While women certainly seem to be taking a greater role in making household financial decisions, men still make the majority of them. The unfortunate reality is that women are much more likely to become widowed. In fact, more than 60 percent of women between the ages of 75 and 84 are single or widowed, and that number increases to 87 percent after age 85. See the issue?
I can only imagine how agonizing it must be to lose your spouse. However, coping with the loss of your other half while trying to piece together the financial situation that often follows is something no one should have to face. That’s why it’s so important to get your financial affairs in order before this kind of tragedy occurs. Even if you’ve already experienced the loss of your husband, you can still take steps now to leave your family in better shape after you are gone.
Download this estate planning worksheet to help you work through the five items below. Then, clearly label it and give copies to your loved ones. Make sure they also know who to call—your financial planner, estate attorney, CPA, etc.—if something were to happen to you. (Need help? Plancorp is happy to assist in completing these types of documents.)
1. Have a good understanding of your assets and debts.
Have at least a general idea of the accounts you and your spouse own and where they are held. Make sure you have at least one checking/saving account in joint name so that when one spouse passes away, the other has access to cash to cover unplanned funeral expenses, pay bills, etc. If working with a financial advisor, join your spouse for the meetings if you’re not already doing so. If there is anything you don’t understand, ask! You don’t have to understand all the details behind the investments, but it’s helpful to have a general understanding of the accounts and the overall investment strategy.
- Know the approximate value of your home and mortgage (if any).
- Know what company holds your mortgage and how to get a hold of them. Does your spouse have life insurance that would allow you to pay off your home?
- Make a list of all your credit cards and their balances (if any).
- Do you have any other debts? Car loans, home equity loan, vacation home, for example?
2. Have a good handle of your income and expenses.
Are you or your spouse receiving income from a pension or Social Security? Make sure you know how much it is and the frequency it is paid.
- What is the impact of the amount if your spouse were to pre-decease you? (Will the pension payment stop? Decrease? Will you need to change your Social Security to a survivor benefit?)
- If you’re not the one paying the bills, at least understand how they are being paid. Is your spouse mailing a check every month? Is the amount being automatically debited from a checking account? When are the various bills due?
3. Know what types of insurance policies you have in place and where the documents are located.
Many individuals can self-insure, especially when their home is paid off and the kids are self-sufficient; but if you do have life insurance, do you know how much it is and how to contact the company to file a claim?
- Do you know where your home, auto, and personal liability policies are kept? Or at the very least, do you know who your insurance agent is and how to contact him or her?
4. Create a list of logins/passwords and keep it in a safe place.
In today’s world, it seems that every website requires a login and password. Not to mention, these passwords continue to become more complex (please enter a password made up of at least eight letters, three numbers, four special characters, one roman numeral … and throw in some Morse Code for good measure). And to top it all off, some websites require you to change those passwords every few months! Creating a list of websites and passwords can be a very daunting but very necessary task.
There are password managers that can keep track of this for you (which of course involve some risk) or you can keep a manual list yourself. If you chose a manual list, be sure to keep it in a very safe place – one both you and your spouse are aware, and be sure to keep it updated when passwords have to be re-set or changed.
5. Make sure your estate documents are signed and up-to-date.
This is by far one of the most important items on the list. Do you have a trust set up (or is a trust even necessary)? Do you know where a copy is located? Are your joint assets titled in the name of the trust? Probate is not only a hassle but can be expensive (and is public information), so take all the necessary steps to avoid it. In addition to a trust, this can be accomplished by adding TOD/POD (Transfer/Payable on Death) designations on all your assets so that at death, the assets go straight to the intended party without a judge getting involved.
- Do you have a Will, Financial Power of Attorney, Healthcare Declaration, and Living Will? If you become incapacitated, you need someone to be able to step in and handle your affairs. This can be set up via a trust or a Financial Power of Attorney.
- Do you want to be kept on life support? Who do you want to make decisions about your health if you’re unable to do so?
- Make sure you have all these documents in a safe place and know where they are. It is also helpful to give copies to the executors/trustees/Powers of Attorney as well.
Once you have these items in order, you should feel both a sense of relief and accomplishment! One of the biggest barriers’ women experience when it comes to financial matters is confidence. Know that you can make educated financial decisions, even if it’s hiring the right professionals to assist you. You can get your affairs in order and feel as prepared as possible for an unfortunate event. You can do this! And we’re here to help.
Video - Estate Documents
Download - Estate Planning Memo
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Disclaimer: This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.