Financial Planning After Bereavement: A Guide for Surviving Spouses

The death of a spouse or long-term partner is among the most difficult experiences anyone can face. During the period of grief, financial decisions continue to demand attention — some urgently. This guide is written for the surviving spouse or civil partner, and for the advisers who support them. It covers the immediate financial priorities, the key assets to address, and the longer-term financial planning that will need to take place — in that order, because sequencing matters.

A note before proceeding: this guide deals with practical financial matters. The emotional dimension of bereavement is real, significant, and deserves proper support. Many of the financial decisions discussed here can wait; some cannot. Identifying which are urgent and which can wait is itself an act of financial planning.

The Immediate Financial Priorities

In the first days and weeks after a death, a small number of actions are both time-sensitive and essential.

Tell Us Once

The government's "Tell Us Once" service allows a single notification to inform most government departments — HMRC, DWP, the Passport Office, the DVLA, local councils — of a death. Ask the registrar when registering the death. This does not replace probate or the notification of private financial institutions.

Notify Key Institutions

Priority notifications in the first few weeks include:

• DWP: To advise on State Pension status and any bereavement benefits (Bereavement Support Payment, Widowed Parent's Allowance — depending on circumstances and dates)
• Employer: To trigger any death-in-service benefit and notify HR
• Pension providers: To begin the process of reviewing death benefits and expression of wishes
• Banks and building societies: To freeze or transfer accounts as appropriate — note that joint accounts typically continue; sole accounts may be frozen pending probate
• Mortgage lender: If there is a repayment life insurance policy linked to the mortgage, notify both insurer and lender
• HMRC: Via self-assessment if the deceased completed a tax return; the deceased's estate will have tax obligations

Locate the Will and Appoint an Executor

If a will exists, locating it is a priority. The executor (or co-executors) named in the will have legal authority to administer the estate. If you are an executor, you will need to apply for a grant of probate before assets can be transferred. If there is no will, the intestacy rules apply — which may not reflect what the deceased would have wanted, and the process is typically more complex.

If estate administration is complex — foreign assets, trusts, business interests, contested elements — instruct a solicitor specialising in probate as soon as possible.

Inherited ISA (Additional Permitted Subscription)

One of the most valuable and time-limited financial planning steps for a surviving spouse is making use of the Additional Permitted Subscription (APS) — the inherited ISA allowance.

When a spouse or civil partner dies, the surviving partner receives a one-off additional ISA allowance equal to the value of the deceased's ISA at the date of death (or the value at the date the account is closed, depending on the provider). This APS can be used to subscribe into a new or existing ISA in the survivor's own name, separate from the standard £20,000 annual ISA allowance.

The deadline: The APS must be used within three years of the date of death or within 180 days of the completion of the estate administration, whichever is later. This gives most survivors adequate time — but it should not be left to the last moment, as the administration of an estate can run longer than expected.

The practical implication: if your spouse held £200,000 in ISAs, you receive an APS of £200,000. This allows you to shelter £200,000 in a tax-free wrapper — a substantial benefit that would not otherwise be available within normal annual allowance constraints.

Contact the deceased's ISA provider directly to understand the APS mechanics applicable to their specific accounts.

Pension Death Benefits

Defined contribution (DC) pension death benefits are typically distributed at the discretion of the scheme trustees, guided by the expression of wishes completed by the deceased. It is essential to contact the pension provider promptly:

• Request information on all pension arrangements the deceased held — these may include workplace pensions from multiple former employers, personal pensions, and SIPPs
• Check expression of wishes: Whether a nomination form exists and who is named; the trustees are not bound by the nomination but will normally follow it absent compelling reasons not to
• Understand the payment options: DC pension death benefits can typically be paid as a lump sum, transferred to a beneficiary drawdown account (inherited drawdown), or used to purchase an annuity; the right choice depends on the beneficiary's circumstances and the tax position

Tax on DC pension death benefits:

• If the deceased died before age 75: the death benefit is paid income-tax-free to the nominated beneficiary
• If the deceased died at or after age 75: the death benefit is taxable in the hands of the recipient at their marginal income tax rate

From 6 April 2027, unused pension funds will form part of the deceased's estate for IHT purposes under the Finance Act 2026 (which received Royal Assent on 18 March 2026), with personal representatives liable for any IHT due. The rules as they stand in 2026 still provide substantial tax advantages for DC pension death benefits; take advice on timing if relevant.

