Many people, after the death of a spouse, have very little financial knowledge and experience to lean on. Learn the basics to ensure this doesn't happen to you.
Over the past couple of months, I have been tasked with the unfortunate responsibility of helping my mother sort through her financial affairs after the death of her spouse. My dad passed in March, and it has been a steady stream of questions, conference calls with her financial advisor and one important decision after another. Of course, this doesn’t even scratch the surface of the emotional stress and strain on the family.
Thankfully, my parents were prepared. Wills were drafted years ago and recently reviewed with their attorney – a meeting I sat in on. Beneficiary forms were current. Long-term care policies were in place. Decisions had been made a decade earlier about cremation and even what vessel my dad’s ashes would be placed in. Yet despite all this planning, despite their son being a CFP® with 25 years of experience in the financial services industry, it was still a slog.
I explained to my mom how a spousal rollover worked with the IRA accounts. I inquired with the financial advisor about life insurance policies. Other issues included things like: Were my mom’s investment accounts allocated properly? How does Social Security work after the death of a spouse? What items were covered by Medicaid and the long-term care policy? What about my dad’s pension? Joint checking accounts? The final joint tax return? On and on and on.
We are at the three-month anniversary of my dad’s passing, and we are in good shape financially. But we have a village of helpers, a tight-knit family, and broad skillsets that collaborated to coordinate the details. Not everyone has such a safety net…
About a month after my dad died, my teenage son and I went to the local bank to open a checking/savings account for him. He needed a debit card and direct deposit account for his new lifeguard job. As we sat in the little cubicle with the banker clicking away on her computer, I spotted an elderly woman clutching a handful of papers. I watched her sit down with another banker at a neighboring cubicle, and I could hear their conversation over the wall. Her first words were, “My husband died a few months ago, and I don’t know what to do.”
The banker began a series of probing questions, but I could not help but feel a sense of dismay for the widow. She was alone with, apparently, little guidance. How in the world could anyone manage such a daunting task by themselves? And if you have no close friends, relatives or advocates to lean on, I cannot fathom the sickening feeling of helplessness.
I mentioned what I had overheard to the lady who was assisting me and my son. She said it is amazing how many people come into the bank after the death of a spouse who have never written a check, who have never done any planning, who have no idea where to turn. I thought of my mom’s situation and, while almost everything was in order, we still had a gauntlet to run.
What does this lead me to? Please, for the sake of your beneficiaries, get your financial affairs in order. It is never too early to start, and it is the responsible thing to do. Also, make an effort to learn the basics of banking, investing, and financial services in general. And be sure to work with trusted and knowledgeable financial and tax advisors. Even a CFP® like me appreciated the professional handholding while my world was trembling.
By Andy Ives, CFP®, AIF®
Ed Slott and Company, LLC