Those experiencing widowhood are often faced with a difficult balancing act: the need to be independent, to be social, and to surround yourself with trusted individuals.

In this episode of Conversations on Wealth, Sarah Widmeyer talks with Maureen Glenn, Vice President of Tax & Estate Planning at Richardson Wealth, about the importance of gaining independence in your financial situation to prepare for all eventualities as you age, including widowhood. They offer some ideas and strategies to prepare for the unexpected, so those initial urgent decisions don’t get lost in the fog.

Sarah Widmeyer 0:16

Welcome to Conversations on wealth hosted by Richardson GMP. A podcast dedicated to helping Canadians navigate the complexities of wealth with a multi-dimensional approach to planning and wealth management. I’m Sarah Widmeyer, Director of Wealth Strategies at Richardson GMP, and this week discussing some of the challenges faced by those experiencing widowhood.

Joining me today is Maureen Glenn, Vice President of Tax & Estate Planning, at Richardson GMP. Thank you for joiningus today, Maureen.

Maureen Glenn 0:52

Thank you for having me.

Sarah Widmeyer 0:54

Widowhood is an extremely emotional time for everyone involved. While every individual’s experience is unique there are some facets of widowhood that apply more generally and that we can focus on as wealth planning experts. The goal is to help individuals through a challenging time, particularly in terms of developing financial independence. As we know, many people are unprepared for this critical responsibility – being the sole decision maker on finances amongst other things. This can be extremely difficult, and frankly complicated, if you relied on your partner to handle money matters and financial planning. I would take it even further that you and your partner probably made most life decisions together, and in widowhood, losing your partner you are losing the primary person who helps you make those decisions.

Maureen walk us through some of the steps that clients should consider when arranging their financial affairs and planning for something that is inevitable for all of us at some stage.

Maureen Glenn 2:04

You know, Sarah, I don’t think there’s ever a bad time to start planning. Of course I do planning for a living, so I would believe that. I think it comes easier for some individuals than it does for others. But the worst possible time to try and embark on this is when something critical has shattered your life. So it’s never too late to start in my opinion. However, we don’t like to think about that eventuality – of losing someone dear to us. It seems so far away. How could we possibly anticipate that coming to us and having to deal with it without much warning?

So in some cases there may be a blessing in knowing about a long-term prolonged illness early so that you have time to adjust. I call that the early grieving period, when you start to change gears, look for trusted advisors and start to plan. However we don’t always have that blessing. Very often these things happen suddenly when we least expect it.

I think a lot of traditional families – while they may have made many decisions together over the years, very possibly one of the partners was more involved in the financial decisions than the other. If that’s the individual who passes first that leaves a big gap for the survivor to fill.

So I think it’s often when things bring this planning to front of mind. For example, if a sibling has passed or one of your dear friend’s partners has passed, it will often start you thinking down this path. For example, I had a client come to me with her husband asking for some wealth planning. And she said she saw her best friend go through such a horrible process when her husband – her friend’s – husband had passed and there was no planning done for her. She had no understanding of where the documents were, what the financial situation was, and it meant a lot of extra work for her and people around her. She said “I don’t want that to happen to me.”

Sarah Widmeyer 3:58

Yeah, it, it, It is shocking. And as you know my father passed away in May and my mom, we’ve been working with my mom through her finances and her financial decisions. And it is such a shock if you haven’t been the primary decision-maker around financial matters. In fact it can be absolutely overwhelming.

If individuals are faced with widowhood when is the right time to contact their financial advisor? I think, as you said, it’s before widowhood. But if we’re not dealing with that situation and widowhood has happened, when is the right time to contact their financial advisor.

Maureen Glenn 4:45

I would suggest that contact needs to happen as soon as possible. Where you know you have a trusted Investment Advisor that you can reach out to who may know various different facets of your financial world that you may not have ready access to. So I would say as soon as possible. We talked about in a sudden situation of widowhood and even in a prolonged one I would suggest that there’s what I call the widow’s fog. And pressing financial decisions are expected to be made, but really the individual is not in any frame of mind to make those decisions. And yet there’s a pressure an urgency to decide on who’s going to manage the assets, where should you transfer the funds, how do you pay the bills.

And we have to be cognizant of that fog and allow some flexibility during that period – that some initial reaches can be made, some initial decisions can be made in an interim plan. But then once you start to come out of the fog there’s flexibility to make changes that make better sense for your ongoing independence.

Sarah Widmeyer 5:50

And that fog can last six to twelve months.