Defined benefit (DB) pensions: DB schemes typically provide a spouse's pension as a percentage of the member's pension (commonly 50–75%, but scheme rules vary). The DB spouse's pension continues for the surviving spouse's lifetime, though it is taxable income. Confirm the amount with the scheme trustee and note it in your income planning.

Understanding the New Financial Position

Particularly where one partner managed the couple's finances, bereavement can leave the surviving spouse genuinely unclear about the overall financial picture. A financial audit is an essential early step.

This does not need to happen in the first week — but it should happen within the first 2–3 months, once the most acute phase of grief has passed. The audit should establish:

Income:

• State Pension (yours and any inherited element from the deceased's record)
• DB pension(s)
• Rental income from investment property
• Investment income (dividends, interest)
• Any continuing employment income

Expenditure:

• Fixed: mortgage/rent, utilities, insurance premiums, subscriptions
• Variable: food, travel, leisure
• One-off: any commitments made prior to bereavement

Assets:

• Bank and savings accounts
• ISAs
• Investment portfolios
• Pension funds
• Property (primary residence and investment properties)

Liabilities:

• Mortgage(s)
• Loans
• Any outstanding tax or estate-related liabilities

This audit may reveal an income surplus (particularly where a partner's salary or pension has been replaced by death benefits and pensions) or a gap. In either case, clarity is the starting point for sound planning.

Reviewing Protection

Following bereavement, review all protection policies:

• Life insurance: Make any relevant claims promptly; check all policies — some people hold policies taken out years earlier whose existence has been forgotten
• Mortgage payment protection: If a policy was in place to cover the mortgage in the event of death, claim and confirm the mortgage liability position
• Income protection: If you are still working, confirm your own income protection coverage is adequate — the household income is now dependent on a single earner

Making (and Delaying) Financial Decisions

The general rule in financial planning following bereavement is: do not make major financial decisions in the first 6–12 months if they can be avoided. This is not a counsel of inaction — the immediate steps described above cannot wait. But significant, irreversible decisions — downsizing the family home, selling investment portfolios, making large gifts to adult children, changing investment mandates — are better made after the most acute phase of grief has passed.

Research consistently shows that financial decisions made in periods of acute distress are more likely to be regretted. The cost of deferring most major decisions for 6–12 months is typically low; the benefit — decisions made from a position of clarity — is real.

Where decisions genuinely cannot wait (for example, a property transaction already in progress, a business succession matter), take professional advice and, where possible, ensure a trusted family member or friend is involved as a sense-check.

Longer-Term Financial Planning

Once the estate has been administered and the new financial position is clear, longer-term financial planning can begin in earnest:

Investment strategy: A portfolio designed for two may not be appropriate for one. Risk appetite, income needs, time horizon, and estate planning objectives may all have changed. A review of asset allocation and investment mandate is warranted.

Estate planning: The death of one spouse often makes estate planning for the survivor more pressing. The survivor is now potentially the single point of wealth transmission. Review or draft a will, consider the use of trusts, and review power of attorney arrangements.

Tax planning: The survivor's personal tax position — income tax, capital gains, IHT — may have changed materially. Take advice on the new position, including the use of the transferable nil-rate band (see below under IHT).

Inheritance tax: The surviving spouse may inherit a substantial estate. On the survivor's subsequent death, IHT will apply to assets above the available nil-rate bands. Planning to mitigate the IHT position on the survivor's estate — through gifts, trusts, charitable bequests, and other means — may be appropriate.

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This guide is for general information only. Probate, inheritance tax, pension death benefits, and financial planning following bereavement are complex areas in which individual circumstances vary significantly. Take professional advice from a qualified financial planner and solicitor. Nothing in this guide constitutes legal or tax advice. Rules change; verify current provisions with your professional advisers.

How Global Investments Can Help

Global Investments has experience supporting surviving spouses and families through the financial challenges that follow bereavement. We can help with the financial audit, pension death benefit decisions, the APS and ISA planning, investment portfolio review, and longer-term estate and tax planning. We work alongside solicitors and tax advisers to ensure a coordinated approach. We understand that financial planning at this time sits within a wider human context, and we work at the pace that is right for you. Contact us when you are ready.