Strategic planning for a difficult time
The final lesson of learning to be independent – widowhood…is the hardest lesson of allAnne Morrow Lindbergh
The future death of a spouse or partner is not something many of us want to consider, but the situation is inevitable for all couples. Like any major life-changing situation, some basic financial preparation in the present can help to alleviate some of the practical difficulties and challenges when you’re eventually faced with widowhood. Consider, for instance, how you would adjust to becoming the sole financial decision maker, or to the loss of income, or to navigating your partner’s paperwork. Thinking proactively and pre-planning – ideally as part of a wider estate plan – can help you avoid becoming financially vulnerable.
Pre-planning: Determine your ‘GPS coordinates’
The starting point to developing a plan is to take stock of your current financial situation as a couple – like establishing your GPS coordinates, says Sarah Widmeyer, Director, Wealth Strategies at Richardson Wealth. That can mean having a difficult conversation and addressing fundamental questions: Where are you at now as a couple and will each of you be OK if one of you dies unexpectedly?
The ideal scenario is for each partner to have at least an adequate knowledge of their joint and individual financial affairs – abdicating this responsibility can leave a widowed individual highly vulnerable.
Organize documents… well in advance
Collect all key documents and passwords to accounts and store them in one place. This includes collating all the obvious paperwork: wills, joint and individual bank and investment accounts like registered and unregistered savings plans, insurance policies, property ownership-related documents, paperwork related to other major assets and safe deposit box information. And in our digital age, it is also important to devise a plan that allows the surviving partner to gain access to all digital assets: actual devices (computer, cell phone, tablets, smart watches etc.), email and social media accounts as well as other online media accounts (spreadsheets, Dropbox etc.).
An Investment Advisor can assist you with this process, creating a plan that includes documenting contact details for each tax, legal, investment and insurance professional you work with. Information can be compiled using Richardson Wealth’s Estate Record Keeper, entrusted to your Advisor for safe keeping, and accessed when required.
“Having a plan in place is absolutely critical to ensure you know where all the pieces are,” according to Maureen Glenn, Vice President, Tax & Estate Planning at Richardson Wealth.
Ensure insurance coverage is sufficient
Insurance, including life and critical care coverage, can mean the difference between living comfortably and facing serious money challenges or cash flow issues. Determining an adequate amount of life insurance – which is dependent on your life stage and specific circumstances – is therefore highly important. A young couple with children will need to ensure their life insurance is sufficient to cover household debt, future education needs and lost income to retirement. Notably, life insurance is less expensive when you’re younger.
For business owners, long-term insurance planning should consider the best interests of the corporation and shareholders, but also the impact on the surviving spouse or life partner, particularly when they aren’t part of the business. See the case study: A widower’s story: Benefits of insurance planning.
Is it ever too late to plan?
Often times, widowed individuals find themselves completely unprepared and therefore unable to make sense of their partner’s affairs following their death. While this scenario isn’t ideal, it’s never too late to figure out a plan. Ms. Glenn recommends the first step is to reach out to a Richardson Wealth Investment Advisor. “They are in the best position to help you identify the missing pieces and can refer you to other professional advisors for tax and legal advice as needed. We can help you figure out what questions to ask and to whom, to move forward during this difficult time.”
Widowhood in three acts
Pre-planning financially for widowhood is an important process, but what of life for the surviving spouse after their partner’s death? Consider three key phases that widowed individuals typically deal with from a wealth perspective:
- Logistical: Making funeral arrangements and arranging payment for these expenses.
- Administrative: Notifying employers and insurance companies; cancelling credit cards; updating household bill account names etc.
- Long-term planning: Once all pressing financial matters have been addressed by a widow/widower, consider longer-term financial planning issues. This can include meeting with a financial advisor to review and revise an existing plan or create an entirely new one.
Need help preparing for unexpected or life-changing events? Speak to a Richardson Wealth Investment Advisor.