4 Financial Planning Tips for Recent Widows
Of all the life events women experience, none are as transformative or stressful as losing a husband. There are no words to express the emotional trauma widows experience, which only time can heal. However, time doesn’t stop when it comes to regaining your financial footing. Widows often face more challenges than widowers in reestablishing their finances and setting a course for their financial future.
Very often, it was their husbands who took the reins of their finances, especially in managing their investments; and many of the advisory relationships
were established through their husbands. So they may not have much familiarity with their inve
stments, taxes, insurance or the advisors who helped them.
Thrust onto a steep and critical learning curve, many widows are forced into making financial decisions they never had to consider before, as if they weren’t already under tremendous stress. However, when making financial decisions, confidence can be just as empowering as financial knowledge. Just knowing the right steps to take and when can bring clarity in a very confusing time. Here are four financial planning tips.
- Let Some Time Pass Before Making Any Major Decisions
While it is not recommended that you make any big financial decisions during your time of grieving, it would be important to take some smaller initial steps to get your financial house in order. Then, after a few months or so, you should be able to view your financial future with a clear perspective on your needs.
- Organize Your Financial Team
At this critical stage, this is no time to go it alone. Among the very first steps is to form your team of trusted advisors to help you prioritize the most immediate financial tasks. You may already have relationships with an attorney, an accountant, a financial planner and an insurance agent. If not, you need to forge new relationships. The best way to go about finding new advisors is through referrals – from close friends or relatives; or from an advisor, such as an attorney. These may not be the advisors you keep for the long-term, but, they can at least guide you through some of the more pressing matters.
You will need your attorney to guide you through the probate process and settling the estate. You will also need your attorney to update your own will and modify other estate planning documents, such as your living trust and power of attorney. Later, you and your attorney can discuss your estate and legacy planning needs.
Your accountant will be instrumental in helping you understand the tax implications of any benefits you will be receiving. He will also be your point person on getting your taxes filed and taking care of your tax obligations.
Your financial planner, preferably an independent and credentialed advisor, can be the most important member of your team of advisors. Not only can he provide much needed guidance on immediate financial matters, he will be the one who helps you set a new financial course. When you are ready, he can assess your financial situation and help you craft a financial strategy designed for your specific needs, priorities and preferences.
Knowing more about your overall financial situation and needs, your financial planner is also best positioned to act as the quarterback of your advisory team, proactively coordinating the tasks of your other advisors so everyone is working with your best interests in mind.
- Take Care of First Things First
With the help of your advisory team, it would be important to tackle all of the immediate issues that will secure your financial future. While some of these tasks can be initiated with a phone call from you, it is recommended you involve one of your advisors to help you through the process. Each of your advisors will have a checklist of immediate tasks. Your financial planner may be best positioned to coordinate all of the tasks. Some of your most immediate tasks might include:
Review your benefit options: These would include options available to you from your husband’s defined benefit and life insurance plans as well as Social Security. Your financial planner can help you determine the best options based on your situation and their tax implications.
Review your immediate cash flow needs: Long-term cash flow planning can wait, but you need to ensure your immediate cash flow is sufficient to meet your needs. Your financial planner will help you organize your finances to meet current needs.
Retitle accounts: To prevent any interruption in access to your accounts, they will need to be retitled. In most states, joint accounts should pass automatically through rights of survivorship, but you will still need to retitle them in your name. You will need a copy of the death certificate in most cases.
- Chart Your Own Course
When all of the immediate tasks are completed and you have had time to gain some perspective on your future, it is time to chart your own course. Just because your husband managed the finances and investments a certain way, doesn’t mean it is the best way for you. Your husband would want you to focus on your own comfort and security. You have your own particular needs, priorities and preferences and those will continue to change throughout your life.
When you feel the time is right, hopefully within a few months, it would be important to sit down with your advisory team to start mapping out your future. Your investment strategy, estate and insurance plans should all be revised to reflect your own goals. Once you have your plans in place, you can begin making some big decisions, such as whether to move to a smaller place or to be closer to your children. Having a long-term plan and the help of your trusted advisors to help you monitor it, should give you the confidence in all of your financial decisions.