Estate Discussions: Don’t Wait Until It’s Too Late
by Damaris Gingerich
Death is not a pleasant or uplifting topic, particularly when you or your spouse is the subject. As a newlywed myself, I’ve noticed a pattern my husband and I have fallen into, where one of us takes the lead on managing individual aspects of our shared life: laundry, insurance, car maintenance, scheduling, bills, and so on.
As someone in the financial services industry, we often have a front row seat to the effect of the death of one spouse on the other — which makes it frighteningly easy to envision the worst-case scenarios that could arise if I lost my husband. It’s important to me that we both have a working knowledge of all estate considerations so that we aren’t caught off guard if one of us passes away. It’s unhelpful to live fearfully, but it’s wise to prepare.
How Might This Apply To You?
Losing a spouse is devastating. In addition to the emotional grief and personal loss, it also presents a real financial risk to many households. This risk primarily affects women because they are much more likely to be the survivor: In 2016, 78% of all surviving spouses were widows. Women also earn less than men, on average, making the income loss more significant. For individuals aged 55 to 64, wage data from the U.S. Bureau of Labor Statistics shows that on average, women’s yearly earnings are about three-quarters of what men earn.[1]
This information highlights why it is so important for both partners to be involved in discussions about financial security.
While couples have traditionally combined their finances, Millennial couples take a different approach: according to this article from due.com, only 34% of Millennial couples combine their finances, compared to 51% among other generations. In cases where a couple has chosen not to combine their assets, it is even more important that the surviving spouse knows what accounts, policies, documents, etc. exist — and that the surviving spouse understands their relevance.
Whether one spouse handles the couple’s finances exclusively or each manages their own money, preparation is key to avoiding the additional overwhelming financial stress that can occur when a spouse passes away. A simple way to cut out confusion is to keep all records and information centralized and accessible. For some couples, a shared folder on a password manager might be a great solution; for others, a file or binder might be better. For a suggested list of important documents, the National Institute on Aging offers some great resources that can help you get your affairs in order.
Besides knowing where to go, both spouses should know who to go to. A document listing the couple’s financial adviser, estate attorney, accountant and other financial and legal professionals is an essential resource, especially if one spouse has exclusively handled the finances for many years.
This article from USA Today provides a comprehensive list of things to do in preparation for the loss of a spouse. One notable item: both spouses’ beneficiary designations should be correct, and estate plans should be current. While this might seem like a hassle in the present moment, these two items can determine whether funds are easily accessible or even available at all to support the financial needs of the surviving spouse.
If one spouse is or was the main breadwinner, knowing about life insurance benefits and pensions will be important for the surviving spouse. This article suggests preparing a budget based on one income (if still working), which can reduce the uncertainty around spending after the death of a spouse.
What Should We Talk About?
Talking about what one spouse would do in the event of the other’s passing isn’t exactly a cheerful discussion, but it is a necessary one. The death of a spouse is an incredibly difficult and stressful time, and alleviating fear for the future can help make it a little easier to navigate. In a sense, having these conversations are a deep expression of each spouse’s love and care for the other.
Beyond the financial considerations, it might also be helpful to talk about living arrangements. Would the surviving spouse want to move to some sort of assisted living facility? Would they prefer to downsize? Or would they rather stay in the house? Are there any charities that are important? How should relationships with children be handled? Difficult as it might be to imagine, this can be an opportunity for each spouse to help ensure that their partner’s life can still be fulfilling without them in it.
What If My Spouse Doesn’t Want to Talk?
In many relationships, one spouse is more organized or financially minded, so a discussion about the future estate will likely need to involve one spouse educating the other. If an exclusively financial discussion feels overwhelming, it can be helpful to provide space for your spouse to talk about their own areas of specialization.
Keep in mind that this discussion doesn’t need to take place all at once — spouses can cover the necessary topics in bits and pieces instead. Talk about the car insurance when the payments are due. Make an effort to go together to meetings with a financial advisor, attorney, or accountant. Each of these are steps in the right direction. Finally, as with any other hard conversation, it’s a good idea to do something enjoyable together afterward.
[1] Federal Reserve Bank of Chicago, Financial Life After the Death of a Spouse.