All too often in my career, I have walked alongside a female client as she navigated the unimaginable—her spouse had passed away and there was a financial puzzle to piece together amidst her grief.
Sometimes she was equipped with the basics, but very often, her husband had fully taken the reins of their financial lives during their marriage, and she didn’t feel prepared for the transition at all. The data shows this isn’t an uncommon experience.
Recent studies have shown that more than 60% of women between the ages of 75 and 84 are single or widowed, and that number increases to 87% after age 85. In short, that means the likelihood a woman will be the primary financial decision maker at some point is incredibly high, but it’s not something they’re prepared for.
Our women’s initiative, InspireHer, seeks to change that. Through curated content and events, we strive to build a community of women who are confident in their financial plans and ready to take the lead as the head of household if ever that day comes.
I can only imagine how agonizing it must be to lose your partner. However, coping with the loss of your other half while trying to piece together a clear view financial situation is something no one should have to face, and can leave women vulnerable to scammers.
That’s why it’s so important to get your financial affairs in order before this kind of tragedy occurs and get both partners engaged in setting and understanding your financial plan. Even if you’ve already experienced the loss of your partner, you can still take steps now to leave your family in better shape after you are gone.
In this article, we’ll walk through 5 important steps to consider that will safeguard your finances in an already difficult time.
Before we dive in, be sure to download our helpful estate planning worksheet that will walk you through the five items below).
Once you’ve completed the memo, 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 partner own and where they are held.
If working with a financial advisor, join your partner 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.
- Make sure you have at least one checking/saving account in joint name so that when one partner passes away, the other has access to cash to cover unplanned funeral expenses, pay bills, etc.
- 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 partner 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 partner 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 partner 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 partner mailing a check every month? Is the amount being automatically debited from a checking account? When are the various bills due?
- Although the year your partner passes you can continue to file taxes as a married couple, the following year you will likely become a single tax filer and your income tax bracket may change. Talk to your financial planner or CPA to make any income withholding changes to avoid an unplanned tax bill.
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 of, and be sure to keep it updated when passwords have to be reset or changed.
A recent article by my colleague, Susan Jones, will help you get your digital estate plan in order.
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.
Next Steps
Let us assist you in taking the necessary steps to appropriately plan for life events such as this. Start by taking a quick 2-minute Financial Analysis. After completing your analysis, we will share financial planning strategies tailored to your financial situation.
