How to Make Sure Your Family’s Financial Plan Includes You

Estate planning can be difficult at the best of times. Thinking about what will happen t

o your family, your possessions, and your wealth after death isn’t easy – even as a theoretical exercise. That’s part of the reason why it’s so easy to overlook important matters or even make serious planning mistakes.

One common one? Failing to address the very real likelihood that a female spouse will outlive her husband.

In fact, one survey found that 80% of women die single, while 80% of men die married. Because women tend to outlive men on average, it’s a very common experience.

That’s why it’s so important for your family’s financial plan to consider the possibility of widowhood. Here’s how.

Start talking – and working together

 If the husband in your partnership does most of the financial work, now is as good of a time as any to start sharing the load. This applies even if that person is doing an amazing job and always has – in fact, in this situation it’s even more important. You don’t want to lose out on the benefits of all that careful planning!

The loss of spouse is an earth-shaking experience for most people: that means it is not a good time to try learning about your family’s finances, including where the money is, how it’s allocated, and what to do with your collective assets.

Share the wealth now by sharing your knowledge.

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Most Overlooked Retirement Risk For Women: Widowhood

Both spouses should be familiar with:

  • Budgeting: Your family’s basic expenses and where the payments are coming from.
  • Bank accounts: Where they are, what they’re being used for, and how much is there.
  • Insurance policies: Basic information about outstanding policies and where they are, along with your overall insurance strategy (for example, the types of policies your family has).
  • Investment accounts: Where they are, how they’re allocated, and what your long-term strategy is for each of them.
  • Retirement drawdown: Which accounts are generating distributions in what situations (for example, using a Roth account in a high-tax year).
  • Financial plan: What your overall investment and personal financial strategy looks like and why.
  • Estate plan: Where the documents are located, what they say, and the name of the lawyer who helped you draft them.

Much of this boils down to simple participation and education – it doesn’t mean you have to reverse roles or do something completely different. A working knowledge of your family finances can go a long way in helping you get through anything, from a stressful scenario like a hospital stay to the turmoil of bereavement.

Consider how to make asset transfer easier

 Depending on your family’s estate plan, it may make sense to take extra steps to smooth the transition of wealth to loved ones.

Common precautions include:

  • Retitling property, assets, and financial accounts for joint ownership. In this situation, each spouse has full and equal access and control of the asset or account in question. If one spouse is incapacitated or passes away, ownership will seamlessly pass to the joint owner.
  • Adding a “Transfer on Death” or “Payable on Death” designation to individual financial accounts. Whether you want the account to go to your spouse or another loved one, the Transfer on Death designation accomplishes the same as joint ownership, while keeping control in the hands of the current owner.
  • Update beneficiaries lists. Whether it’s a life insurance policy or a retirement account, be sure that your beneficiary plans are formalized and up to date.

While survivors may still need to go through probate – this depends on a number of factors – ensuring faster asset or cash transfer can help avoid financial trouble in the short run. The last thing a grieving spouse needs is a difficulty in accessing money for groceries!

Stay aware of retirement accounts

Inheriting a retirement account can be a surprisingly tricky undertaking.

Depending on who inherits there are immediate tax issues that may need to be addressed – some of which can get complicated – and the beneficiary may also need to go back and deal with Required Minimum Distributions or other administrative issues. Beyond that, your survivor(s) may need to make critical decisions about asset allocation and a distribution strategy.

Given the potential significance that retirement savings can have on the stability of your retirement, you may want to consider speaking to an advisor ahead of time – and making sure that your beneficiaries have their contact information.

Making this information available to your spouse, children, or other loved ones now can end up being a real gift in their time of need.

Working together

 All this is well and good, but as some our friends and clients know, changes to the status quo don’t always come easy. If you’re having difficulty communicating with your spouse about how to prepare for the possibility that one of you will outlive the other, it might be time to rethink your strategy.

For spouses who are unwilling to share control or who feel questioned about their ability to manage, a bit of truth can help. The statistics regarding widowhood are real – and they are rightly scary to many who encounter them. Of course, spousal negotiations are an art form perfected by the spouses themselves – no one has more knowledge than you when it comes to the best way to communicate in your relationship.

However, if you’re having trouble meeting in the middle, consider enlisting an advisor or even your estate attorney. Sometimes having a third party involved whose best interest is both of you can help foster the discussion and keep matters on course.

But know that by reading this, you’re already taking the most important step. Widowhood isn’t a topic anyone likes, but it is a potential reality with serious repercussions on every level. That means it’s worth addressing – preferably before it’s too late.

If you want to truly start preparing for retirement, you need to read this.

Whether you’re recently widowed or one-half of an active couple going strong, your retirement plan needs to account for some difficult issues.

Widowhood is one of the most serious retirement risks that women in particular face, so here at Vitucci & Associates we believe it is an urgent subject to understand.

Our free eBook series on widowhood focuses specifically on women and covers some of the biggest financial risks that widows face, the best ways to adjust your financial plan for the possibility of widowhood, and special advice for the recently bereaved.

Help protect yourself and your loved ones through one of the most difficult experiences an adult can face: download The Most Overlooked Retirement Risk for Women today.

The Most Overlooked Retirement Risk For Women: Widowhood

Download Part 1 of 3 Series 

Let Us Help!

We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

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Important Disclosures

Material provided by Augury Consulting. Augury Consulting is not affiliated with Vitucci & Associates Insurance Services or United Planners Financial Services (United Planners). The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Securities and advisory services offered through United Planners Financial Services, member FINRA, SIPC. Pasquale Vitucci, CA Insurance Lic. # 0758212, is an Endorsed Agent of Vitucci & Associates Insurance Services CA Insurance Lic. # 0I06319. Vitucci & Associates Insurance Services and United Planners are separate and unrelated companies.

Further Reading

Widowhood statistics: https://www.financialpro.org/pubs/subs/journal/docs/2016/JFSP0116_53-60.pdf
Transfer on Death designation:
http://www.finra.org/investors/alerts/plan-transition-transfer-brokerage-account-assets-death

Joint accounts. Please note there are additional potential risks should you consider joint ownership with a person other than your spouse. Due to the subject matter of this article, these issues were not covered.
https://www.fdic.gov/deposit/diguidebankers/documents/joint_accounts.pdf

Death and retirement plan assets:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-plan-beneficiaries

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