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Couples Need to Prepare for the Inevitable………

It is not a happy thought, but at some point, every couple will have to face the loss of their beloved. Planning in advance, financially and emotionally, can be helpful for the surviving spouse.

There can be dramatic consequences when a spouse dies, and as described in a recent article from USA Today, “How to prepare financially for being a widow/widower,” one significant change is a loss of income that leads to a reduced economic situation. Here are some examples:

Some income may cease when a spouse or former spouse dies.
The death of a disabled person’s caregiver spouse may result in financial issues at a very difficult time.
The surviving spouse may be unable or unwilling to manage the family’s finances.
The inability to cope with a spouse’s death or terminal illness plays a part in high rates of depression and suicide among the elderly.
There are several things you and your spouse can do to manage the risks associated with becoming a widow or widower. One is talking about money matters together.

First, spouses (especially women) need to know about the household’s finances. This includes where all accounts are located. In addition, it’s critical that they know what benefits might be available from employment-based plans, like pensions, 401(k)s, life insurance and medical insurance, and how to contact the appropriate people to access any benefits that may be due.

Figure out if your financial plan will provide enough lifetime income for the surviving spouse. Note that the surviving spouse may have less to live on, if he or she has to spend down assets to take care of the spouse that dies. If, after running all the variables, there’s a shortfall, think about upping your savings, decreasing expenses, downsizing and buying life insurance.

If you’re the higher earner, you might delay Social Security until at least full retirement age (FRA)—or better yet until age 70—if there’s a good possibility your spouse will outlive you, because the surviving spouse collects a higher lifetime benefit based on the primary earner’s benefit.

Investigate whether you have a traditional defined benefit pension plan and select the joint-and-survivor annuity, instead of the single life annuity. You should also check your beneficiary designations.

Make a list of your employer-sponsored retirement plans, as well as your life insurance plans, bank and credit union checking and savings accounts and titling on real estate. Be sure the credit cards and other accounts are set up so that both spouses have access.

You might also look at long-term care and consider what would happen if one or both spouses needed LTC.

Create or update your estate planning documents. This includes your will, trusts, powers of attorney for financial matters, advance directives, living wills and powers of attorney for health care and physician orders for end-of-life care. You may want to file a “do not resuscitate” or DNR order with your hospital to avoid aggressive attempts to prolong your life. It can also help to prevent incurring large medical bills for the surviving spouse to pay.

Consider planning your funeral arrangements in advance.

As a kindness to each other, the couple should sit down with an estate planning attorney and review their assets, cash flow, and make sure that both understand what will happen, when one or the other spouse dies. Understanding how income will change and how the surviving spouse will manage, will give both spouses some comfort.

Reference: USA Today (January 19, 2018) “How to prepare financially for being a widow/widower”

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