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Creating A Financial Roadmap Before Your Spouse Dies Can Help You Prevent a Monetary Meltdown

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If you’ve been married for a long time, you and your spouse or partner have probably settled into comfortable roles based on each of your strengths. Nowhere is this truer than in handling family finances, where it’s fairly common for the spouse with the best combination of motivation and aptitude to “just take care things” when it comes to paying the bills and managing retirement accounts.

But what happens when the spouse who is the money manager isn’t there anymore? How does a couple prepare today for the fact that the surviving spouse may suddenly find that they have to fend for themselves 0ne day? Because that’s such a common scenario, we wanted to bring back to your attention this article from the NextAvenue website, which first appeared last spring. In this helpful report, writer Bart Astor addresses this painful but essential idea, and proposes some solutions that couples need to consider long before a health crisis or other circumstance comes along to tragically upend the status quo.

We think Astor has a good approach. But we also think he’s missing an essential element, as Rajiv explains at the end of the piece.

Surviving Spouse Doesn’t Know Where to Start

In his NextAvenue article, Astor begins with the all-too common story of a woman named Sindy Steinberg, whose husband passed away unexpectedly at 62. His death left her reeling, completely unprepared to take on his responsibilities. “I don’t even know where to begin,” Steinberg said. “I’m just trying to stay on top of the bills. I don’t even know all the passwords for the bank accounts and investments.”

As Astor makes clear, and as most attorneys like Rajiv can attest, this story is tragically common among a large percentage of widows and widowers. “While the family is deeply into grief and mourning, life around them continues on. And keeping up with it all can be overwhelming,” Astor writes.

The Steinbergs were much like many families.  Steve and Sindy had settled into different roles, and Steve had taken care of all of the family’s financial tasks for years. After he passed away, Sindy’s grief mingled with confusion at how to suddenly handle the family finances. “Steve was meticulous about how he organized everything,” Sindy said of her husband. “He had set up everything and managed the day-to-day business of our lives and also the strategy for our future.” But because they hadn’t prepared, Sindy was left at a loss, not knowing what to do.

Picking Up the Financial Pieces of a Family

“Running a family is much like running a business,” Astor writes. “There is income and there are expenses. There are investments and accounts to keep track of and bills to be paid. Although sometimes the tasks of running the household are shared, often there is one Chief Operating Officer, or COO, who keeps it all humming smoothly. 

The problem with this very normal set-up is that the passing of a spouse can leave the surviving spouse dealing with a complete mystery at how to handle the finances, especially if there are many accounts with unknown passwords to deal with.

Astor himself admits that he is not immune. “I am personally well aware of the fragility of life, having seen friends leave us through illness or accident,” he writes. “So, I am embarrassed to admit that this shoemaker’s children do not have shoes: I have been in charge of the administrative and business life of my family, but have not fully shared enough with my wife or heirs to ensure a smooth transition to the new COO if the proverbial bus hits me.”

This is why a “financial roadmap” is such an essential piece of any long-term family plan.

A Plan Provides Security

The prospect of losing a loved one is stressful enough without adding financial worries to the mix. For that reason, as New Jersey financial planner Gabe Caponetto told NextAvenue, “Having a plan in place will provide both individuals a sense of security that their financial lives are in order.”

In the case of the Steinbergs, Sindy knew that she wasn’t in serious financial danger – the couple had adequate funds. But the stress of mysterious daily tasks, the worry about late payment notices, and those frustrating “administrative roadblocks” added tremendous pressure to her grief, a pressure that was very preventable. 

Caponetto encourages families to engage with a financial planner early on, to act as a quarterback, or guide. “By knowing who all the advisors are in a client’s life — who I refer to as the ‘Centers of Influence’ that includes financial advisors, CPAs, tax preparers, and attorneys — my client can make one phone call and have the quarterback take over,” he says. “And,” he adds, “the great thing about the plan is that once you start it, you’re able to continuously update it as your life changes.”

Eight Tips for Transitioning to a New COO

Astor includes a very thoroughly-explained list of tips in his article for how to make as seamless a transition as possible between family members, so we encourage you to check out the original article for more details. We have summarized the main points below.

