If you are married or have ever been married, you remember the words. My guess is that like my wedding vows, yours too included the phrase “Till Death Do Us Part”. At the time those words meant commitment and dedication to me. What did they mean to you and your spouse?
Those words, however, do not give newlyweds any insight as to when that event will occur. Part of my professional world is to sit down face to face with couples and discuss their retirement dreams and aspirations. It is very common for me to hear their stories about how they have grown together, been through the gauntlet of life and are now looking forward to the future of retirement, together. We were recently referred to help a new client and we heard similar stories. We heard how they had grown together, raised families, enjoyed hobbies and were just beginning to enjoy retirement. However, this story had a much different retirement context to it. This was a widow who lost her husband to a tragic accident nine months ago while enjoying their birthdays. This was a meeting that included a tissue box for everyone.
It was at that moment that the phase “Till Death Do Us Part” contextually, reminded me that it also can be the “Part” of planning that can blindside you and knock you off track.
Our work is focused on helping people deal with the issues that arise in times like this. We are quite familiar with assisting clients as they pick up the pieces and begin the process of transitioning from being happily married to widowhood.
Everyone goes through the cycle of denial, anger, grief, and acceptance. To recover emotionally they need to be honest about what they have lost. To recover financially is where we focus our efforts. We try to reframe the conversation and ground our clients to a different framework. It will take some time but that framework is all about moving forward with a peace of mind.
Key Point: There is no crystal ball that tells you when you are about to go through this or any other income/life/market disrupting event.
What are the initial steps? What should you do financially when you lose a loved one? First keep in mind that when a spouse dies that person will need to handle numerous financial and legal issues. You may not be prepared for such an undertaking. What follows is a simplified overview. If you desire more details, we are as close as the nearest telephone.
Many don’t where to start. The first step is to get organized. You’ll need various documents such as wills, trusts, power of attorney forms, death certificates (several copies), financial statements, etc. You will need to find these documents in order to apply for benefits. You will need to set up systems to organize these records and other important information you’ll receive. Don’t forget to determine your short-term need for income. Afterwards, you’ll be ready to start settling your financial affairs with the help of personal and professional advisors.
Getting organized
Gather Records – You will need a number of documents to settle an estate or to apply for insurance proceeds or for IRA beneficiary claims. To apply for life insurance proceeds you will need a certified copy of the death certificate (and possibly) the insurance policy too. To apply for social security benefits you’ll need to provide proof of death (death certificate), proof of marital relationship (marriage certificate), and proof of age, (birth certificate). You will need to contact your spouse’s employer as well as the Social Security Administration to see if you are eligible for survivor or death benefits.
Set up a phone and mail/email/online document system
During the immediate time after a loved one’s death, it can be quite emotional and chaotic. That is why it is important to keep track of details as they come forth. Set up a phone and mail/email/online document system to record incoming and outgoing correspondence. Keep a journal handy for phone calls. Note who called, the date, time and topics discussed. For mail, either write down who sent the piece, the date you receive it, and the date you sent mail in return. It would be wise to keep a scanned copy of any such mail correspondence on your computer or web-based document storage system.
Set up files
We offer our clients the use of a “Digital Vault” that helps keep things organized. We know the importance of setting up a filing system and I am sure you do too if you have ever had trouble finding something and couldn’t. Set up online or paper folders to keep track of different financial and legal matters. We also encourage clients, married or not, to pen a “Family Love Letter” that explicitly states where a loved one or friend can find things such as important documents, phone numbers, passwords, addresses, contact lists, etc.
Make a contact list
You should have a written list of all personal and professional advisors you need to be corresponding and meeting with. The list could include your health insurance company, attorney, financial planner, insurance agent, and friends who can give you advice.
Evaluate short term income and expenses
Immediately prepare a list of all debts you’ll have to pay in the next 30 days. Then determine if you have enough money to pay those debts. We always advise clients to keep 3 to 6 months of expense money set aside in a cash reserve for such reasons. Please don’t panic if you don’t have this resource. If you know you have some insurance proceeds coming or an estate settlement there are ways to short-term fund these expenses. First, you may have access to your own personal non-qualified investment account or IRA. Second, you may be able to get life insurance proceeds within a few days and you may be able to delay other expenses by negotiating with creditors. Lastly, if all other options are out, use credit cards to pay what you can or consider using a cash advance against the card if necessary. If you do, be mindful of interest rates and cash advance fees or other charges.
Bottom Line: Peace of mind is knowing that you have a limited number of cards to play when planning or rebuilding your financial future after a spouses death and that you are playing those cards the best you can giving any situation. Ask yourself these questions:
- Have you and your spouse ever completed a “drop-dead” contingency scenario? If so, how has that affected your emotional objectivity on the matter. What kinds of issues did you discover? What are the gaps?
- Is your family love letter written? If so, what does it include? Talk to anyone who has been an executor of an estate and ask them how hard it was for them to find important documents/facts for the deceased. This is especially true for the children of the deceased.
- Do you have the necessary estate and financial documents in place and are they up to date? Keep in mind a fully coordinated estate and financial plan is about who you leave behind.
There are many legal and financial issues that arise when a spouse passes away. If our insights have resonated with you please give us a call. We are as close as the nearest telephone (515-457-2930).
Phil E. Gose
Capital Resource Management, LLC