Tue, October 03, 2023
By Jane Taubner Barney
While we tend to focus on building wealth and preparing for the future, there’s a significant life event that can often be left unaddressed until it’s too late: the loss of your spouse. The reality is that this may happen without warning and can devastate far more than your emotional well-being.
It’s not hard to understand how this happens. Picturing life without your spouse is painful enough without trying to predict all the financial and legal setbacks that may come with it. You may not know exactly where to start. The process may seem overwhelming and complex, and there may be decisions to be made for which there is no clear answer—so it’s easy to postpone the discussion.
Nevertheless, a little advanced planning now could save you from struggling with financial and legal anguish in the future. It can be hard to imagine waking up to the reality that your loved one is no longer by your side, but that possibility should prompt you to explore this important question: If widowhood happened to you, would you be prepared?
Let’s consider the most common issues to address that can help you feel more prepared should you find yourself in this difficult situation.
No one wants to think about losing their spouse—it almost seems taboo. But we’ve all heard stories of people who found themselves widowed unexpectedly. They may have faced legal or financial issues that had them scrambling to get their financial bearings when they really just needed to grieve their spouse in peace.
Taking time to craft a comprehensive financial plan that covers all aspects of your life can help put you in a much better position should you lose your spouse. While it may seem awkward to discuss, it is a necessary exercise when planning for the future.
An important initial step in this process is to make sure both spouses have access to important financial account information, including checking and savings accounts, retirement plans, and other investments. In addition, understanding how these accounts are titled (jointly or individually), as well as who is listed as the beneficiary, are key aspects of estate planning. You can help the assets transfer smoothly and avoid probate by having joint ownership on your accounts, or by naming each other as beneficiaries.
Imagine adjusting to life after the death of your spouse knowing there won’t be any surprises or drastic changes to your lifestyle. Life without your spouse will be challenging, but a detailed financial plan can help ease the transition by reducing the stress of day-to-day financial concerns and decisions.
Start by creating a current budget with your spouse, so you can discuss the types of expenses that will either be increased or decreased in the event one of you passes away. Then consider whether there is life insurance in place to provide benefits upon the death of either spouse.
Next, determine whether you’ll be entitled to any benefits should your spouse pass before you. Things like Social Security, life insurance, pensions, and annuities should be reviewed so you have an understanding of the income and benefits that will be available. This can help avoid the need to struggle to make difficult financial decisions immediately after a loss. As difficult as it may be, talking about these things ahead of time will help you both feel prepared.
You should also review your debts and discuss how they will be handled at the first spouse’s passing, especially if one or both of you are worried you won’t be able to afford them if the other passes away. The last thing either spouse wants is to leave behind debt their loved ones can’t manage, so making a plan for the liabilities to be met is crucial to creating a sound financial future for the surviving spouse.
Preparing for the death of a spouse means circling back to areas you may have already considered—such as tax-efficient wealth transfer, wills, and trusts. It also involves reviewing other estate documents, such as healthcare proxies and durable powers of attorney. Even if you already have some or all of these documents in place, it’s important to review them to verify that successors to your spouse have been named, so the documents will still be effective if your spouse predeceases you. A periodic review of your estate planning documents with your financial advisor and estate planning attorney helps determine if anything was missed or should be updated to meet your changing needs and wishes, as well as any changes in the law.
You may have both a will and a trust; each serves different purposes. A will takes effect after your passing and typically names a personal representative to settle your estate and directs how your assets should be distributed after your death. It can also identify guardians for your dependents, among other things. A trust may be used during life and after death to specify how and when the trust’s assets are to be distributed to the beneficiaries of the trust. It may be used to minimize estate taxes, provide privacy protection, and avoid probate of the trust’s assets.
Without a will or trust in place, it can take longer for the surviving spouse to access funds to pay bills and settle affairs. It also makes it more likely assets will pass pursuant to your state’s intestacy laws, which may not be in accordance with the deceased’s wishes. Having the appropriate documents in place allows the surviving spouse to access funds and assets more quickly and with less stress, which ultimately helps to reach closure and peace. If you do have estate documents in place, review them with a qualified estate planning attorney to confirm they’re accurate and up to date.
Having a strong support system can carry you through the loss of your spouse and give you the strength to move forward. An important part of that support system should be a trusted financial professional.
It’s been said that your lawyer or accountant isn’t the first professional you call when tragedy strikes; quite often it’s your financial advisor. With a trusted person in your corner to contact during these difficult times, you can feel more confident about your future. Whether you are currently working with a financial advisor or looking to hire one, it’s important to develop a relationship with someone you both trust.
If there is one spouse who tends to handle all financial matters, make it a point to introduce the other spouse to the financial team. The weeks, months, and even years after the loss of a spouse are a vulnerable time, and it’s vital that both spouses feel comfortable reaching out for help regarding important financial matters. Don’t be afraid to interview several financial professionals before making your decision. Your future security and well-being depend greatly on the level of confidence each of you have in your advisor.
Worrying about money and financial issues is the last thing you need while grieving. Having a solid plan in place in advance allows you to grieve at your own pace and in your own way—without worrying about finances.
At TFC Financial Management, we take pride in helping clients navigate complex financial transitions to relieve their worries and concerns. We can help you and your spouse navigate the difficult decisions associated with the potential death of a spouse. As you take the next step in building a solid financial foundation, we are here to answer your questions. If you’d like to schedule a meeting, we invite you to call (617) 210-6727 or email jbarney@tfcfinancial.com.
Jane Taubner Barney joined TFC Financial Management in 2007. She participates in the firm's financial planning and investment review process and provides comprehensive financial planning and investment advisory services for a select number of the firm's clients.
Prior to joining TFC Financial Management, Jane was a client service manager for Canby Financial Advisors, where she prepared financial plans, conducted investment research, and made investment recommendations. Previously, she worked for MetLife Financial Services, where she prepared comprehensive financial plans, wrote recommendations, and conducted training classes for financial planners.
Jane is a graduate of New England Law | Boston and received her bachelor's degree in Computer Science/Management from Russell Sage College. She is a CERTIFIED FINANCIAL PLANNER™ practitioner, and a member of the Massachusetts Bar Association, as well as a Certified Divorce Financial Analyst®.
Jane is a past President and Member of the Massachusetts Association of Women Lawyers, and is a member of the Boston Estate Planning Council. She was a contributor to the book, Breaking Barriers: The Unfinished Story of Women Lawyers and Judges in Massachusetts (MCLE, Inc. 2012). She also appeared as a host and guest on the Massachusetts Association of Women Lawyers' former television program, "The Legal Line," discussing topics from life and disability insurance to financial, investment, and retirement planning. Jane is also a flutist in the Southeastern Philharmonic Orchestra.