After grief, new widows must reevaluate finances

When my husband died after a short illness seven years ago, I was brokenhearted. Back then, I couldn't imagine when the anguish would end. But slowly, over time, I moved forward. My husband wouldn't have wanted me to be stuck in that first stage of widowhood—grief—forever.

The following stage of widowhood—growth—is a time to take care of business. As a widow moves into this period, the fog begins to lift; her thinking becomes more normal. Thus, Stage 2 is the time to begin taking care of the major financial decisions that previously had been deferred.

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If you're a widow in Stage 2, most likely you will have already reviewed your money flow (sources of income and regular bills), filed for death benefits and started organizing information for your attorney, tax professional and financial advisor.

If you previously parked life insurance proceeds in a money market account, now's the time to consider longer-term uses for those funds. If you're a younger widow still in your working years, this may include an investment in your career.

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Stage 2 is also the period when you'll think about staying in your current house or downsizing to a residence you can more easily manage on your own.

This is the time to review your investment portfolio. What you and your husband had previously decided about your money may not be appropriate now that you're a widow. Your new plans should reflect this transition. Here are some tips to help you move forward.

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Don't be controlled from the grave. Several months after my client Jane's husband died, she felt nervous about her investments because her late spouse, a retired medical doctor, had enjoyed "playing the stock market daily."

He had spent most of his days researching different companies and also happened to be lucky with his purchases. "Now I'm a nervous wreck with nobody paying attention to that brokerage account since Fred's gone," Jane said. "I never was interested in all that stuff before. I don't even know what he bought or sold. What if there's another market crash?"

Like many widows, Jane needed to feel financially safe. She wanted to spend time with her grandchildren and pursue her other interests, not worry about her investments.

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At Jane's request, I reviewed her portfolio. As suspected, the retirement account she inherited from Fred held a high percentage of very volatile Asian stocks. I agreed that these were not appropriate for a widow in her mid 70s who was not interested in "playing the market." She quickly agreed to reallocate her money into a diversified and balanced portfolio of funds.

But when it was time to sell her husband's prior investments, Jane froze. "I just can't do it," she said. "It's like I'm slapping Fred in the face, telling him his decisions were wrong." She felt disloyal in wanting to exchange his volatile stocks for more conservative investments. Yes, Jane understood why she needed to make changes, but emotionally, it was as if Fred controlled his wife from the grave.

Jane and I revisited her situation and talked again about how investments that had been acceptable for them as a couple were no longer right in her new stage of life. This freed Jane to move forward, knowing Fred would want her to have peace of mind. (By the way, had Jane stayed in those risky stocks, she would have lost most of her money in the market crash of 2008.)

You, too, may benefit by reviewing your investments in your changed situation as a widow in Stage 2.

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Update your own estate plans. Although you may have recently settled your husband's estate, now it's time to think of your own estate plans. Before your spouse died, you might have had a simple "Honey, I love you" will that left everything to him. Now you'll need to think about how your money and possessions should be divided after you're gone. Who gets what? You can spell out your intentions in your new will or living trust.

You'll also want to create or update your living will. That document says what you do or do not want done for you medically, including life-prolonging treatments. Also think about giving durable and medical power of attorney to someone you trust. This person will make financial and medical decisions if you're not able to speak for yourself.

Make sure you've designated beneficiaries on your life insurance policy and on retirement and other accounts, such as your IRA, where you can name a direct beneficiary. Your husband was probably the beneficiary before, so you'll want to change that. Remember to do the same for U.S. savings bonds.

If you have minor children, consider the protection you're leaving for them, including insurance coverage. Also carefully designate who would be your children's guardian and manage money for their care.

"Consider your end-of-life planning as a lasting gift for your loved ones."

Thinking about your own death isn't easy, especially after facing your husband's passing. Consider your end-of-life planning as a lasting gift for your loved ones. They'll certainly be grateful that you are leaving things so organized.

So, you may ask, how long does it take for a widow to move from grief to growth? It depends. A husband dying suddenly and unexpectedly is much different than an ailing spouse "living on borrowed time" for several years.

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A widow's age, her own health, the amount of family and community support she has and any pre-planning she does before her husband's death will also impact her progress.

Some women move into Stage 2 within several months of their husband's passing, while others remain in Stage 1 for a year or more. Each woman's journey is different.

Kathleen M. Rehl, Ph.D., is a certified financial planner, owner of Rehl Wealth Collaborations and author of "Moving Forward on Your Own: A Financial Guidebook for Widows."