If the unthinkable happened tomorrow, what would you do? Do you have a plan for when (not if) your spouse dies? No one wants to think about losing their spouse, and most people don’t believe this will happen to them anytime soon. But the reality is that this happens every day. It’s better to be prepared for the unexpected than to have to deal with financial issues during a time of loss and grief when you want to focus on more important things.
Although you can’t prepare emotionally for the loss of a life partner, dedicating time to answer these questions below can help relieve some of the financial burden if widowhood happens tomorrow.
Do You Have a Trust in Place?
If you and your spouse do not have a trust, consider drawing one up to control where your assets go now, and in the future. A trust ensures assets are protected and disbursed to the right heirs. You can have both a will and a trust, but while a will takes effect after one’s passing, a trust can be used both during life and after one’s passing. Be sure to ask your advisor about state laws when it comes to the differences between wills and trusts. For instance, in the state of Michigan, a will must go through probate court, while a trust avoids probate court.
Without a trust, it can take longer to get closure, and the details about how assets should be passed on can get messy in the process. If you have a trust, ensure it’s up to date by working with a qualified estate attorney to update it as necessary every three to five years, or as your situation changes.
What Benefits Are Available to You?
Understanding your benefits is another important aspect in preparing for the possibility of widowhood. Things like Social Security, life insurance, pensions, and annuities should be assessed ahead of time so that you're not struggling to make difficult financial decisions immediately after loss.
If your spouse is still working, there may be other employer-sponsored benefits available as well. Work together with your loved one to make a list of all the benefits either of you will receive in the event of widowhood as well as the information needed to access these resources. As difficult as it may be, talking about these benefits ahead of time can help you both feel prepared when the time comes.
Do You Have Access to All Financial Account Information?
One of the hardest parts of widowhood is moving forward without the support of your spouse. Maybe they were the ones who handled all of the day-to-day financial matters and now you are stepping into this role for the first time in your life, or at least the first time in a long time. It can be overwhelming, to say the least.
The best way to prepare for this possibility is to make sure both spouses have access to important financial account information including checking and savings accounts, retirement plans, other investments, and life insurance policies. At a minimum, both spouses should have access to the account numbers and any login information. Also, keep in mind that in some cases settling an estate may require a birth certificate and/or marriage certificate (even if you are divorced), so it’s important to keep these in a safe and accessible location.
Additionally, understanding how these accounts are titled (joint or individual), as well as who is listed as the beneficiary, are crucial aspects of estate planning. Having joint ownership on all accounts, or listing each other as beneficiaries, can help the assets transfer smoothly by avoiding probate.
What Does Your Spending Plan Look Like?
Life after widowhood will be challenging, but a detailed spending plan can help ease the transition by alleviating the stress of making day-to-day financial decisions. Start by creating a current budget, if you don’t have one already. Together, you and your spouse can discuss the types of expenses that will either be added or removed from the budget if widowhood happens. It may seem strange at the moment, but it can be an incredible aid when planning for the future.
Special attention should be paid to debts like mortgage payments, monthly utilities, car payments, credit card debt, and other loans. Understanding how these debts will be managed in the event of widowhood is crucial to creating a sound financial future for the surviving spouse. The last thing either spouse wants to do is leave behind debt that their loved ones can’t manage. Planning ahead can help alleviate this burden and provide comfort to both spouses knowing that their partner is going to be okay on their own.
Do You Have a Trusted Advisor?
Having a solid support system can carry you through widowhood and give you the strength to move forward. Part of that support system should be a trusted financial professional.
Whether you’re already working with a financial advisor, or you’re looking to hire one, take your time getting to know them and make sure you like working together.
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. Widowhood is a vulnerable time and it’s vital that both spouses feel comfortable reaching out for help with important financial matters. If one or both spouses don’t trust the advisor, it may be necessary to reevaluate the relationship.
Your well-being is of the utmost importance during this process, so don’t be afraid to interview several financial professionals before choosing the one you trust most.
You’re Not Alone
While no one can ease the pain of a significant loss, such as losing a spouse or life partner, we can help ease the financial burden during this time. Our team is well-versed in handling these financial matters and we know what to do for clients facing this situation.
If you or someone you know is facing widowhood, or if you want to be proactive by preparing for that eventuality today, we can help you and your spouse navigate the difficult decisions associated with this possibility. To learn more about how we can help, schedule a free introductory meeting online, call (248) 220-4321, or email me at email@example.com to get started today.
Justin Williamson is a senior partner and co-owner of Center for Wealth Management, an independent, fee-based wealth management company in Troy, Michigan. Justin has been serving clients in the financial services industry since 2001. He spends his days helping his clients achieve their financial goals and make the best decisions for their families so they can spend time on what they love and experience financial peace of mind. Justin is known for his dedication, integrity, personal touch, and ability to simplify complex issues. Justin specializes in serving engineers and other professionals who are close to retirement or recently retired and helping them maximize their benefits and create a retirement plan they can rely on. He is a seasoned public speaker and presents at numerous corporate events each year on retirement planning, Medicare, Social Security, and other financial topics. Justin has a bachelor’s degree in Business Administration majoring in Personal Financial Planning from Central Michigan University and is a CERTIFIED FINANCIAL PLANNER™ practitioner.
Outside of work, Justin enjoys spending time with his family. He and his wife, Corinne, have five children between them ranging in age from sixteen to twenty years old. Justin lost his first wife, Heather, to brain cancer in 2020, and thus has experienced firsthand the emotional, mental, and financial challenges spouses and children go through when dealing with such a tragic situation. Outside of work, Justin enjoys coaching or attending baseball, softball, powerlifting, and basketball events, traveling to new locations, and spending time at the family cabin at Higgins Lake. Learn more about Justin by connecting with him on LinkedIn.