolidating down to one or two banking relationships to reduce the number of things that can fall outside your attention. The utilities conversation is more straightforward: get ahead of account transfers so nothing gets shut off, and don’t be shy about asking providers for discounts once the crisis has passed, since the answer is always no until you ask.

The investment and retirement account portion covers the key decision points that come with inherited accounts. As a spousal beneficiary, you generally have the choice to roll retirement assets into your own name, which restarts the clock on your own age and retirement timeline, or to keep them as an inherited account, which allows penalty-free withdrawals before fifty-nine and a half but preserves the original tax character. Required minimum distributions add another layer, since whether your late spouse was older or younger than you can change which option makes more sense. I also touch on how risk capacity, risk tolerance, and risk exposure each play into how these accounts should ultimately be invested using a bucket approach, with near-term expenses held conservatively and longer-term goals invested for growth.

The second half of this administrative walkthrough covers what happens once assets are ready to be reorganized into your name. I go through the mechanics of custodian-to-custodian rollovers, which can simplify moving an old 401k into your chosen custodian without extra steps, the 60-day rule that applies if a rollover check is ever deposited into your own account, and the case-by-case evaluation that illiquid assets like annuities, restricted stock, or business interests require. Updating beneficiary designations becomes critical at this stage, since a blank contingent beneficiary can send assets into probate, and a minor child listed outright could inherit a large sum at eighteen with no guardrails. This is where a properly built estate plan, often naming a revocable living trust as beneficiary with the right see-through provisions, gives you control over timing and helps preserve the SECURE Act’s distribution rules. At Wise Stewardship Financial Planning, this is exactly why we partner with Encore Estate Plans to make sure your wills, trusts, and powers of attorney are drafted correctly and work together. I close with a reminder that consolidating scattered custodians, understanding how SIPC coverage differs from FDIC insurance, and simplifying down to one investment relationship all make ongoing management and tax time considerably easier, and that this entire process, done well, often takes clients six, twelve, or even twenty-four months. If it feels like a lot, that’s because it is. Take it one step at a time.

Affiliated Links Mentioned During the Podcast:

Organizations/Programs

• Max My Interest (maxmyinterest.com)
• NAIC Life Insurance Policy Locator Service
• Monarch Money

Thank you for listening to this episode. We hope this checklist gives you a clearer path through the administrative side of loss, one step at a time, and the reminder that you don’t have to sort through it alone. As always, please leave a review and connect with us on LinkedIn with your questions or feedback. We value hearing from our community.

 

Show Transcript

 Welcome to this episode of Widow Life and Money. Today is a solo episode without a guest, because I want to talk through some of the important planning and logistics that surround the administration after a loss. We’ll cover a few specific topics: life insurance, along with some annuities as they relate to it; banking and everything that goes along with your bank accounts; utilities; and some broad guidance on gathering your investment information.

Most of this is not intended to be investment advice. We’re going to focus on the administrative steps. Later this season, our guest Jasmine Hathaway will go deeper into how her organization, PALS (Professionals After Loss), comes alongside clients to help with these administrative steps. So consider this episode a general checklist, especially for those of you wondering, “Have I missed anything?” We’ll also have a PDF checklist guide so you can think through what applies to your situation. Some of this may apply to most of you, but I doubt all of it applies to all of you.

Some of these decisions come early in the grief journey, some in the middle, and some later. You’ve heard us talk before about the now, soon, and later decision buckets, and I’ll reference those as we go.

Let’s start with life insurance. There are a couple of different steps in this process. The first is initiating the claim with the insurance company itself. Maybe that’s an employer plan through a company like MetLife, or an individual term policy issued by Banner Life or another insurer. Each company handles claims based on the coverage it issued.

Filing the claim can, and in most cases should, happen early. Filing does not commit you to a payout method. When you file, the insurance company will send paperwork asking how you want to receive the benefit. Typically you can take a lump sum, meaning the full death benefit sent to you all at once by check, ACH, or wire transfer. You can take installments over a fixed period. Or, in certain cases, you can leave the payout with the insurer in an interest-bearing account.

That held account earns modest interest and can buy you time without forcing a decision, which can be helpful in those early days if you’re feeling overwhelmed. Filing the claim and deciding how to take the payout are two separate acts.

The life insurance benefit itself is almost always received completely tax free. However, interest paid from the date of death is taxable. Don’t be surprised when you receive a 1099-INT interest form from the insurance company the following tax year.

