What could it look like as a widow, and how can we plan ahead to protect our selves, our money and our loved ones? This article touches on what financial and legal records to have gathered, and why.
There are few things in life as romantic and enduring as a man’s desire to protect the woman he loves. Though these day’s that doesn’t typically require the sacrifice of his own body for hers, it’s still easy to see examples every day of the men around us taking on the role as protector…guarding the heart and defending the honor of the one that he loves.
As an adviser, I’ve enjoyed having clients intentionally seek out my advice on how to minimize the potential impact on the life of his partner in the event that he were to predecease her. This touches me to the core, that he is thinking ahead and wanting to take the steps necessary to try to make her life without him as easy and bountiful as it possibly can be.
The truth is, in our death denying society; hours and hours are spent on planning for retirement with very little time being used to put a plan in place for the surviving spouse upon the death of the first. Though I love the story of a man looking for advice on how to get their financial affairs in order for his wife, I’ve seen that it is the minority of people that will proactively take the steps to acknowledge and plan for the inevitability that one spouse will likely, survive the other.
Typically, that survivor will be the woman and she may be woefully unprepared to handle her finances on her own.
According to Brian R. Korb, an associate professor at Texas Tech University, 70% of boomer wives are expected to outlive their husbands. Though this number speaks to the boomer generation, the reality is that death can happen at any time, at any age, and unexpectedly. The median age of a widow according to the 2011 U.S. Census is a very young 59.4 years of age.
As Sheryl Sandberg, Chief Operating Officer of Facebook, so eloquently put it in a Facebook post following the death of her own husband: When the death of a woman’s husband occurs, for many women the rug of financial security is also pulled out from underneath her.
To take care of each other now and forever, couples need to think carefully about planning for the survivor’s needs. Though often it’s in our nature to ignore activities such as planning for death and incapacity, the reality is that if one spouse truly wants to protect the other, it needs to be addressed; and don’t wait until you’re 60 to do so.
What her life could look like without you:
Envision a world where you are gone. She’s lost the love of her life, her best friend, her protector, thinking partner and confidant. What happens to her now, where does she turn and what does she do? There is the possibility that your household of assets may have been depleted due to healthcare expenses. There is the reality that she may suffer the predatory practices of unethical individuals (family members and financial professionals alike). Before or after the obituary is even seen, she may be targeted by upsells at the funeral home, home repair companies looking to fix something unnecessarily, or even charities soliciting donations. There are many ways that she may be sold an inappropriate product by someone who knows she is now financially and emotionally vulnerable.
To be better prepared for the likelihood that one of you will at one point outlive the other and that she may need to travel the road of becoming financially independent, some of my hot button To Do’s include:
1. Make it a priority. Getting this done ahead of time will remove the burden of decision making from her shoulders if she does find herself grieving the loss of her husband. Though each person’s experiences will vary, during this period of cascading emotions in bereavement, our minds are not likely to function in the way that we are used to. We may go through periods of “fogginess” with an inability to concentrate, difficulty in making decisions, or understanding even basic concepts. All of which lead to the reason why it’s so important to have financial affairs in order before the death of the first spouse. At the least, it will minimize the decisions that the surviving spouse will need to make right away.
2. Work together. Working together to gather records and create a filing system that would be easy for either of you to get to in the event of emergency is an important step.
Recommended items to include in a file or binder:
- Any and all vital records applicable to the family. Include Social Security numbers and military discharge papers.
- A net worth statement or balance sheet that illustrates all savings, investment accounts and debts. Include account numbers and contact information.
- A “money flow” statement. This would be a statement that shows what money you have coming in and what bills are being paid out. (This goes a long way when she’s trying to make sure she’s getting what income is due to her and paying what bills she needs to).
- Contact information of all financial professionals. This includes any advisers, your tax preparer, insurance agents, attorneys, employer, business partners or property managers if applicable.
- Any other financial data including (but not limited to) property titles, online passwords, tax documents, trust documents, safe-deposit box information and business agreements.
- Revisit these documents and update if needed annually and consider giving copies to adult children.
3. If you haven’t done so already, consider funeral pre-planning and go through the estate planning process together. Funeral pre-planning will reduce decisions that either of you would need to make in the throes of bereavement, and can actually save money. The estate planning process is important because it would be done to equip each of you with your last will and testament, living wills, power of attorney for health and money, and the creation of any necessary trusts. A survey in 2012 by RocketLawyer.com reported that at that time 50% of respondents with children did not have a will to protect their family, and 41% of boomers did not have one either. If you die without a will, there is no guarantee who gets your assets and settling your estate can become a more complicating, drawn out, and expensive process.
4. Have a savings stash available that either of you can get to easily. This should cover several months of expenses in case complications arise with settling the estate or any impending income sources.
5. Have a trusted confidant lined up; your wife (or other loved ones) may need it. A confidant that she can plan to rely on if the day comes that she needs someone to lean on. This person may be instrumental in helping her sort things out, prioritize tasks and if needed find a professional financial adviser for more in depth assistance.
6. Consider a letter. One of the most touching things I’ve seen was a letter written by a husband for his wife to refer to after his passing. Although this particular wife did already have financial professionals she could trust, this letter was there to help her understand what they had been working on together in the years before his death, and more importantly, why. It was clear, how much easier her transition was as she felt that with this letter, a part of her husband remained there sitting on her shoulder providing her guidance and more importantly, emotional support.
￼￼￼￼￼￼￼Before I close, I think it’s important to touch on the notion of her seeking a financial advice provider. If she doesn’t have one yet and she decides to bring a professional into the fold, it’s not uncommon for her to shop around with her trusted confidant (see item No. 5). She should be aware of when or if an adviser is or is not acting in a fiduciary capacity. Acting as a fiduciary; meaning that the adviser is required (typically by law) to put their clients’ interests ahead of their own. Before deciding to work with a professional, she should also check that adviser’s record for any disciplinary action on SEC.gov and FINRA.org.
When looking for an adviser, she’ll likely want someone that’s willing to move away from meetings centered around charts and graphs and that will be able to understand her fears, goals, needs and values. She’ll also likely be looking for a place where she can feel safe asking questions, learning new information and getting help prioritizing tasks. What I’ve learned in working with and learning about women is that product sales and investment management are not typically as important to her as finding an adviser that will be able to assist her with her overarching concerns of running out of money. She will likely want to seek the help of an advisor that will be willing to address a broad base of financial topics anywhere from how to maximize income by selecting the best Social Security strategy to how to realize her sense of purpose with a charitable gifting strategy.
I know I’ve given you a lot to digest here and that this process of financial preparedness is a tough task to take on, but I cannot say it enough how valuable this will be when that day comes that one of you is now looking down the barrel of life without the other. It’s hard enough emotionally to travel this road, do yourselves a favor and dedicate some time to this for each other.
About the author: Wendi Strom is a Wealth Manager and CERTIFIED FINANCIAL PLANNERTM at Renaissance Wealth Management in Englewood, Colorado. A lifelong champion for investment literacy and women’s financial security, Wendi currently co-chairs the Pro Bono Committee of the Financial Planning Association of Colorado. Securities and financial planning offered through LPL Financial, a registered investment adviser. Member FINRA/SIPC. FINRA.org SIPC.org
￼Wendi Strom, CFP®
Education, financial life planning & wealth management
Dedicated to helping women reclaim their sense of financial security after experiencing major life transitions.
Linked In: Wendi (Skalicky) Strom, CFP®
Securities and financial planning offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
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