For many couples, one spouse manages the majority (if not all) their financial affairs. That might entail managing assets, bank and investment accounts, credit cards, or dealing with a financial planner, accountant or estate planner. When both spouses are alive and well, this works well, but what happens if the spouse managing financial matters passes away? We’ll take a look at some of the issues that arise in such situations, as well as some ways to prevent them.
Losing a spouse is difficult enough. Trying to figure out finances on top of it can make even the calmest person a nervous wreck and could open the door to financial predators, as well. In some cases, heirs and even spouses may have never met their financial advisors, which can lead to a lack of good, trusted advice. In the midst of the financial turmoil in 2008 or, even further back, as a result of the September 11, 2001 attacks, families experienced devastating financial losses due to a lack of financial guidance. In 2008, some portfolios lost 50-60% of their value and in our office alone, we saw two cases where in the wake of a death in the family, the loved ones left behind lost a significant amount of an investment portfolio before they could get the financial advice they needed.
In light of these experiences, we encourage our clients to seek the counsel of financial professionals while both spouses are alive and well. Regardless of who will take day-to-day responsibility for managing assets, it’s important that both spouses know and are comfortable with their financial advisors. After the death of a spouse, you want to be confident in the advice you receive from your financial professionals.
Some individuals prefer a do-it-yourself style of financial management. However, this could lead to disastrous results after the death of a spouse, especially in cases where one spouse is more financially savvy. In our office, we recommend working with a financial planner, even if that advisor won’t take over management of the assets until after the death of the financially-savvy spouse. You’ll want to think about making the transition smooth for the surviving spouse, especially considering they’ll be grieving a loss.
We find that holding a Family Care Meeting is the most effective way to connect you financial advisor to spouses, adult children and other fiduciaries with important roles in your estate plan. At Family Estate Planning Law Group, we strongly encourage our clients to hold a Family Care Meeting. We work with our clients to outline the roles and responsibilities of their loved ones in the estate plan and introduce them to the financial and estate planning professionals they’ll be working with to implement the plan. We find it’s helpful for them to understand role and responsibilities, like those under a power of attorney or health care proxy. Especially for those who’ve created a trust-based plan, it also helps to let heirs know the bankruptcy, creditor and divorce protections inherent in this type of planning.
By starting the relationship now, you’ll maximize the likelihood of a smooth transition for both your spouse and your heirs and minimize the chances of impulsive or bad financial decisions being made in the wake of a death. For more information, explore our website and contact us to schedule your consultation today!
Reference: Investment News (July 13, 2015) “The great wealth transfer is coming, putting advisers at risk”