When you file the death claim, you may need additional information such as coverage details, policy numbers, and confirmation that you’re the named beneficiary. In the unlikely event that you contact the company and they can’t give you information, it’s possible you’re not the sole named beneficiary. We’ve had cases like that, particularly with my pro bono clients, and the insurance company won’t necessarily tell you who they can talk to. This is where the executor, the person settling the estate, may need to step in. If there’s a will and you’re named executor, you may need letters testamentary to go back to the company and find out what’s there.

When you contact the claims representative, ask for the official filing instructions. This is where a simple decision matrix helps. Do you need the cash right now to pay bills? If so, a lump sum can be helpful. You can deposit it into safe, interest-bearing, FDIC-insured bank accounts while you build a thoughtful long-term plan.

One of my favorite tools here is MaxMyInterest, which you can learn about at maxmyinterest.com. It lets you spread deposits across multiple banks. For instance, if you receive a $1 million life insurance payout, you could spread $250,000 across four separate banks (the service offers more than four), and each would be separately FDIC insured. Otherwise, you might park $1 million at one bank and exceed the FDIC limit, since as a single account owner you’re now covered up to $250,000. This was helpful in my own case and for many clients. It buys time, earns a competitive interest rate based on current rates, and gives you room to decide what to do next.

Next, review any term and supplemental life insurance, such as group life insurance from your spouse’s employer. HR or the benefits administrator can confirm coverage and walk you through filing the claim. For those of you going through the SGLI process, your casualty affairs officer and the associated benefits services can help you complete it. With a civilian employer, you’ll often need to contact them about other benefits as well, such as stock benefits, COBRA health insurance decisions, and the final paycheck, and much of that can happen in the same conversation.

There may be additional payouts, especially if there was accidental death coverage and your spouse died in a qualifying accident. It’s also worth checking whether professional associations or union memberships provide secondary life insurance benefits to you as the spouse.

Once you’ve received life insurance benefits and used them to fund your own investment accounts and financial plan, your own life insurance needs may go down. This is where planning becomes very individual and case by case.

You may also wonder whether there are other life insurance policies you don’t know about. You might track those down through old tax returns showing interest or dividend income. The NAIC also offers a Life Insurance Policy Locator that searches participating insurers nationally. Using information from the death certificate, or acting as the executor, you can search that database for policies from an old employer, a credit union, or a mortgage protection rider tied to a home loan. These are often policies where no premiums are being paid anymore.

You may also find small paid-up whole life policies from decades ago. They’re still worth claiming, even if they’re only worth a few thousand dollars. A thorough search can take weeks, but done properly, it’s far better than discovering a policy years later after it has been turned over as unclaimed property. Search file cabinets, safe deposit boxes, old mail, and statements, and look through paid bills. A monthly premium payment can help you track down an old life insurance company.

If your spouse owned an annuity, the process is similar to life insurance, and it’s often the same kinds of companies. Contact the company first. Most contracts have a death benefit that passes to named beneficiaries, bypassing probate.

Start by determining whether the annuity was already annuitized. In other words, were your spouse, or the two of you jointly, receiving payouts, with a check showing up every month? Or was it still in the accumulation or deferral stage? That determines whether payments simply continue or whether you have additional options. Assuming you’re the named beneficiary as the spouse, you may have spousal continuation options that preserve the tax deferral rather than forcing a taxable distribution. Similarly, if the annuity was still in its surrender period, surrender charges may not apply to a death benefit payout, but confirm that in writing rather than assuming.

Because so much of the annuity decision ties into tax planning, outside expertise for your specific situation can make a big difference. Insurance companies operate with extensive legal disclosures, so review the actual information in writing before making big decisions. Sometimes we’ll even use an AI tool to ask questions about a specific contract document.

In my experience, customer service from these companies is mixed. Some representatives are very knowledgeable and helpful, and some less so, particularly when customer service is outsourced offshore. How you receive a life insurance or annuity payout, whether as a lump sum or as installments, is typically a one-time, irrevocable decision, which makes it very important.

More often than not, the younger our clients are, in their 30s, 40s, and 50s, the more they benefit from the flexibility of taking a life insurance payout as a lump sum rather than annuitizing it. That money can then pay off the mortgage or other debts, or be invested in a brokerage account for long-term goals. On the other hand, the older you are, especially if children aren’t in the picture, the more sense some annuity benefits might make. We look at all your other income sources to make the best decision.

That can run against the common guidance, which isn’t always appropriate, to avoid major decisions early. If you take a lump sum and park it in FDIC-insured bank accounts, you buy time to let the grief process continue, let the brain fog start to lift, and get extra support.

