How to Avoid the 'Widow's Penalty' After the Loss of a Spouse

A woman with grey hair wearing a wedding ring holds a black-and-white photo of a man. .

In the hierarchy of stressful life events, losing a spouse consistently ranks as the most traumatic crisis most individuals will ever experience. It’s not uncommon for widows and widowers to feel confused and fearful, or even guilty that they didn’t die first. For that reason, financial advisers often recommend that surviving spouses postpone making major financial decisions, such as selling the house, until they’ve had time to process the loss. 

For the most part, that’s good advice. However, surviving spouses who want to avoid an unfortunate phenomenon known as the widow’s (or widower’s) penalty may need to take steps relatively quickly to avoid a significantly higher tax bill.