Maureen Glenn 5:53

Oh I’d say at least a year, and it can return sporadically when you’re least expecting it. I know as I’ve grieved for family members in the past, sometimes it’s something very small like seeing a picture or a flower that brings it back. and then you need to give yourself time to get through that period.

Sarah Widmeyer 6:08

Yeah, be kind to yourself.

So if individuals have not planned ahead and are now suddenly faced with widowhood without their documents and other details in place, it sounds like it it’s not the end of the world. It’s certainly recoverable and there’s really only a couple of things and decisions that need to be made probably in the short term. Does that sound about right?

Maureen Glenn 6:38

I think so. I think the urgency initially is compiling the information, finding the copy of the will and the original will – which is another challenge on top of that. Identifying who the financial advisors are that you can surround yourself with. It might be an investment advisor, it might be your wealth planner, it might be a banker for debt and mortgages, it might be your insurance specialist. So identifying who those individuals are, letting them know what’s going on so they can start to help and then compiling all of those documents in one place. You may not need to do the taxes the next day but at least you start to compile the information so that you’re ready to do that when you need to approach your tax advisor, perhaps at the next tax filing season.

Sarah Widmeyer 7:22

How can insurance play a role in an individual’s estate plan? It sounds like, the obvious thing is that it would immediately have an injection of cash which may be useful to pay some short-term bills. For example, funeral expenses and other related things. It sounds like an obvious question, but perhaps you could expand.

Maureen Glenn 7:47

Yeah, insurance, life insurance, is often the fastest claim process in regards to filing a claim and seeing the funds from that insurance death benefit being paid to you. It’s paid very quickly, often within a number of weeks after the claim is filed. A couple of challenges there are: you will need to have a bank account that is yours, that is not locked down or frozen as a result of the death. So joint accounts have the risk that they might be frozen until the bank is satisfied that they have all the documentation they require. Likewise the insurance doesn’t freeze the assets, but you can’t cash the check without a bank account. So these are things to think about in advance.

The good news about insurance is they are very proficient at fulfilling their obligations with regards to a life insurance contract as long as you know that it exists. So that’s why I talk about compiling all the documents. Lots of individuals purchase insurance early in their lives, perhaps when their children were very young. I see copies of insurance policies dating back to the 1950s and 1940s. The paper’s pretty thin on those, but they still exist and they were probably paid off many, many years ago. So if the widow doesn’t know that that insurance policy existed, or perhaps he or she assumed that it was gone, now then that claim may never get filled.

I did a little bit of research – and this is a couple of years old – but in USA Today, they announced that the Florida Office of Insurance Regulation said there’s $7.4 billion of unclaimed benefits in the U.S. Now they expect that about $5 billion of those dollars will eventually get paid out to beneficiaries. And we’re seeing of the last few years insurance regulators are pushing insurance companies to create better search mechanisms so that that money doesn’t just sit in limbo. But in the article that I read, they say that 2.4 billion of that 7.4 billion will end up going to the state across the country.

There’s other examples: The Bank of Canada at the end of 2018. Ultimately if there’s deposit accounts or other Bank type assets that are inactive for more than 10 years, the assets must be transferred to the Bank of Canada. There’s over two million unclaimed accounts as of the end of last year worth over $816 million, and they hold onto those assets. Some of these assets go back all the way to 1900 where they simply haven’t been able to find an owner of that account or a next of kin to transfer it to. So really the stats are one thing, but my point is that if you don’t know that the insurance policy or the bank account exists, you can’t possibly put a claim in for it, and that’s just lost wealth. So compiling everything in one place, finding the documents, reaching out to every possible source you can find to help you do that search is so important. And of course, if everything happens to be in the safety deposit box, well, that’s a very safe place to store things as long as you know where the key is, or your executor does.

Sarah Widmeyer 10:59

You said something about bank accounts and making sure that you have bank accounts in your own name. I remember back when I was advising clients I would talk about a lot of wives did not have credit established in their own name. A lot of joint credit or, I was Mrs. Widmeyer, as opposed to my own name. So it’s really important that we encourage particularly our wives – usually it’s the wives of our client relationships – to have their own credit and their own credit history because, again, with widowhood all of that goes away if not established in your own name.

Maureen Glenn 11:46

I agree, and I think there’s many more modern family structures. Still have that component of perhaps one individual being more involved in the finances or in the workplace and the other staying home. And that’s not gender specific, that’s just the way we live our lives and raise children and so on. I worry about our younger clients where there’s one breadwinner in the family, but there’s a joint mortgage on the house. And the concern that if the bank ever questioned whether the survivor, who may not have been the breadwinner, would be able to maintain the mortgage payments over time. So this is why we talk about life insurance planning, of course before widowhood ideally, to make sure that you’ve got all of the structures in place. And that really goes to advance planning thinking ahead and allowing us as your advisors to help you consider the worst case scenarios so that you’re prepared.