If you have high-interest debt at this stage, you might use some of the proceeds to pay it off. We’ll talk in another episode about whether you should pay debts in your spouse’s name, so here I mean debt in your own name, such as high-interest credit cards or auto loans. Mortgages are a little different, since their interest rates are often competitive with what you could earn elsewhere. You might also use the proceeds to build up your emergency fund or replace lost income with structured withdrawals. For example, if your household normally relied on $5,000 a month from your spouse’s income, you could park the payout in a savings account and set up an automatic monthly transfer of that amount to checking. Running the numbers on how long the proceeds would last helps you decide whether that’s a suitable short- and medium-term plan while you build long-term income replacement.

Handling insurance money often comes with significant emotions. There’s academic research on this, some of it going back to 9/11, about how mixed those feelings can be. I’ve shared about it, and other guests on the podcast have shared how it felt for them. Life insurance is bought as a gift of love to provide for you, but it can take a while to feel that way about it. This was very hard for me early on, because I didn’t want the money; I wanted Sarah back. If you feel that way, welcome to the club. That gift gives you space and the opportunity to replace lost income, provide for your children, and meet the long-term financial goals you and your spouse may have had together. Taking the time is well worth it.

Now let’s switch to banking and financial accounts. This can be a bit of a treasure hunt, particularly if you weren’t a joint owner on every account. Just as with life insurance, prior tax returns help. Banks issue a 1099-INT when an account earns at least $10 in interest, so those forms can point you to accounts, though they won’t necessarily reveal all of them.

You can also look through statements, online banking access, and incoming mail. Once a death notice or probate notice has been filed, institutions may come out of the woodwork. Start making a list, whether that’s a digital checklist or a legal pad: “I think there’s an account here, but I’m not sure if I have access to it.” Missing accounts often surface later. MissingMoney.com may help, but accounts generally appear there only after being turned over as unclaimed property, which can take years, so it won’t help much early in this journey.

For each account, note who the owners are and whether it was joint or individual, and keep track of online login credentials. In my experience, the bigger the bank, the easier this tends to be because of digital access. With smaller community banks and local credit unions, your best bet is often to go in person and talk to someone face to face rather than trying to handle it over the phone. It can be inconvenient, but it usually gives you a clear picture of what’s there.

If you weren’t on an account and it was in your spouse’s name only, you’ll likely need to go through probate and obtain letters testamentary to access it as the executor. Good legal counsel for your specific state may come in here. When you meet with a bank in person, bring at least one copy of the death certificate and, if already issued, the letters of administration or letters testamentary.

As you review each account, check for a POD, or payable-on-death, designation. A POD acts as a beneficiary designation, typically speeds up the process, and often avoids probate entirely. If you’re the POD beneficiary, you can usually move the funds into an account in your name. If an account is going through probate, defer to the advice of your attorney.

The big priority is making sure you have enough to pay your bills, as we discussed with life insurance. If you were a joint account holder, the account is yours to use however you choose. Generally speaking, though, leave your late spouse as a joint owner on at least one account, most often the joint checking account. If old checks, refunds, or missing money arrive in your late spouse’s name and their name isn’t on your account, you likely won’t be able to deposit them. You may have to open a new account, potentially an estate account through probate, just to deposit them. My general rule of thumb is to leave their name on your checking account for at least 12 months, maybe a little longer if you suspect there’s missing money out there. You don’t lose anything by doing that, and it eases deposits later.

When deciding how much cash to keep available, ask how much you need for daily living and bills over the next several weeks and months, and hold that as a baseline cash reserve. One thing we’ve seen is that if you put a large sum, particularly from life insurance, into a checking account and let it sit, it becomes harder to track, even though you know there’s plenty there. Our general recommendation is to hold it in a separate savings account and transfer what you need each month, almost like paying yourself a paycheck.

Next, review automatic deposits and withdrawals tied to accounts in your late spouse’s name, such as payroll deposits, benefit payments, and automatic bill payments. Redirecting or stopping these may require identification, and missing them can cause confusion or bounced payments. Some automatic withdrawals, like subscriptions or insurance premiums, can be moved to your account, or left in place if you’re keeping the joint account that’s now in your name. Cross-reference this list so you don’t miss bills, have services turned off accidentally, or overlook responsibilities going forward. If you use a budgeting app (Monarch Money is the one we typically recommend to clients), you can audit the last six to twelve months at a glance to map out recurring items.

