Navigating finances after death or divorce
My mother was suddenly widowed when she was just 54, leaving her feeling uncertain about her financial future and worried. Unfortunately, her situation was not unique: according to the US Census Bureau, the average age of widowhood is only 59 years old, and 80 percent of women will outlive their partners by over a decade. This means that many of us will—or already have—found ourselves facing a sudden change in our short-, medium-, and long-term financial situations due to the loss of a partner, whether through death or divorce.
Knowing these statistics certainly doesn’t make preparing to navigate the financial implications of a partner’s death any easier, but it does help us realize how important it is to have these conversations early on. Still, the issue is often avoided until it is too late.
Women and Finances
While both death and finances are sensitive and difficult topics to address, they are also ones that all families—and especially all married women—need to discuss to ensure they are prepared in the event of an unexpected loss. Yet, a recent Key Private Bank Advisor Poll found that only three percent of married female clients drive wealth conversations in their families. This lack of financial agency is leaving the majority of women at a disadvantage should they be pre-deceased by their partners. Instead, we must prepare ourselves in advance with the knowledge and plans we’ll need should we be required to reconcile family finances following a partner’s death or departure.
Prepare Ahead of Time
Oftentimes, the biggest challenge a new widow faces is identifying which financial decisions must be made immediately versus those that can and should wait. It’s important to have financial conversations when everyone is thinking clearly, without the added stress and grief that occurs after the loss of a partner. If you’re ready to start the discussion, below are a few steps to take to help you be better-prepared in the event of or prior to a partner’s loss.
Recruit a Team of Professionals
Working with experienced tax preparers, attorneys, financial planners and advisors will make the post-loss steps much easier. Ask for recommendations from friends or family if you’re unsure, and find professionals with whom you are comfortable and that you trust.
You’ll begin the process by identifying and documenting sources of income, your household budget and all of your assets. It’s important to remember that the loss of a partner doesn’t mean half of your ongoing expenses or financial obligations have disappeared, which is why you’ll want to carefully review all of the following with the assistance of financial professionals.
You may want to take a look at the following records:
• All bank accounts, investment accounts and credit cards
• Insurance policies
• Consider closing accounts
• Social Security survivor benefits, partner’s final paychecks or pension
• Revisit your household budget to determine whether you need to adjust spending habits
You may want to work with a professional on the following tasks:
• If you’re not the personal representative of the estate, work with the appointed executor to ensure the probate process moves forward smoothly
• Discuss tax planning with a seasoned professional as soon as possible, because filing rules are complex
• Review all assets, keeping in mind that it can be especially hard to consider expensive assets that you have an emotional attachment to, such as a vacation home or artwork. Working with an advisor can be helpful in deciding whether to retain these assets.
Make a plan
You’ll want to develop a short-term and long-term financial plan to make sure your own future needs will be met. Reviewing the items above and working with an advisor you trust will help you tackle this planning.
Advisors to advise, friends to comfort
It will be tempting to seek advice from friends or family, yet this invaluable support network may not have extensive financial expertise. While friends and family provide emotional support, in the event of a loss, your advisor will be the person best-suited to provide sound and objective financial advice for your family in your time of need. Do not be afraid to have open conversations with your advisor about what to do. This is their job!
You might consider using these steps as a way of starting a conversation with your partner ahead of time so that together you can outline your budget and needs and formulate a plan to support either of you should the other pass.
Finally, if you are going through this now, the psychological impacts and financial challenges of the loss of a partner are significant. Remember to take care of yourself in this difficult time.
Susan Barnicle is V.P. Relationship Manager CFP at KeyBank’s One Canal Plaza location. She can be reached by calling 207-874-7107 or by email firstname.lastname@example.org