One of the most common worries clients have is, “If I suddenly died, I worry about the financial turmoil my spouse would be in.”
In a Jan. 14, 2017, article for the New York Times titled “Death is inevitable. Financial turmoil afterward isn’t,” John F. Wasik wrote: “More than 800,000 Americans lose their spouses each year, and 700,000 of them are women, according to the Census Bureau. Because women generally outlive men, they spend an average of 14 years without a spouse. There are now more than 14 million widows and widowers, accounting for about one-quarter of the over 65 population.”
What is unfortunately a common scenario is a widowed spouse, grieving for the loss of his or her partner, and having to deal with the added stress of sorting out a mess of financing. The best way to avoid this scenario is to get organized and plan now.
The most basic step to start with is to make sure both partners understand the marital assets, each spouse’s individual assets, and where they are. Some items include life insurance policies, pensions, IRAs and retirement plans. Do you know who the beneficiaries are on these policies? Are they still people you want to have beneficiaries? It is vital both spouses understand how the money is designated to flow after someone’s death.
The next step is to discuss what would happen should one spouse become disabled. Do you and your partner have a Durable Power of Attorney in place? Do you and your partner have a Healthcare Power of Attorney in place?
These basic estate-planning documents give your spouse the ability to make financial and medical decisions for you, should you become incapacitated. To go one step further, these powers of attorneys should name an alternate agent, as well.
Should your spouse become incapacitated or die, and then you find yourself disabled, who will help make financial and medical decisions for you? Powers of Attorneys are the best tools to prepare for incapacity.
The next step is to discuss where assets are going to go upon death. Estate planning documents such as a last will and testament or a revocable living trust are two examples of documents designed to dictate the flow of assets upon death. Preparing a workable estate plan while healthy is the best course of action.
Estate planning attorneys are specifically qualified to assist clients with fleshing out their desires for their estate plan. You should be discussing the flow of assets from a deceased spouse to the surviving spouse. You should also be discussing the flow of assets when both partners have passed.
Openness and communication is key when creating your estate plan. The more you and your spouse communicate about your wishes and desire for your estate, the easier it becomes to begin the journey to preparedness.
As Wasik said in his article, death is inevitable. Financial turmoil after a spouse’s death does not have to be. Contact an estate-planning attorney and get started on taking control of your future.
Rebekah N. Freeman is an associate attorney with Elder Law & Estate Planning Center.