If you haven’t already contacted institutions like Social Security, DFAS, or the VA about stopping or changing payments, that can create a challenge. You may find you owe money back for an extra month, two, or three of deposits. Sometimes these institutions pull the money back automatically by ACH, so monitor your checking account and keep extra cash in it as a buffer. That way a large withdrawal won’t suddenly overdraw your account.

While you may want to keep the joint checking account for depositing those stray checks, you may also want to open a new checking account in your name only. This lets you reset everything going forward with full control and knowledge of what’s happening. It’s a common recommendation for our clients: the new account is where deposits flow, and you know exactly what’s coming in and going out.

Back to the old joint account: keeping your late spouse’s name on it for about twelve months also gives you a chance to catch anything that was missed. Some bills are paid quarterly, semiannually, or annually, so a twelve-month window lets you double-check bills and expenses as they come in.

Most banks let you set up text alerts or push notifications for transactions above a set threshold. For example, if you want to know every time more than $200 leaves your account, you can set up a push notification, or set a low-balance alert to warn you ahead of time. You don’t have to log in constantly to track things, and you’re notified when something needs attention. This is especially helpful for unexpected bills and fraud alerts.

Earlier I mentioned the POD designation. When you open new bank accounts, adding a payable-on-death beneficiary can be very helpful, whether that’s your children, other heirs or dependents, or, as you move into estate planning, a revocable living trust. If this terminology is unfamiliar, we’ll have a separate estate planning episode covering it in more detail, or you can refer back to Season One, where we had a full episode on your own estate planning. Anytime you open a new account, a POD makes the process easier for your children, your heirs, and others down the road.

Something we see regularly is the value of consolidating and simplifying down to one or maybe two institutions. Fewer accounts means fewer statements, fewer logins, and fewer things that slip by unnoticed. Then the question becomes where you want to bank. If you need to show up in person regularly, look at banks in your area. If you travel often and need branches elsewhere, that may point to a national bank with branches in many states rather than a local credit union. Local credit unions can be a great first stop, since they may offer more personalized customer service, sometimes at the trade-off of a less polished mobile app. Look for low or no fees for ongoing checking account maintenance. Many banks waive fees for veterans, military spouses, and service members, so that’s worth considering.

Keep your regular checking account, where income and bills flow in and out, at the same institution as your emergency fund for overdraft protection. That emergency fund is typically three to as much as six months of living expenses. Long-term savings can be held in FDIC-insured accounts, for instance through MaxMyInterest. Consolidating is a lower-urgency task that falls in the soon bucket. Everything else we’ve covered so far, getting a handle on what’s flowing in and out, belongs in the now bucket.

Once you’ve closed unnecessary secondary accounts, obscure credit lines, and duplicate bank profiles, life gets simpler. We see it over and over: clients with fewer accounts to monitor feel less financial anxiety and more in control.

Let’s switch gears to utilities. Most of the time this is relatively straightforward: contact the utility provider, provide a copy of the death certificate (very rarely the original), and complete a simple account transfer form. If you were already jointly titled on the house, it’s usually a seamless process.

The main goal is to keep services from being shut off because notices are going to an unchecked email account or autopay is drafting from an account that no longer has money in it. The earlier you contact your electric, gas, water, trash, and internet providers, the better. If you’re setting up a new checking account for bills going forward, you can have all autopay and automatic bill pay come out of that account, which gives you more control than relying on an old account.

As you review these services, it may also be an opportunity to save money. This probably falls in the soon or even later bucket, but ask about discounts and review whether to switch, downgrade, or cancel. It’s amazing how often clients call the cable company, say they’re switching or need to downgrade, and are offered discounts the company never mentioned on its own. I always say the answer is no until you ask.

For the last part of this episode, let’s talk about the administration of investment and retirement accounts. You may or may not have a good handle on where everything is, particularly old employer 401(k) plans from prior jobs. If you don’t have statements or logins, a financial professional can help search databases, and a tax professional can help review old tax returns and pay stubs that show where accounts were set up.

Brokerage accounts are usually titled as individual, joint with rights of survivorship, or trust-owned. If you were joint owners, it’s as simple as contacting the custodian (Schwab, Vanguard, Fidelity, or similar), providing an original death certificate and some paperwork, and the account is transferred into your name. An individual account in your late spouse’s name alone is where probate likely comes in, and you’ll need appropriate legal counsel. The assets move from the individual account into an estate account and then, based on the probate proceedings, into your individual account. Paul Allen and I did an episode this season on the tax implications, including how the step-up in basis works, so refer to that episode for the specifics.

