We understand that losing a spouse is likely the most devastating emotional obstacle that one can experience. Financial matters are likely the last thing on your mind. However, when you lose a spouse it’s important to have a plan in place to ensure your finances are in order. Here we discuss five key steps to consider, including gathering a team of trusted advocates to help you navigate the road ahead.
1. Go slowly to avoid mistakes
You will need time to absorb and process next steps. Do not let anyone make you feel uncomfortable by pressuring you into making any hasty decisions.
Only work with people who will help you understand your options, at your pace. Some choices can wait, especially those that are not critical. In the first year of working with a new widow or widower we give them ample time to process things, so they are not overwhelmed with too much information.
If you have a close family member or friend you trust, you may want to bring them with you when seeing your adviser, so you have an extra listener in case you miss something, or simply to have someone provide you with an objective viewpoint.
2. Get your family involved in the conversation
New widows and widowers are susceptible to feeling alone if they do not have a support system. You should sit down with your family and team of trusted advisers in the first year, so your loved ones will get to know the advisers who can help your family take care of your financial affairs, if something were to happen to you.
Decide what you want to share regarding your important documents, such as where they are, and who is best suited to answer questions regarding the various aspects of your will, living will, separate durable powers of attorney for health care and financial decision-making, deeds, bank accounts, insurance policies, investment accounts, retirement accounts, tax returns and support documents, all loan documents, and current bills.
In addition, online monitoring services should be considered to protect against suspicious activity, unusual withdrawals, missing deposits, odd charges, changes in spending patterns, and more. These services will even let you select other individuals to receive these alerts in case you miss them.
3. Identify where your money is
Make sure you know how to access your cash and whether you have enough to cover some immediate expenditures. This may take some investigative work on your part to find all your checking, savings, brokerage, and retirement accounts, as well as the user IDs and passwords. Looking at your check register and statements, along with your most recent joint tax returns can be a good place to start. If you already have a financial adviser or accountant, he or she can be a great resource as well, offering you guidance about your choices as the beneficiary of your spouse’s retirement funds.
On accounts that are jointly titled, you will probably need to change registrations. While you are in the process of identifying all your investment and bank accounts, you should also make sure your beneficiary designations are up to date. This also applies to your life insurance policies. For accounts that need to be changed from joint to individual ownership, you will need to provide each financial institution with copies of your spouse’s death certificate.
4. Understanding your expenses
Make sure your bills continue to be paid on time (consider having certain recurring bills paid by auto-pay), and file for any life insurance benefits.
You may want to create a budget as some expenses will remain the same while others change. Your insurance coverages, such as health and life, should also get a fresh look, especially if you still have children under 18 living with you. Depending on your age, you may also qualify for Social Security Survivor Benefits.
5. Have a team of experienced professionals by your side
If you already have a financial adviser in place who knows you, you should be in a good place with your finances. If you do not have one, or if you were not present at their discussions with your spouse, ask a friend for a recommendation or look for one in your area on the NAPFA website. You may also seek guidance and referrals from an accountant, attorney, personal banker or other professionals. We recommend you work with a fee-only adviser who is a fiduciary, acting in your best interest, like Modera. We have written a few educational articles about the fee-only approach as well as how to find a fee-only adviser.
Be sure to interview prospective advisers. Your choice should not be based simply on their credentials but also on whether you feel their personality will work well with yours. Since you will eventually be confiding in this person, it must be someone you respect, trust, and relate to. Additionally, a financial adviser can act as a coach to help you avoid making costly mistakes from offers that are tempting.
Some think that the value of financial advice is simply reflected in their portfolio’s performance, but that should be just one component of the financial planning process. There are many other aspects to consider such as tax, estate, insurance, retirement, and cash-flow planning needs that can affect your bottom line and personal well-being. You should also ensure that your financial adviser is able and willing to educate you in the areas where you lack knowledge or need clarification.
With your team of advisers in place working with you, your family, and/or trusted friends, you may find comfort and peace of mind knowing you can get through this difficult time in your life with the confidence to make prudent decisions about your financial life.
At Modera, we take into consideration a wide range of issues in our clients’ financial world, offering guidance and support for issues you bring to us, and for those you might not have yet thought of. Your relationship team at Modera also can work closely with your other financial advisers, such as your attorney and your CPA, as well as your loved ones, to help see that your financial life is going according to plan. If you’d like to discuss this or any other financial topic that interests you, please reach out to us to start the conversation.
Modera Wealth Management., LLC is an SEC registered investment adviser with places of business in Massachusetts, New Jersey, Georgia, North Carolina and Florida. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.
For additional information about Modera, including its registration status, fees and services and/or a copy of our Form ADV Disclosure Brochure, please contact us or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). A full description of the firm’s business operations and service offerings is contained in our Disclosure Brochure which appears as Part 2A of Form ADV. Please read the Disclosure Brochure carefully before you invest or send money.
This article is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accounting-related matters, we recommend you seek the advice of a qualified attorney or accountant. This article is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements and opinions expressed in this article are subject to change without notice based on changes in the law and other conditions.