There’s more than taxes to deal with when your spouse dies


Discussing money matters while living can avoid future grief when your spouse dies

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MONEY MILESTONES: In an ongoing series, the Financial Post explores personal finance questions tied to life’s big milestones, from getting married to retirement.


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Most people are never quite ready to lose a spouse, and those who find themselves in this difficult situation face emotional grief as well as myriad financial decisions in determining their next steps.

Experts say traditional advice, such as suggesting the surviving spouse wait six months to a year before making major financial decisions, no longer holds true. Some money matters, such as starting the insurance claim process, require immediate attention, though other decisions about assets can be put off for longer periods if a person isn’t ready to deal with them.

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“I’ve had people who bounce back fairly quickly and others who take a couple of years depending on the trauma of the situation,” said Wendy Brookhouse, a certified financial planner and founder of Black Star Wealth in Halifax. “It’s important to give yourself space to grieve.”


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She refers to it as the “space and grace” period when dealing with clients who have lost their spouses.

For those whose spouse was the household’s money manager, there is also a period of grace needed to “learn a whole new language” around finances, she said. “(Financial) concepts they’re suddenly hearing about may not stick right away and they need to work with people who will help them understand things clearly before making major decisions.”

Brookhouse said life insurance is one financial planning area that people undervalue until it’s too late. Clients are often surprised by the amount of money needed to replace a spouse’s lost income over time.

“If you had to replace a $100,000 salary over 15 years, that’s $1.5 million, which people think is way too much when it really isn’t,” she said.


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Even for the breadwinner, the loss of a spouse could mean sudden childcare costs or other household expenses that hadn’t been previously accounted for.

Some financial relief in the short term can be found by tapping into government assistance (such as the Canada Pension Plan death benefit for survivors and their children), as well as benefits from the deceased spouse’s employer.

“Sometimes there are provisions to extend health and dental benefits for a period of time, particularly with larger employers,” Brookhouse said.

Death and taxes

Tax implications after a spouse’s death are also worth more careful consideration, said Keith Masterman, vice-president of Tax, Retirement and Estate Planning at CI Global Asset Management in Toronto.


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For example, the deceased’s assets will often be rolled over to the surviving spouse to defer taxes when it might make more sense to opt out.

“If my spouse had a capital loss, I may want to create a gain and then write it off against the loss,” Masterman said. “There doesn’t need to be a knee-jerk reaction to always take the rollover.”

Another often overlooked strategy involves registered retirement savings plans (RRSPs). The deceased spouse’s estate can make contributions to the survivor’s RRSP in the year of death or during the first 60 days after the end of that year. These contributions can be claimed on the deceased individual’s return, up to that individual’s RRSP deduction limit for the year of death.

“Depending on the circumstances, certain strategies can help to minimize tax and maximize wealth for families,” Masterman said.


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Beyond taxes, he said it is critical to review the estate plan when a spouse dies and ensure there is a power of attorney allocated.

“I know my wife and I have had that conversation about what we want to happen in our lives, but have I had that conversation with my child or nephew who will now take over?” he said.

Tackle tough conversations early

In an ideal scenario, financial decisions around estate planning should be discussed with the entire family well before either spouse dies, said Elke Rubach, financial adviser and founder/president of Rubach Wealth in Toronto.

“It’s about normalizing the conversation around death and money,” she said. “It may not be a cheerful one, but at least if you’ve talked about what will happen and who will get what, it makes the process after a whole lot easier.”


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Rubach said having an up-to-date will can help “spark” these difficult conversations in the first place. Then make sure you update your will when your spouse dies and reappoint an executor to take over if that person was originally your spouse.

“People forget that at some point their children get married and that adds complexity to the mix, too,” she said.

Having a good financial guide who will collect and allocate information accordingly can also help ensure surviving spouses aren’t left scrambling to figure out what needs to go where, Rubach said. And if they aren’t providing this service, it’s time to go elsewhere.

The vast majority of widows change advisers within a year of their spouse passing because they haven’t cultivated a trusted relationship prior or feel stereotyped and disrespected, according to, a Toronto-based consulting firm.

“The number of financial advisers who jump on the widow just to manage the assets is just awful,” Rubach said. “You have to be on the same page.”

Financial Post



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