Retirement accounts, such as old 401(k)s, 403(b)s, the TSP, traditional and Roth IRAs, and pensions, pass by named beneficiary. Assuming you’re the named spousal beneficiary, contact the custodian and submit a copy of the death certificate (sometimes an original, which they’ll return) along with the account paperwork.

This is where key decision points come in. As with the life insurance payout, these are irrevocable decisions about how to receive the funds. As the spousal beneficiary, you can roll the account into your own name. The account then follows your retirement timeline based on your age, staying tax-deferred if it’s traditional or tax-free if it’s Roth, but it’s generally meant for your retirement after age 59½.

Alternatively, you may be able to keep it as an inherited IRA. That can let you withdraw money without the 10% penalty that normally applies before age 59½, but the tax treatment stays the same. Traditional money has never been taxed, so withdrawals are taxable income to you. Roth withdrawals remain tax-free.

So we look at all your income sources. Are you eligible for retirement benefits or a pension? Are family Social Security benefits a factor? How much life insurance did you receive, and is it going into an investment account that can cover bills between now and your 50s, 60s, 70s, and beyond? In that case, it might make more sense to roll the retirement accounts into your own name. If there isn’t as much, or you’re already past 59½, required minimum distributions, or RMDs, come into play.

If your late spouse was already taking RMDs, meaning they were older than 73, you may still be required to continue taking them. Some of this changed recently with the SECURE Act and SECURE 2.0, and it gets complex quickly. If your spouse was older than you, it may make sense to roll the accounts into your own name, since your younger age changes the RMD. Conversely, if your spouse was younger than you, it may make sense to keep them as inherited accounts, since the RMD is based on your late spouse’s age rather than your older one. Consulting a qualified professional, especially one who does comprehensive, holistic, fee-only planning, makes a big difference here.

You might then ask how these accounts should be invested. That depends on several factors, starting with risk capacity. Are you still working, or do you plan to return to the workforce? If so, how many years of earnings might you have? More working years and higher earning potential mean higher risk capacity. A widow in her early 30s, with decades of potential earnings and career prospects, is in a very different stage of life than a 75-year-old widow who has been retired for years and has no desire to return to the workforce. That older widow has a much lower risk capacity.

We also look at risk tolerance, which is how well you sleep at night. It’s a psychological measure. How much do your retirement and investment balances worry you, and how often do you look at them? How often does the topic come up with your peers, and how well do you understand the trade-offs and drawbacks involved? We typically have an in-depth conversation with clients about this.

The last factor is how exposed you would be to a reduction in your living expenses. Do you already have significant steady, inflation-adjusted income from Social Security, SBP, or similar sources that provides a stable base? If so, withdrawals from your retirement and investment accounts may be more flexible. Each of these is a key part of the decision, which is why personal financial planning is far more personal than it is financial.

We also like to give every dollar a job. Withdrawals you plan to need over the next one to three years typically belong in conservative, safe investments. This is sometimes called the bucket approach. Savings accounts, CDs, money markets, and short-term Treasury funds or bonds can fund near-term living expenses, while money for expenses 10, 20, or 30 years from now can be invested in stocks, which have different characteristics and more growth potential over your lifetime.

As you apply this approach, remember that life has changed. Time horizons may have changed, and your goals on this side of loss will likely be very different. Reconsider the overall picture and avoid dramatic swings or reallocations driven strictly by fear. Review everything systematically, goal by goal and dollar by dollar. This is where working with a fee-only financial planner who understands the intricacies of the grief journey can make such a big difference. When life changes alter your overall picture, the transition away from the prior plan should be deliberate. Aligning your investment timeline with a reduced or single income and changed circumstances can make a huge difference.

Let’s revisit some specifics of those irrevocable decisions with employer retirement accounts. Rolling them into your name may give you longer-term options, with the trade-off of less short-term withdrawal flexibility. The custodial process varies widely. Some custodians handle this regularly and have fully digital processes. Others, particularly in the 401(k) and 403(b) space, have services that are, to put it politely, antiquated: forms filled out by hand in wet ink, documents sent by mail, sometimes even faxes. So take heart. If it’s discouraging, frustrating, and slow, that’s sadly the way some of this process goes, and having someone walk you through it can make a big difference.

