I’ve Lost My Spouse. Should I Change Anything About My Investments?
Introduction
A common question we get from widows after they lose a spouse is, “should I change anything about my investments?” It’s a great question, and the answer isn’t always straightforward or obvious.
There can be a feeling of urgency to make sure everything is set up exactly the right way after losing a spouse. Some people feel like they need to make quick changes, out of fear that if they don’t act now, something will go wrong. Others take the opposite approach, and change nothing - for years - partly out of grief, and partly because it’s overwhelming.
Neither extreme serves you well. We’re going to talk about what should take priority about investments, and what can wait.
Things to Address Soon
When it comes to your investments, changing the internal structure could require quick attention. But there are a few things about these accounts that should take higher priority than the investments themselves.
The first is beneficiary designations. If your spouse is listed as a beneficiary on your retirement accounts or life insurance, that needs to be updated. In most cases, it’s a simple form, or can even be completed over the phone. It’s also an easy thing to overlook while you’re focused on everything else. But leaving it undone can create problems for whoever you’d want to receive that money.
One note of caution: if you have minor children, it’s usually not a good idea to name them directly as beneficiaries. If you have a will in place, naming your estate as the beneficiary can be the better option. Some companies can get picky about how it’s listed - for example, “Estate of Jane Smith pursuant to the will dated 8/18/26” - and some are fine with your just writing in the word “Estate.” Some want you to complete a separate form. It’s worth a phone call to the company to be sure.
The second thing is account titling. Some accounts, including joint brokerage accounts, generally transfer to you automatically as the surviving owner. If an account is solely in your spouse’s name - and there is no named beneficiary - then it may need to go through probate before it’s fully yours to manage.
Things That Can Wait
There are certain decisions that are better to wait on. Selling out of everything in an account, and moving everything to cash, is typically not the right decision - even if it might be in the future. It can feel like a way of taking control, but it might actually be self-sabotage. Gifting money, or making a major purchase from an investment account, can also feel tempting.
It’s a delicate balance: these kinds of decisions are either difficult or impossible to undo. They’re also decisions that lead to missed opportunity - like a good year of market growth - that might hurt you later. That’s why grief is just not the ideal state of mind to be making these choices in.
It’s okay to give yourself six months, or even a year, before committing to anything that’s permanent or hard to reverse. But these big decisions typically involve things like paying off the mortgage, selling the house, or moving away - not the investments themselves. Those are the ones that are worth waiting on. As well-meaning as grief is, it’s important to not let it sabotage your financial future. Build a partition between your grief, your money, and the decisions about your money. It’s okay to do that.
What About The Actual Investments?
Once the paperwork is processed and you have a little bit of breathing room, it’s worth reassessing the portfolio from a new lens. Your financial situation has changed, and that difference can lend itself to investment changes that better suit your needs.
A common thing we see is that household income has changed. If you depended on your spouse’s income, then the gap between what comes in now and what was lost has to be made up from somewhere. After you assess how your spending plan will be different going forward, there’s really only three options for addressing that gap: 1. cut spending, 2. use savings and investments to make up the difference, or 3. both.
If some of your investments need to take care of your needs now, but they weren’t before, that means they might need to be changed. Investments that were once earmarked for long-term growth might now need to meet two needs - growth and income. An investment account designed for “aggressive growth” or that’s full of stocks might serve you better if it’s balanced between stocks and interest-bearing things like bonds and money markets.
One tax detail I should mention here: if you’re inheriting a brokerage account, or continuing a joint account you shared with your spouse, you may experience what’s called a “step-up” in cost basis. Cost basis is essentially what you originally paid for an investment. When you sell, the tax you pay is calculated on the different between what you get and what you originally paid. But when you inherit investments at a spouse’s death, the cost basis often changes to become the value on the date your spouse passed, rather than what was paid years ago. And if you’re in one of nine states that allow for it - Arizona, Idaho, New Mexico, California, Texas, Wisconsin, Louisiana, Washington, or Nevada - your basis also steps up in jointly held accounts.
Nothing in the previous paragraph applies to retirement accounts. If you’re inheriting a retirement account, that’s an entirely separate set of considerations worth understanding.
Bottom line: if the account you’re inheriting is set up for aggressive growth, or concentrated in a single or small number of stocks, these setups are worth reevaluating against your own needs.
What Was Theirs & What Is Now Yours
Keeping things exactly the same way your spouse had them might be exactly the right thing to do. But there are times when making some adjustments is in the best interest of your future self and your family.
I recently heard a widow say that she didn’t wash her husband’s laundry for three months after he died unexpectedly. To her, this was one of the last pieces of him being around, and the life they shared. She said that she knew once she washed it, she’d then have to decide what to do with it. Putting laundry in a dresser for someone who would never be there to open the drawers added a layer of complication to something otherwise mundane.
There are no rules to grieving. Keeping things the way someone had them, for our own sake, is okay. But I’m here to tell you that it’s not a betrayal of their memory to make changes, at the right time, when your needs call for it.
If you were named as a beneficiary on accounts, it’s because the person who left them to you cared about you being taken care of. So I’m here to tell you it’s okay to move them if that’s what you being taken care of means. You don’t need to rush. But you also don’t need to put it off indefinitely to honor their memory.
What’s beneath what they once held is an investment decision they made a specific time. Sometimes there’s no telling, just by looking at an account, what the thought process was behind opening it, or how long they planned to invest in certain stocks or funds. But what they invested in was based on a future with them in it. There’s a reason they didn’t write down, on paper, “keep everything exactly like it was if something happens to me.”
This also doesn’t mean selling everything your spouse picked is the right decision. Each holding is worth evaluating on its own merits. Ask: does this fit my income needs? Am I comfortable with the risks? How does this align with my goals? Some of what’s there might still be exactly right for you.
Common Questions
How soon should I meet with someone about this? There’s no rule that says you need to have a conversation about this in a specific timeframe after you lose your spouse. I encourage you to wait until you feel like you have capacity for it. That being said, reviewing beneficiaries and account titling are items to handle sooner - even if the bigger investment conversation waits.
What about our old advisor, if my spouse was the one who mainly talked to them? This is a matter of personal preference. In my experience, widows often switch to new advisors if their spouse was the one who had the primary relationship. The previous advisor served previous needs. A new advisor might be right to serve new needs.
If you’re navigating this now, you don’t have to figure it out all alone. You also don’t have to figure it all out today.
Check out (and bookmark) our free resources for widows page, and other blog posts for widows going through this.
When you’re ready, you can schedule a free intro call with Scot and Lindsey.
Scot Whiskeyman, CFP® and Lindsey Ciarrocca, CMC® are independent, fiduciary husband-and-wife financial planners, serving pre-retirees and widows nationwide. They help people approaching retirement make clear decisions with the full picture in mind. They primarily work with widows of any age, or diligent savers between age 50-60, with $500,000 or more investable assets.
This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. Providers & Families Wealth Management is not affiliated with, and does not endorse, sponsor, or guarantee the accuracy, completeness, or reliability of any third-party websites, tools, or calculators referenced herein. Use of any such tools is at your own discretion and risk. Investing involves risk, including the possible loss of principal, and past performance is not indicative of future results. Information is provided "as is" without warranty of any kind.