  • Share passwords with key people. Make sure that all of the relevant user IDs and passwords are up-to-date and accessible to the proper people. “Be sure to also keep the partner’s email account active so notifications can still be received,” Astor writes. “For some assets that are valuable but may not have a monetary value, such as frequent flyer miles and points, the survivor can continue to utilize them by accessing the account online.”
  • Check ownership of assets. Change or update ownership to make sure that the right people have legal access to accounts, safe deposit boxes, or other significant assets. If you have questions about the best way to go about this, consulting an attorney is ideal.
  • Automatic payments are your friend. Setting up automatic payments on repeating bills such as mortgage or rent, loans, credit cards, and utilities can take a load of stress off of the surviving family members after a death. Then, make a list of ALL recurring bills and how they are paid, whether automatic or manual, so that your family members aren’t given any nasty surprises.
  • Hands-on learning is ideal. Invite your partner or other family member to sit with you and pay the bills together for a few months. Experience can be the best teacher, and they might even have some new and better ideas to streamline the process.
  • Make your own arrangements. Make sure that you’ve made all of your funeral arrangements beforehand—what you want done with your remains, along with any memorial/service requests—so that your family doesn’t have to make difficult decisions in the midst of grief.
  • Look three months ahead. Craft a simple, short-term (two or three months) budget so that your family members can see how discretionary vs. non-discretionary expenses look on the short term.
  • Now, look even further. Next, craft a long-term budget for the entire year, especially taking note of larger expenses that happen less often. “If possible and practical, the current COO can set aside or notate where the funds will come from to pay the upcoming large expense,” Astor notes.
  • Gather your team. The easiest way to make sure that a transition happens smoothly is to make sure that all of your financial team members—financial advisors, brokers, attorneys, etcetera—have each other’s contact information. That way, if anything happens to you, they can help your family members transition as easily as possible.

Rajiv Adds, “Remember the Financial Dashboard!”

Rajiv Nagaich has counseled hundreds of bereaved spouses and families, and he has seen the pain when a surviving spouse or partner is suddenly thrust into that role as “Family COO.”  Rajiv states, “I think this article takes the right approach. At least, I hope people won’t repeat the tragic mistake of pretending that the status quo is how it’s always going to be. That simply isn’t true! Best to prepare for just about any scenario and be ready should illness or loss happen.”

However, there’s one tool missing, he says. “To help the surviving spouse stay on track, couples truly need a financial dashboard, something I recommend to everyone. Look, if you and your spouse sit down now with a qualified fee-based financial planner and put a dashboard together,” he emphasizes, “I can guarantee you that you’ll make things ten times easier for the spouse who outlives you to stay on course. Instead of making adjustments in a vacuum, he or she will have the road map all laid out. A proper financial dashboard can literally make all the difference.”

Sound intriguing? Contact us and we’ll gladly refer you to a qualified planner who will explain the concept further and help you build this powerful and essential tool.

My Life, My Plan, My Way: Get Started on the Path to Retirement Success

At AgingOptions we believe the key to a secure retirement is the right retirement plan – yet statistics show that 70 percent of retirement plans fail. That’s why for nearly two decades we’ve been dedicated to the proposition that a carefully-crafted, fully comprehensive retirement plan is the best answer to virtually any contingency life may throw your way as you age.  Our slogan says it all: My Life, My Plan, My Way.

When it comes to retirement planning, most people focus on one fairly narrow issue: money. Financial planning is an important component of retirement planning. However, people heading towards retirement often make the mistake of thinking that a little financial planning is all that’s required, when in fact most financial plans are woefully inadequate. What about your medical coverage? What if you have to make a change in your housing status – will that knock your financial plan off course? Are you adequately prepared legally for the realities of retirement and estate planning? And is your family equipped to support your plans for the future as you age?

The best way we know of to successfully blend all these elements together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. Thousands of people have discovered the power of LifePlanning and we encourage you to the same. Simply visit our website and discover a world of retirement planning resources.  Make certain your retirement planning is truly comprehensive and complete with an AgingOptions LifePlan.  Age on!

(originally reported at www.nextavenue.org)

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