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I read with great interest what happened to a widow whose husband died unexpectedly and she had to deal with the finances. The article which should be available without a subscription is below:
https://www.wsj.com/personal-finance/widow-financial-planning-36ce4608?st=AM25UW&reflink=desktopwebshare_permalink
I wanted to know what do HD readers do to prevent something similar from happening to them. Is there a checklist that you review every so often with your spouse or someone who will handle your finances after you are gone.
I look forward to your wisdom.
I have written a “letter” to my wife entitled, “What Do I Do Now?”
it is a comprehensive listing of all financial accounts, account numbers, passwords, etc. it also lists the location of all documents, legal and otherwise.
it gives instructions on end of life issues. Including funeral instructions.
it also includes name and contact info on all advisors, and attorney and banker.
Lastly, it includes recommendations on what to do in a variety of different situations. Basically, I prepared everything I have recommended to clients over 40 years in financial services.
Same scenario for us – dear wife has no interest in the financial details. However, our financial side is current and well documented in Quicken – all accounts, contact info, current values, etc. updated once a month. For us, “the letter” is actually a 1 inch thick notebook covering where everything is, obituaries, prepaid cremation documents, funeral instructions, wills, advanced medical directives, durable powers of attorney, etc.
Our four sons (and daughter-in-laws) will almost certainly have to jump in if I predecease her, but it’s all there and we will review it with them again when we’re together for Thanksgiving.
My wife is very similar to the lady in the article, she tries at times to stay updated on everything but ultimately her eyes gloss over and it just becomes very frustrating for her.So what we have done is try to make everything as simple as possible
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1) We only have funds at Fidelity and Vanguard at this time, my wife still has a 401k with Principal at her work, we will transfer those over to Fidelity or Vanguard once she turns 59.5 next year.
2) All of our accounts are kept both digitally and in paper form in our safe deposit box that gets updated as needed for both her and the kids.
3) I found a Financial Advisor who charges a very reasonable fee that works out to about one tenth of 1%, (0.12%). They only invest in index funds, we meet 1x a year to go over our plan, we have access to him as needed throughout the year with no extra costs, and he does our taxes every year. He has done our Roth conversions, and this year is doing tax gain harvesting for us. So it’s a win/win situation, much less stress for me trying to get her more involved and much less frustration for her.
While my wife and I discuss our investments, she is very similar to the lady in the article in the WSJ. I’ve got a binder stashed in a safe place that has all of our retirement accounts, bank accounts and insurance information contained in several pockets within that binder. If something happens to me, both she and my son know where to go and can follow the breadcrumb trail. They can do what they like with these investments at that time.
Nick, this is a topic near and dear to my heart. I had a handful of clients whose scattered portfolios could confuse an expert, not to mention an uninterested spouse. One thing I gleaned from the article is the potential use of a video to help explain these and other things to a future widow.
Chris and I discuss finances, though I handle the mechanics of the plan. I have instructions attached to our wills and POAs that explain investments, as well as how to access those and all other entities involved in our lives. Chris is capable of taking over if the time comes.
We have consolidated our accounts into two entities. The bulk of our world is at Fidelity, and includes IRAs, checking, brokerage, and credit card. The other is with a friend, and includes an IRA and brokerage, both in my name. We do have an account at a local bank in case we were unable to access Fidelity for some reason. There are also a couple other credit cards.
We involve my kids in the conversation, including the sharing of documents. We sort of have an ace in the hole as one son-in-law is an advisor, the other an estate attorney.
Nik, thanks for the link to the article. I’ve written about my wife’s widowed and childless aunt who developed dementia. She gave my wife POA and we took over control of her finances. She had more than a dozen banking and investment accounts, as well as stashes of cash around the house. She moved in with my in-laws and we took a few years to find, organize, and simplify her financial life. It was a formative experience for me and I learned a lot about personal finance. When my father-in-law died, my mother-in-law had confidence in turning over her finances to me. During this process I made sure that my wife’s 4 siblings were aware of, and agreed to, everything we did.
I’ve also seen a troubling number of similar situations during my 7 years of volunteer tax preparation. This can happen because of the death of a spouse, but also due to a divorce. The truly heartbreaking cases aren’t the ones where a recent widow or divorcee have to manage finances, its when they realize they have very limited financial resources.
I WROTE THIS AND NOW SEE JERRY BEAT ME TO IT
I have written about this before. In addition to all the legal papers, you prepare a final instruction letter – and share it with children too, if applicable.
It outlines where everything is and how to access it. Insurance policies, bank info, will, investments. Who to contact, especially if there are survivor pensions or health benefits involved.
It lists the amount of life insurance to be received and how to claim and all other sources of income for the survivor. In our case pension benefits. I list the total income that is expected from different sources, including investments.,
Attach copies of all financial/investment statements and update them regularly. Attach screenshots of any websites that may need to be accessed.
Different for different situations of course.
There are many similar stories like that. I have done several PP presentations to NC govt retirees which I titled “The Letter”. It was very well received. I did a narrative version. Jonathan had told me I needed to get it under 1200 words. It is about 1400 words. If HD editors will allow it, I will submit it for the site.
My wife’s great fear was that I would pass first and she would have a big mess to straighten out. I documented all of our finances and investments in plain language and gave her and our daughter a copy. I update it periodically as things change.
Sadly, she passed away earlier this year. However, I will continue to update it for our children to use with my passing.
There is much more for people to deal with than just investments. Just a few are taxes, online accounts and access, epayments and edeposits, banking, pensions, social security and many others.
you were able to publish it and it is great. I think we need to remind folks to do this every month or so.
I will provide another sad story like the WSJ article. My daughter has a good friend whose husband unexpectedly passed away in his 50s of a heart attack. He was thought to be in good health.
He was a serial entrepreneur. He would start a new business, get it to a profitable state, sell it and then start another business. His wife had no involvement in their finances. Periodically she would ask him “Are we ok?”, and he would always say yes.
She got help from some business people at her church to help figure everything out. It took some time and he left her in good financial shape, but I am sure there were many anxious moments in the process.
I’m grateful my wife and I are equally invested in our finances, especially when it comes to our retirement drawdown strategy. Her corporate banking background probably helps, she’s comfortable in that world. When I ran my own business, I never worried about what would happen if I got seriously ill because I knew she could step in and run things. That’s why it feels a bit off to me when partners aren’t on the same page about retirement accounts and how to manage them. Though I suppose I’m just used to how we do things. In the final analysis, as long as someone is taking responsibility and keeping the partner in the loop, that’s really the major consideration.
That’s a sad story. My spouse is also not that interested, but not nearly like Alice in the article. I manage our investments but she is aware of what’s happening at a high level. She knows what every account is, is the primary beneficiary on all, and already has authority over all (except for my 401(k) which doesn’t permit that). Oh, and we have no spreadsheets.
Noting additional comments about instruction letters, I add that we have that as well. Ours is joint in case we both go at the same time. Where things are, what to do, who to contact. But in terms of surviving spouse access to accounts, as I hope I made clear before, there’s no need for a list of passwords. We both already have access to and authority over each other’s accounts.
Good topic to raise as most all will all face this situation, one spouse passing before the other, in our lifetime. I try to keep my wife aware of our financial situation, but she either trusts me too much or simply doesn’t want to get more involved. This concerns me, as I will likely not outlive her, so I share the most important components of our finances and have prepared a list of accounts, log-in and password credentials, names and contact information, etc. for her (and our 2 children) for whenever it is needed.