Kobe Bryant was and is a legend in the game of basketball. He was 41 when he died in a helicopter crash recently in California. He is survived by his wife and three other daughters. Kobe's death was tragic but it is a reminder for all of us we need to think and prepare for the unthinkable, life without a significant other. Though this is not a pleasant thought, it is important. The sudden passing of a loved one may leave the surviving spouse scrambling to pick up the pieces at an emotionally fragile time. With Kobe's untimely death it got me to thinking of the steps we can take today to help to ease the transition for the survivor. Here are three examples of how to prepare for the unexpected:
Time to get up to speed on the family finances
When it comes to managing the family finances usually there is one spouse better than other. If the surviving partner is not prepared to handle the bills, manage the money, or oversee the long-term financial responsibilities that come with retirement or college planning, he or she may be overwhelmed.
Lesson learned, never wait till the time is right to understand your family's financial picture, that time will most likely never come. Instead be proactive and ask questions now. You don't have to be a financial expert, but you do want to know the basics. For instance, know how much life insurance your spouse has, and with what company. I suggest maintaining a folder with the most recent investment statements, college accounts, bank, and credit card statements and keep it in a safe place along with the Will and insurance policies. Or consider my Financial Checklist. Be sure to keep the online passwords handy too, that will help. Acquiring enough financial knowledge to make money decisions can go a long way in helping the surviving spouse.
Women Need to Plan for a Long Life
Women on average live longer than men, that is nothing new. Wives should understand how this impacts their financial planning and weigh in on key decisions, like when to take Social Security or a pension. If a husband was the major bread winner and was collecting Social Security early, the surviving spouse is locked into a lower benefit for what can be a longer lifetime.
The same goes for other financial decisions. Recently, I had a client who wanted to drop his life insurance policy because the premium was getting too high. After many conversations with his wife, and her prompting, they agreed to keep it and to pay quarterly to help with managing their cash flow. Six months later, the husband was diagnosed with a severe form of cancer and passed away shortly thereafter. Fortunately, they had the life insurance, but that was because of his wife. That life insurance paid off the mortgage and paid for their son's college. Lesson learned, it's usually wise to assume the wife outlives the husband when discussing financial planning decisions. Continue reading more about what women should be thinking about with my blog post: "3 Reasons More Women Should Plan for Widowhood and What they Can Do to Prepare."
Think Ahead and Hire Help
If the financial situation is too complicated or the spouse is not comfortable handling money at all, then it may be time to hire help. I am often told by the spouse who handles the money that one of the reasons they hire me is to help if something were to happen to them. Sometimes the situation is too complicated - such as Social Security Claiming Strategies for Widows. If the surviving spouse is not as financially astute then having a team of an accountant, estate lawyer, and financial planner is a good idea. If you do decide to hire a financial advisor, be sure both spouses are engaged or participate in some of the meetings so the advisor is not a stranger, it will help.
Hope this helps! -Mike
SEE MY ARTICLE ON KIPLINGER'S WEALTH CREATION PAGE: "WHEN YOU LOSE A LOVED ONE WHO HANDLES ALL THE MONEY"
Keep in touch and stay informed.
Lesson learned, it's usually wise to assume the wife outlives the husband when discussing financial planning decisions.