My experience as a financial adviser for the past 25 years has given me a unique perspective on preparing for a spouse’s death. We don’t like to talk about our own mortality, let alone that of someone we love — but those difficult conversations are essential for your family’s future security.
Most of us know the basic estate plan documents: will, durable power of attorney, health care power of attorney, living will and revocable living trust. Although these documents are vital, they fall well short in preparing for the emotional aftermath of a spouse’s death. I’ve found that a few simple steps now can save a lot of heartache later, especially at a time when grief and confusion can paralyze the surviving spouse and lead to financial problems.
Keep your spouse up-to-date. Share passwords and other critical information — and where to find them. Meet as a couple with your professionals, including your CPA, estate planner and financial adviser. If only one of you handles finances, the surviving spouse will be unprepared and vulnerable to financial predators later on.
Be open and transparent. Title accounts properly. Make it clear which assets will be passed directly to your spouse — for example, a house that lists both of you on the title — and which assets will be transferred because of a beneficiary designation. It’s important to review beneficiary designations for IRA accounts and other retirement plans. If your designation lists a former spouse, for example, your money will go to that person — even if you’re remarried. Understand the probate process in your state, as these can vary widely, adding extra complexity and cost.
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Open bank accounts in joint name. Failing to do so could prevent a spouse from accessing cash to pay bills and final expenses. Credit card accounts and utility bills in a single name could prevent a spouse from paying them. The card company or utility generally won’t even talk to you if you’re not on the account.
Get a handle on Social Security. It can be confusing to claim this benefit at the time of your spouse’s death, but making the correct selection could make a big difference in benefits received over a lifetime. The same applies to a pension plan that offers a survivor-benefit option.
Understand the household budget and monthly operating expenses. Many couples underestimate the amount they spend. A one-page spreadsheet is adequate for most people, but knowing where the money goes every month is critical.
Everyone will have a final day on earth. Preparing for that day in advance can make a huge difference in how we deal with the stress and anxiety at the intersection of legal, personal and financial matters.
Mark Daly is managing director and investment officer at Daly & Vachek Investment Consulting Group of Wells Fargo Advisors. (208) 333-1433. This column appears in the Nov. 16-Dec. 20, 2016, edition of the Idaho Statesman’s Business Insider magazine. Click here for the Statesman’s e-edition, which includes Business Insider (subscription required).