Written by: Deborah Cartisser
Maureen never expected to be on the receiving end of that call, the one informing her that her husband had died in an accident. She was not only shocked and bereft, but faced the daunting task of taking over their finances that he had always managed. She felt as though the weight of the world had been dropped on her shoulders.
Many more of Maureen’s generation will face similar challenges in the coming years as the baby boomer generation ages. While it’s less likely in the generations that follow, baby boomer men are more likely to be running the finances with limited participation from their spouses. With women more likely to outlive their spouses, a large wealth transfer has begun where women will assume independent control of family wealth. It’s being called The Great Wealth Transfer and reportedly involves $30 trillion dollars changing hands by 2030.
A death can require reviewing and changing estate plans, rebalancing portfolios, selling or retitling properties, filing insurance claims and of course the estate settlement process itself. This can be a massive amount of work, so where should you start? Start by calling your attorney, CPA and wealth advisor. These three professionals should work in concert with one another and form a team operating on your behalf.
If you have participated in meetings over the years, you may have an opinion on which of your advisors you will work best with. It’s not unusual for some women not to have had much involvement at all. If this is the case, start with your financial advisor. Unlike the CPA or attorney, they are less likely to charge by the hour. You will need to understand how all of your professionals charge for their services. Pick a point person to be the lead on directing the process of reregistration of accounts and gathering the data necessary for the estate return. This person should know how to lead you through the process and if not, read on to learn how to find new professionals who suit you better. These professionals should function as your team. They should share information as it relates to your financial picture and communicate with you as well as with the other team members. Coordinated communication will ensure that everyone is aware of what is happening and can provide the best service to you.
Contact the estate planning attorney who drafted your wills and get a copy of the will and a revocable trust, if you have one. Speak to the funeral director and get multiple copies of the certified death certificate. You will need one for each asset and account your spouse owned. I typically recommend 15-20 copies.
Start with an expandable file and a notebook to house your records. You will need to keep track of case numbers, names of people you spoke with and dates you spoke with them. Keep the death certificates in the file as well as any correspondence you receive from the companies you interact with. Each entity should have a folder that helps you to track the status of the assets your spouse owned and where they are in the re-registration process. Do not try to rely on your memory. There is far too much data to be able to track without assistance.
The first priority is to focus on continuing to pay your monthly expenses. If your checking account is in joint name, you will need to work with the bank to re-register the account in your name. In this case, the funds may not be available to you until the account is re-registered. If you have cash in your name alone, it may be best to use that for bill paying initially. Speak with your bank to find out what’s required and ask for a list of all payments that are made automatically from your primary checking account. Make a list of all your bills and creditors. Cancel credit cards and any subscriptions or services that belonged solely to your spouse. Car leases and cell phone contracts can be difficult to exit. A few months in, start to think about how you can track your expenses. Get suggestions from your advisor on how to gather this data. Some use apps, or a single credit card that gives a breakdown of expenses at the end of each year. Knowing what you need to spend is the foundation of your financial plan and is critically important to understanding your current and future financial situations.
Apply for benefits and make insurance claims. Social Security needs to be cancelled for your spouse and you may be better off claiming his benefit than your own. Speak to Social Security on the phone to get more information. If he already got his benefits for the month, funds may have to be returned. As a widow you are entitled to a $225 death benefit. If you have minor children, make an appointment as soon as possible at a local Social Security office to apply for survivor benefits for the kids because the benefits for them start accruing at filing date, not on your spouse’s date of death. As a widow age 60 or more, you have an option to receive either your benefit or your spouse’s, whichever is lower, until age 70 and then switch to the higher benefit at age 70. Call back to double check the numbers you are given. Contact your husband’s employer to gather information on how to move his retirement accounts to your name and whether he had any other company benefits, such as stock options, deferred compensation, pensions, etc. If he served in the armed forces, he may have been entitled to benefits and you can track this down through the branch in which he served.
Determine if your tax preparer or attorney will be filing the estate tax return. Not all CPAs file estate returns, so don’t assume they can do this for you. Speak to both about their process and get an estimate of the cost involved. This filing is more involved than a typical tax return and may be more complicated than something you are willing to do yourself, even if you prepare your own taxes. The professional you enlist will be able to go through all the financial assets with you to ensure you haven’t missed anything. You have 9 months to file the federal estate return or an extension from your spouse’s date of death. Speak with your advisor on where the funds will come from to make the estate tax payments.
