This is the fourth part in our series on Estate Planning. I encourage you to start with the first three if you haven’t already done so.
In this blog we deal with a tough topic that may sometimes get overlooked when estate planning – how to prepare your spouse for your passing. In many marriages, one partner (often the husband) handles most of the financial details while the other has a general idea of how it’s working. However, when that day comes, the grief will be heavy and intense – so you want to ensure your spouse is well prepared and avoid confusion. Today, I share some of these steps and encourage you to prayerfully consider having this conversation with your spouse:
Talk about It Early On and Regularly
No one likes to talk about death, but avoiding the subject is never the answer. I suggest having regular discussions from the start by forming a health directive, revisiting your financial goals each year, and updating your estate plan regularly. Keep in mind, these discussions don’t need to be emotionally charged, but rather, open discussions about what life will look like upon your passing.
For Kathy and I, we review our estate plan every two years and make meaningful changes as needed. By doing this, our current financial matters are always up-to-date, and we don’t let too much time go by without looking at the numbers. I encourage you to develop your own strategy and review it with your wife on a regular basis.
The truth is, a well-organized estate plan preserves your legacy and ensures that your assets are available when needed. It makes it clear what will be passed down to future generations as efficiently as possible. In my opinion, it can mean the difference between a state of confusion and peace of mind.
A well-constructed wealth plan answers the following essential questions:
- How will your assets be managed during your lifetime?
- Who has the authority to make the financial decisions if you lose capacity?
- Can your financial records and other important documents be accessed readily?
- How will your assets be distributed upon your death?
- Is your family prepared to receive the assets?
- Who receives the proceeds from your retirement accounts and life insurance policies?
- Who will be the guardian for your children (if they are below 18)?
- How can taxes be minimized?
- What do you want to leave for your children/grandchildren?
- What do you want to go to charity?
As you and your wife discuss your own estate plan, you might have questions to add to this list. The key is to have open discussions and be ahead of the game in preparation for your passing.
Have a Mutual Understanding of Your Financial Portfolio
It’s important for your wife to have a clear understanding of your financial portfolio. This includes your personal balance sheet, (assets, liabilities, net worth), as well as your income, expenses, and savings.
If your financial portfolio seems overwhelming to her, try breaking it down into smaller, categorized pieces. Start with the basics and consider meeting together with your financial advisor for direction and support.
Most of all, include your wife as much as possible in financial decisions and actions. Encourage her to be hands-on when budgeting, paying bills, making investments, and looking at the numbers. The more involved she is now, the better grasp she’ll have upon your passing.
Discuss the Decision-Free Zone (The Mourning Period)
The stress and heartache of losing a spouse can make managing financial obligations seem almost impossible. Encourage her to consider the immediate time post death as a decision-free zone (as much as possible) for six months to a year. After all, your wife will be recovering from a huge loss. Discuss the decision-free zone with her ahead of time, as rash decisions made under duress may compromise your estate.
Here are some examples of decisions that should not be made during the mourning period:
- Don’t immediately pay off the mortgage.
- Don’t put your house on the market. Emotionally selling may lead to a sale at less than its worth.
- Don’t immediately purchase a vehicle.
- Don’t immediately make major improvements to your house.
- Don’t immediately take extended and numerous trips.
- Don’t give money away to children, family, friends or charity.
- Don’t allow a salesperson to talk you into buying financial products such as an annuity or life insurance, nor invest IRA assets in annuities to guarantee an income.
Encourage your wife to give herself time to grieve and heal before making any major life decisions. Remind her that many things can wait, and only the most important things will need to be handled right away. Point her towards the plans you’ve made together and give her a team of advisors to call on for help.
Establish a Trusted Team for Managing Affairs After Loss
To help your wife manage your affairs and make important decisions once you’ve passed, I recommend establishing a trusted team of people to come alongside her for support, wisdom, and counsel. These decisions will range from how she completes paperwork, collects survivor benefits, changes ownership of assets, updates the estate plan etc.
The first step is to predetermine and hire a team of professional advisors to take many of the burdens off your wife’s shoulders and provide guidance. Make it clear to her that she shouldn’t try and go through the decision-making process alone.
Here is a list of team members to consider:
- Personal counselors (at least two) that are pre-selected
- Tax accountant
- A staff accountant that has a detailed balance sheet and P&L
- Estate lawyer
- Insurance agent
- Business lawyer if businesses are involved
- Investment manager(s).
- You may have Trust Representatives if you and your spouse have chosen an institutional trustee.
Something you’ll want to include is a clear, updated list of all your key advisors – with their names, phone numbers and email addresses; along with a brief paragraph on each person explaining who they are, why you trust them and how they have helped you. This way your spouse knows exactly who to reach out to and where to lean for guidance.
Give Her an Action Plan Post-Passing
While your wife is grieving, it might be difficult for her to remember what steps she needs to take post-passing. It’s likely she won’t be thinking clearly and might feel pressured to make more decisions than is necessary. That’s why it’s important to create a list of first-action items she’ll need to handle.
Here’s a list of things to consider:
- Contact funeral home to make arrangements.
- Request funeral director to provide 20 to 25 certified copies of the death certificate.
- Arrange for someone to be at your home during the funeral, since burglars read obituaries.
- Contact spouse’s employer and report passing of your spouse.
- Contact your estate attorney to begin a review of your spouse’s Will and Trust.
- Pay all immediate bills. Place all bills in your name.
- Report the death to Social Security — 1-800-772-1213.
- Don’t write a check to anyone without an official document such as an invoice and/or a signed agreement by your spouse, you, or both.
- Don’t be pressured into making decisions.
The more details you can cover before you pass the better. Also, having everything organized and kept in a familiar place will help your wife find what she needs when she needs it. I’ve created the handout – things to complete for a memorial that offers more information on this topic.
Write a Detailed Letter to your Spouse
One of the things I have done is write a letter to Kathy that covers key areas of our life in great detail. The reality is that doing this well takes a lot of work, but the burden you leave your family for not thinking it through well enough would be worse. Therefore, make these decisions while you still can set it up the right way. I have included a draft Letter to Your Spouse in a handout, feel free to read and amend as necessary.
Be sure to revisit your estate plan every year or two and together run through the steps she’ll need to take upon your death. Lay things out clearly and make sure she has easy access to every account, document, and advisor needed to make the most informed decisions. Ensure she knows where to find this package.
Ultimately, there’s no way to fully prepare your wife for your passing, but you can eliminate unnecessary hassles and provide a clear action plan. In the end, it will make things much easier as she moves through the grieving process and learns to navigate life without you.
ACTION STEP
If you haven’t already, prepare to bring your spouse into the loop now, Schedule ample time and walk through the estate plan, introduce them to key advisors and share the big picture of your financial world.
Put together a centralized information packet – and leave it in a clearly marked place. Keep copies of all important documents and contact information of your professional team. Make sure your spouse knows exactly where these are stored.
What are your thoughts on what I’ve shared today? Please let me know by putting it in the comments section. Your feedback could help another reader.
