Originally published April 2016. Last updated March 2026.
Losing a spouse is devastating. On top of the grief, there are financial and tax implications that demand attention. Having a plan for these changes can prevent costly mistakes during an already difficult time.
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Your Filing Status Changes
In the year your spouse dies, you can still file jointly. For the next two years (if you have a dependent child), you may qualify for “qualifying surviving spouse” status, which preserves the married filing jointly tax brackets and standard deduction.
After that, you drop to single filing status, which has narrower tax brackets and a lower standard deduction ($15,000 vs. $30,000 in 2025). This “widow’s tax penalty” can push you into a higher bracket even though your income hasn’t changed.
Inherited Retirement Accounts
As a surviving spouse, you have options that other beneficiaries don’t:
- Roll it into your own IRA: The inherited account becomes yours. RMDs are based on your age, not your deceased spouse’s. This is usually the best option if you don’t need the money immediately.
- Keep it as an inherited IRA: If you’re under 59 and a half and need access to the funds, keeping it as inherited avoids the 10% early withdrawal penalty. You can always roll it into your own IRA later.
- Lump sum distribution: Take it all at once. You’ll owe income tax on the entire amount, which could push you into a much higher bracket.
Required minimum distributions depend on the option you choose and your age. If you roll the account into your own IRA, RMDs begin at age 73 (or 75 if born after 1960). The penalty for missing an RMD has been reduced from 50% to 25% under SECURE 2.0 (10% if corrected within two years).
Social Security Changes
A surviving spouse can claim survivor benefits as early as age 60 (50 if disabled). You’re entitled to the higher of your own benefit or your deceased spouse’s benefit, but not both. If your spouse delayed claiming and had a larger benefit, that amount transfers to you.
Strategy: if you’re under full retirement age, consider claiming survivor benefits now and switching to your own (potentially larger) benefit at 70.
Estate Tax Considerations
The federal estate tax exemption is $13.99 million per person in 2025. The unlimited marital deduction means no estate tax is owed when assets pass to a surviving spouse. But to preserve the deceased spouse’s unused exemption (portability), you must file Form 706 within 9 months of death (plus extensions). Don’t skip this step.
FAQ
Do I need to change my own estate plan?
Yes. Your beneficiaries, executor, power of attorney, and healthcare directives likely named your spouse. All of these need updating. Don’t put this off.
Will my taxes go up as a single filer?
Often, yes. The single tax brackets are roughly half the width of married filing jointly brackets. Same income, higher rate. This is one reason Roth conversions can be valuable in the surviving spouse’s early years, while income may be temporarily lower.
Should I make financial decisions right away?
No major decisions in the first 6-12 months if you can avoid it. Grief affects judgment. Make sure your bills are paid and your income streams are set up, but hold off on selling the house, changing investments, or making large gifts until you’ve had time to think clearly.
Schedule a free 20-minute consultation if you’ve recently lost a spouse and need guidance on the financial next steps.
R.L. Brown Wealth Management
106 W Vine St, Suite 300, Lexington, KY 40507
859.317.5889
