Losing a spouse is one of life’s most profound losses, and managing finances in the aftermath can feel overwhelming — especially if financial decisions weren’t previously your responsibility. If you’re walking through this kind of a loss, you don’t have to navigate it alone.
Finding support after losing a spouse
It’s often beneficial to share feelings of grief and sadness with others who understand. Bereavement advice and resources, such as the Widowed Village online forum by Soaring Spirits International and Modern Widows Club® can offer solace and support. These communities keenly understand the need to connect with others who are going through grief.
Financial planning for widows: Where to start
A caring financial team is essential for helping evaluate options and developing a strategy for the future — so you can take the right steps, one at a time. Include a tax specialist, a fiduciary wealth advisor, and an insurance professional.
Because financial planning for widows often starts with understanding the tax questions at hand, we’ve outlined five important questions to consider below. These can be helpful as you begin adjusting to life after a loss.
1. Can I file as a qualifying surviving spouse?
Widowed taxpayers may be eligible for qualifying surviving spouse tax filing — formerly known as a qualified widow or widower tax filing — for up to two years after their spouse’s death. This allows you to use the same tax rate as someone who’s married filing jointly, including access to the higher standard deduction.
To qualify, you must meet each of these criteria:
- You were entitled to file jointly during the year of your spouse’s death.
- The death occurred in the past two years and you have not remarried.
- A qualifying child or stepchild lives with you and can be claimed as a dependent.
- You paid over 50% of your home’s yearly upkeep expenses.
If you meet the criteria above, talk with your tax advisor, who can help you decide if qualifying surviving spouse status benefits you.
2. When should I begin filing a single return?
If you do not remarry before December 31 of the year your spouse passed away, you’re eligible to file a joint return. Filing taxes as a qualified surviving spouse for the year of death is often helpful as most deductions and exemptions are higher for joint filers than for single filers.
That said, it’s important to discuss next year’s filing status with your advisor promptly. The tax bill can increase significantly when filing as a single filer for the first time.
3. What is a step-up basis for inherited assets?
One of the most significant — and often overlooked — tax tips for widows involves the stepped-up basis rule. In most cases, you may be able to claim a stepped-up basis over the inherited assets basis following your spouse’s death. Rather than using the original purchase price, the cost basis resets to the fair market value at death.
This can substantially reduce the capital gains tax you could owe if you sell appreciated real estate, securities, or other investments. Discussing this with your tax or wealth advisor could reveal meaningful planning opportunities in your asset portfolio.
4. What is my home-sale capital gains exclusion?
The current law lets a single taxpayer exclude up to $250,000 in capital gains from selling a primary residence. Married taxpayers filing jointly may exclude up to $500,000. If you’re considering selling your home following your spouse’s death, doing so while you still qualify for the higher exclusion might be in your best interests.
This is a time-sensitive decision — one that deserves a careful review with your advisor. You should also ask about current or pending tax law changes that could impact your planning.
5. What are the required minimum distributions (RMDs) rules for an inherited IRA?
If your spouse had an IRA, 401(k) plan, 403(b) plan, or other qualified retirement account, you likely inherited those assets if you were named the beneficiary. Inherited IRA RMDs can be complex. The RMD rules depend on your age and your spouse’s age at death.
For taxpayers born after 1951, RMDs begin at age 73. As a surviving spouse, you generally have more flexibility than other beneficiaries. In many cases, you can roll inherited IRA funds into your own account. Then you can delay RMDs until you reach your required RMD age. Your tax or wealth advisor can evaluate which approach aligns best with your broader financial strategy.
Take the next step with confidence
After the death of a spouse, seeking professional guidance as early as possible can help ensure you don’t miss a critical deadline or overlook a beneficial strategy. Wealth advisors who work with women in transition understand that emotions and money are deeply linked — and our wealth advisors are ready to support both.
At Mercer Advisors, we specialize in helping women in transition, and we can support you in managing your money after losing a spouse. In addition, we offer tax planning and preparation, insurance solutions, investment management, estate planning, and more. You don’t have to figure this out alone; we’re here to help.
If you would like to learn more about how we can help during transitions
-
A stepped-up basis is a tax-related adjustment that resets the cost basis of an inherited asset to its fair market value at the time of death, rather than the original purchase price. When you eventually sell the asset, you’re taxed only on gains that occur after the date of inheritance — not on the full appreciation over the asset’s lifetime. This adjustment can reduce capital gains taxes on appreciated real estate, stocks, or other investments.
-
The qualifying surviving spouse status allows a widow or widower to use the married filing jointly tax brackets and higher standard deduction for up to two years following the year of the spouse’s death. There are certain requirements that need to be met to qualify. Consulting a tax advisor can help you determine whether this status applies to your situation.
-
Deciding when to sell your home is a tax-sensitive decision. Married couples filing jointly may exclude up to $500,000 in capital gains from a primary home sale, while single filers may exclude up to $250,000. Selling while you still qualify for the higher exclusion could lead to tax savings. A wealth advisor can help you weigh the financial and emotional dimensions of this decision and identify the timing that is best for you.
-
As a surviving spouse, you generally have more flexibility than other beneficiaries. You can often roll the inherited IRA into your own account and delay RMDs until you reach your own RMD age — currently 73 for anyone born after 1951. A wealth advisor experienced in inherited IRA strategies can help you evaluate the best approach for your tax situation and long-term income needs.
-
Mercer Advisors has experienced specialists who focus on this type of work. They are credentialed, fiduciary financial professionals who have experience working with women in transition. They will listen carefully, understand your goals, and help coordinate across tax, estate, and investment planning on your behalf. Contact us to learn how we can help.
-
In the year your spouse passes away, you might be eligible to file a joint return if you meet specific criteria. This offers the full benefits of married filing jointly for that tax year. The qualifying surviving spouse status applies to the two tax years after the year of death, allowing you to continue using joint tax rates and the higher standard deduction.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. External links are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Mercer Advisors of any of the products, services or opinions of the corporations or organizations or individuals represented in the links. Mercer Advisors bears no responsibility for the accuracy, legality or content of the external sites or for that of subsequent links. Contact the external site for answers to questions regarding its content.
Mercer Advisors is not a law firm and does not provide legal advice to clients. All Estate planning document preparation and other legal advice are provided through select third parties, with which Mercer Advisors has a contractual relationship. Mercer Advisors Tax Services, LLC, does not provide financial audit, assurance, compilations, or forensic accounting services. Insurance products are provided by Mercer Advisors Insurance Services, LLC (MAIS), which places individual life, disability, long term care coverage, and property and casualty coverage through select insurance companies. Trustee services are offered through select third parties with which a client would sign an additional agreement, and additional fees may apply.