Sarah Widmeyer 12:41

Great. A statistic that a lot of people might be shocked by is that the average age of widowhood in Canada is 56. So with that in mind, what can we do to help prepare our clients and what can we do for ourselves to prepare for independence?

Maureen Glenn 13:03

I think it really depends on the individual situation and the assets that they have access to. But really, it comes down to knowing your plan and knowing what your wants are. We often talk about needs. So if there’s a concern that you want to stay in your home but you wouldn’t be able to support a mortgage well that’s a need. We need to cover that somehow and plan for it, or budget for it so that you can pay down that debt over time. Alternatively though, it might just be a want that you really want to keep the cottage in the family and you don’t want to have to sell it at any point in time because of financial distress.

I would suggest that everyone should be creating a plan for themselves and that involves collecting all the documents, documenting everything, so you know where to find it. And if you’re not here, making sure someone you trust knows where to look for that information. The understanding that we can we can only plan for what we know today and any financial plan evolves over time. So it needs to be checked every now and then. But often when clients come to me where they’ve never had a plan and luckily they’ve always had the finances to make ends meet, well that’s lovely. But perhaps they need to just put a little bit more thought into what do they really want for their funeral, or their burial, or a memorial service. And then can they do some planning in advance to make sure their wishes are met.

Sarah Widmeyer 14:23

So there’s a theme to your answers it’s around documents, document control and around planning. So what then are some of the ways that your advisor can help you prepare.

Maureen Glenn 14:39

Well, you know, it kind of um, the most important thing – and I won’t repeat document – but we do provide the services of helping you identify all of these assets that you hold and then documenting them – sorry – in what we call an estate record keeper. And it’s just a number of pages of paper where you can write down your trusted insurance advisor’s name and phone number so that if you don’t have all the documents about your insurance perhaps that individual will be able to collect it. The name and phone number and contact information of your lawyer, your accountant and your investment management professional so that the people you leave behind – perhaps your widow – has a first place to start to find everything. And it may even include things like the passwords for certain asset or certain online accounts so that those assets can be identified and shut down very quickly. We worry about identity theft.

And and that is a segue to the other comment that I wanted to make, which is as we get older there are more risks in front of us. On average, you mentioned, the average age widowhood is age 56. I can also say that 80% of those individuals that are over the age of 85 are widowed and the majority of them, the largest percent of them, are female. And we worry very much about victimization. We know that about 8.2%, so that just over 8 percent of capable seniors – that’s not involving dementia or weakness in any way – but around 8 percent of capable seniors have been abused in the last year. And that is unfortunately what we see is very underreported and may be perpetrated by family members and close friends.

So what we can do to plan for our independence is to make sure we circle ourselves with those we trust, that they can help us and that we remain independent because that’s so important to our long-term health. But also socialized so we have people around us to protect us from risk. Risk of perhaps scams on the phone, scams by email, victimization by individuals who become very close friends and then start to drain bank accounts. We’re seeing it more and more because our demographic is getting older, we’re living longer and we need to put protection in place. Having a record keeper in hand, in a safe place where someone knows where to find it. Knowing who your executor is and advising them and communicating with them what your wishes are. And then staying in touch with your circle of friends so that they know if perhaps your health is declined or if you need some additional protection.

Sarah Widmeyer 17:30

All really great advice, thank you, Maureen.

Is there anything else that you can think of that would be helpful in sharing for those preparing for widowhood or perhaps those who are now a widow and are dealing with financial concerns and other decision making for the first time on their own?

Maureen Glenn 18:02

I think you mentioned it well in saying that you need to be kind to yourself and give yourself time to work through decisions. And then allow yourself to educate and find the resources around you that can help you. There are people here that can help and can help guide you through your decisions. Our firm provides those services and we can do it at any stage of life. Whatever your needs are, we can address those through consultation and planning, and having trusted advisors who know what to expect and how to walk you through the next steps.

Sarah Widmeyer 18:32

Wonderful. Thank you again, Maureen, for sharing your thoughts and your advice and frankly you’re calming wisdom with us.

If you’d like to learn more about developing financial independence and coping financially for difficult times or through challenging life events you can also visit our website at RichardsonGMP.com for articles and videos on these topics. Remember to subscribe to Conversations on Wealth wherever you get your podcasts and follow us on LinkedIn for a broad range of information on wealth strategies. Thank you all for listening and join us again next time.