Remember that your own estate documents need to be updated. Speak to your attorney about updating your estate documents and replacing your spouse as an appointee on your health care proxy, durable power of attorney and will. You may do some more advanced planning as the estate settlement process unfolds, but at least get your will, health care proxy and durable power of attorney updated.
Your beneficiaries need to be updated on your retirement accounts, insurance policies and any pension accounts you own. Don’t forget to tend to your own assets in this process. Each institution has different rules and required forms, so the process can be time consuming. Keep copies of anything you sign and maintain records of anything you do online.
With the knowledge that you are now a target, be careful of the information you write in an obituary. The wealthier your family, the more likely you are to be a target. I’ve seen clients targeted by using the name of a grandchild, listed in an obituary, who is supposedly in trouble and needs funds immediately. We’ve all heard of homes robbed during a wake or funeral service. Take precautions by having someone stay in your house during services when the entire family will be away. Don’t give out personal information on the phone. Ask for the caller to send you information in writing. Do not sign anything without running it by one of your professional advisors. Everything you do should be communicated to the team of people supporting you.
Your financial advisor should be able to guide you through the process of re-registering your investment accounts and help you prioritize your attention on what needs to be accomplished first. You should schedule time to meet with your advisor and start the process of turning your joint financial plan into an individual plan. Ideally, your advisor should treat you as though you are a new client, learning about your preferences, values and vision for the future. They should run forecasts for you to show you how your assets last into the future. They should be planning for your future and discussing how to structure your financial plan to support you. It may take a year or more to determine your annual budget needs, but conversations on this topic needn’t wait until this information is solidified. Your advisor should be able to identify your concerns, your values, the important people in your life and be able to discuss how the plan they are putting in place addresses or reinforces you and your plans for the future. By the end of the first year, you should have a much better understanding of what you have, where it is and how it serves you.
If you find that your advisor isn’t the right fit for you, or you don’t feel as though your needs are being met, it may be time to seek out a new advisor. It’s common for financial professionals to fail women, by not addressing their concerns and not adapting to the unique needs women face. Historically this industry has been run by men, for men. In a Boston Consulting Group study, 73% of women reported being unhappy with the financial services industry and typically 80% of women switch advisors within a year of their husband’s death. If you don’t feel as if your needs are being met, it’s time to move on.
Get recommendations from your CPA and attorney first as they will have the best sense of your needs. Ideally they have had experience working with the referred advisor through other clients. Tell them what’s not working with your current advisor and qualities you would like to see in a replacement. Bring someone you trust with you to meetings to help evaluate the new advisor, the services they offer and to simply help you remember facets of the conversation. Many of the widows I have worked with told me they couldn’t remember anything for the first 9 months or so after the death of their spouse. You may want to record the conversation so you can refer back and hear the parts you missed. Don’t bring anyone with whom you are uncomfortable sharing your financial information. You can ask your CPA or attorney to attend the meeting with you, with the knowledge that you will be paying for their time.
The financial forecasts and estate planning are critical functions performed by your financial advisor. They should be very clear in their assessment of your current budget and cash flow to determine if you can continue to support your current lifestyle. If changes need to be made, they should help you to quantify the extent of the changes required. By the end of the first year, you should have a sense of your budget needs and the sustainability of your financial plan. Any time you have a financial decision to make, you should bring it to your advisor to help you evaluate the pros and cons of the potential outcomes.
Your professionals are advisors, but they should not be relied upon to make decisions for you. If you don’t understand what’s being said or asked of you, stop the conversation and ask questions. Unfortunately, it’s common for someone new to the finance industry to feel like the meetings are being conducted in a foreign language. Stop and ask them to define jargon, to describe in layman’s terms what they are telling you. It’s their job to educate you and bring you to a place of understanding. Ask them to help you but be sure you aren’t asking them to decide for you. With all that’s required of you now, it’s tempting to look for a person to rely on, whether it’s a trusted friend, a family member or an advisor. Don’t let others make decisions for you. Take your time and get a clear understanding of when a decision is required, but it is critical to maintain your voice in this process. You are piloting the plane and no one else can serve in this role for you.
In my experience guiding women through this process, it takes about a year before they feel as though they are on secure ground again and are confident in their new role as head of their financial household. Throughout the process, remember to take care of yourself and allow the time and space needed to get acclimated to your new life and new role. Ask for help and surround yourself with trusted professionals who can form part of your safety net. Be sure to look back along the way and celebrate how far you’ve come.
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