More often than not, choosing direct rollovers, what we call custodian-to-custodian rollovers, makes this easier. For instance, suppose you ultimately want the money at Schwab because that’s where your advisor manages assets, but you have an old 401(k) at Fidelity. It’s often easier to first roll the 401(k) into an IRA at Fidelity. Fidelity retains the assets, and then Schwab can more easily pull them over IRA to IRA. Going straight from a 401(k) to an IRA at a new custodian can add an extra step. If you’re already feeling overwhelmed by this whole process, I understand, and that’s where having expertise and someone to guide you helps.

When you keep traditional to traditional and Roth to Roth in a rollover, the original tax treatment holds, and the rollover is not a taxable event. In the unlikely event the assets are paid out to you and you deposit the check into your checking account, timing becomes very important because of the 60-day rule. If you deposit a 401(k) rollover check into your own account, you can send that money back into a like-titled retirement account, but you have to do it within 60 days. Most other 401(k)-to-IRA decisions fall in the soon or later bucket. Depositing the check yourself is the exception, because it starts a ticking clock.

The last item I want to touch on is annuities and other illiquid assets, which might include investment property, closely held business interests, or restricted stock. These need case-by-case evaluation. Annuities may have unique features like surrender periods, where taking money before the period ends means paying extra fees or leaving money behind with the insurance company. They may also have market value adjustments or death benefit provisions that vary significantly, not only from company to company but from contract to contract. If you have enough liquidity from life insurance or other assets to pay your bills, these decisions belong in the soon or later bucket, when you have time to understand all the options. If a company pressures you to decide and there’s no specific deadline, defer and let a fee-only planner help you decide, because these are usually irrevocable decisions. Similarly, try to avoid buying new illiquid financial products during the initial phase after a loss, while you’re still trying to make sense of it all.

Once retirement accounts are in your name, after a rollover or similar decision, updating your own beneficiaries becomes critically important. This ties back to building your own estate plan to provide for your loved ones. Every retirement account needs its own current beneficiary designation. Most likely your late spouse is listed as the primary beneficiary, perhaps with your children as contingents. Now that your spouse has passed, if something happened to you, the assets would flow to whoever is listed as contingent.

If the contingent beneficiaries are blank, the assets might flow to your estate and, without a will, be distributed under your state’s intestacy laws. If your children are listed as contingent beneficiaries, they might unintentionally inherit the money, with it held for them until they reach the age of majority, 18 in most states, when they gain full control. That may not be wise. You might not want your 18-year-old suddenly inheriting hundreds of thousands of dollars or more.

A good estate plan can set up levels of control. After setting up a revocable living trust, many of my clients name the trust as the beneficiary of their retirement accounts. A well-drafted trust with see-through provisions can allow the trust’s beneficiaries to potentially use the SECURE Act 10-year rule and other distribution options. If this is hard to follow, that speaks to the value of a good estate plan. It does get complex, which is why all these pieces need to fit together, so consult appropriate legal counsel.

At Wise Stewardship Financial Planning, that’s one of the reasons we’ve partnered with Encore Estate Plans. They help make sure your wishes are documented and that you receive enough education to make the best decisions for what’s important to you. Their team then prepares your documents: updated state-specific wills, pour-over wills that send everything into a trust, trust beneficiaries aligned with your accounts, and financial and healthcare powers of attorney, all working together. The big takeaway is understanding how everything is linked. That’s why financial planning is so important, so everything is on the same page.

Just as it made sense to consolidate bank accounts, it often makes sense to consolidate investment accounts. Clients sometimes ask about custodial diversity: “What if I keep some accounts at Schwab, some at Vanguard, and some at Fidelity?” FDIC insurance covers $250,000 per depositor at each bank. Brokerages and custodians are covered by a different kind of protection called SIPC, which you can research online, and it works very differently. Your investments are held separately from the custodian’s own assets, and the custodian mainly provides the interface for managing them. That’s why it often makes sense to consolidate down to one custodian with one login. Combining scattered IRAs makes your investment approach easier to implement, simplifies withdrawals, and makes everything easier to track, especially at tax time with the 1099s that come with withdrawals.

One piece I haven’t covered here is how the step-up in basis works for investment accounts. Refer to the other episode this season where Paul Allen and I go into those details, including how living in a common law state versus a community property state affects it.

Because all of this is so complex, it takes time. Even in a best-case scenario, it takes us six, twelve, eighteen, or even twenty-four months to work through everything in this episode with clients. If it feels overwhelming, that’s probably because in many cases it is. Start small. How do you eat an elephant? One bite at a time, and the same idea applies here.