May 7, 2018, 12:02 PM

Five Essential Financial Tips for New Widows

By John J. Ceparano, CPA/PFS, CFP®, M.Tax

The most important thing to have when you become a widow is a support team, both emotionally and financially. In this article we will talk about gathering a team of trusted advocates to ensure your finances are in order and help with your peace of mind.

Key takeaways

It will take time to adjust to your new norm so take your time before making any major financial decisions after the death of your spouse.

Provide your loved ones with the contact information for the key people who are helping with your financial affairs an executor duties.  Make sure your power of attorney and health care surrogate forms are up to date in case you need help.

Review your sources of cash to make sure you have enough for the first six months as you assess the changes to your sources of income and expenses.

In many marriages one person typically takes care of the finances.  If you happen to be the one who had left it up to your spouse, you may have found yourself unprepared to just pick up where your spouse left off (e.g. “where are his passwords, and what things got paid automatically”).

Once the blur of the funeral is over, you know that you have to get a grip on your financial picture.  Many widows put-off getting involved in the financial decisions other than big items, but now that you are alone, the responsibility is on you.  Hopefully your spouse left a good trail or set of instructions, but if they didn’t, you can still figure it out.  The key is your checking account because everything you have been paying goes through it – it’s like a biography of your expenditures.  Either way, you will have to be more proactive about your finances and investing.

My mother went through this because my father took care of certain things, and she didn’t pay attention to them.  She was a little overwhelmed at first, but luckily she had help.  It may seem scary, but there are some good advisors who can help you get through this period and guide you going forward.  One resource to find a financial advisor to help you with your finances and investments is the National Association of Personal Financial Advisors, NAPFA (see https://www.napfa.org/find-an-advisor) whose members follow an oath to: 

Always act in good faith and with candor.

Be proactive in disclosing any conflicts of interest that may impact a client.

Not accept any referral fees or compensation contingent upon the purchase or sale of a financial product.

It is at this time of your life, when you have lost your spouse and best friend, that you are most vulnerable.  Working with these individuals can help you feel in control of this aspect of your life.  Even if your financial resources may be in fine, there are typically a number of items that need to be updated and changed and warrant a review with your advisors.  At the least, it can be a good learning process with people who have helped others like you in a similar situation.  The key is finding professionals who are both competent and empathetic to your situation, as they may help empower you.

Here are five key steps for new widows to get a wise strategy in motion.

1. Review your current personal and household expenses

Although big decisions such as selling your home and moving closer to your family may take time, making sure you are on top of paying your bills timely (consider having certain recurring bills paid by auto-pay), and file for any life insurance benefits

The best way to get a handle on your spending is to create a budget as some expenses will remain the same while others change.  Your insurance coverages will also need to get a fresh look such as health and life insurance coverages, especially if you still have young children still living with you (under 18).  Depending on your age, you may also qualify for Social Security Survivor Benefits. 

2. Identify where your money is

It can be unnerving following the death of your spouse not to know where you have access to cash and whether you have enough to cover some immediate expenditures.  This may take some investigative work on your part to find all of your checking, savings, brokerage and retirement accounts, as well as the user IDs and passwords.  Pulling out the check register and most recent joint tax returns can be a great place to start.  If you already have a financial advisor or accountant, they can be a great resource as well (they can specifically guide you with regard to making decisions about your choices as the beneficiary of your spouse’s IRA).

On accounts that are jointly titled, you will probably need to change registrations.  While you are in this process of identifying all of your investment and bank accounts, you should make sure your beneficiaries are up to date.  This also applies to your life insurance policies.  For accounts that need to be changed from joint to individual ownership, you will need to provide each financial institution with copies of your spouse’s death certificate.

3. Go slowly to avoid mistakes -- you will need time to absorb and process “stuff.” And do not succumb to pressure… just walk away

Only work with people who will help you understand, at your pace, the choices that are in front of you. Some choices can wait, especially those that are not critical.  In the first year of working with a new widow we take time for them to process things so they are not overwhelmed with too much in any meeting.  That typically means sitting down and listening to what they are concerned about first. 

Advisors need time to develop a well laid out financial plan.  New widows, however, may not always have the emotional capacity to do that right away.  Planning should occur when individuals are in the right frame of mind.  This is why advisors need to be especially patient and empathetic. Do not let anyone make you feel uncomfortable by pressuring you into making any hasty decisions.  If you have a close family member or friend you trust, you may want to bring them with you when seeing your advisor so you have two sets of ears in case you miss something or simply for them to provide you with an objective viewpoint.

4. Have a team of experienced professionals by your side

If you had a financial advisor in place who knows you, you should be head of the game.  If you do not have one in place or they never involved you in the discussions with your spouse, ask a friend for a recommendation or look one up in your area at the NAPFA website provided above.  We understand how discussions about finance and investments can be very private and sometimes overwhelming for many people.  Make sure to interview them and choose them not just on their credentials but also assess whether their personality will work well with yours.  They should be able to educate you in the areas where you lack knowledge or need clarification.

Whoever helped you and your spouse regarding money matters in the past may be the logical person to start with. You may seek guidance and referrals, however, from an accountant, attorney, personal banker or other professionals.

It may take some time to gather your team of advisors, so start by asking your friends and family whom they use and why they like them to gain insight before you meet the professional.  My suggestion would be to have a phone interview first, not to go over details but to “hear how they sound.”  You also want to get a feel for what you can expect from him or her, and vice versa.  Since you will eventually be confiding on this person, it has to be someone you respect, trust and can relate to.  It may seem warm and fuzzy, but the credentials are just the starting point, whereas the relationship is why you’ll always feel comfortable sharing “what’s on your mind” and know they are always looking out for your best interest.

Some people think that the value of financial advice is simply reflected in their portfolio’s performance, but it is just one component of the financial planning process.  There are many other aspects such as tax, estate, insurance, retirement and cash-flow planning needs that can affect your bottom line and personal well-being.  At the same time, a financial advisor can act as a coach to help you avoid making costly mistakes from offers that are tempting.

5. Get your family involved in the conversation

No one should feel alone in this world, and widows are susceptible to feeling this way if they do not have a support system.  A widow should sit down with her family and team of trusted advisors in the first year, and let her loved ones know about her team of advisors who are going to help her family take care of her affairs, if something should happen to her.

Depending on how private you are will dictate what you want to share regarding your important documents, where they are, and who is best suited to answer questions regarding the various aspects of your will, living will, separate durable powers of attorney for health care and financial decision-making, deeds, bank accounts, insurance policies, investment accounts, retirement accounts, tax returns and support documents, all loan documents, and current bills.

In addition, online monitoring services should be considered to protect against suspicious-activity, unusual withdrawals, missing deposits, odd charges, changes in spending patterns, and more.  These services will even let you select other individuals to receive these alerts in case you miss them.

With your team of advisors in place, working with your family and or trusted friends, you may find comfort and peace of mind knowing you can get through this time in your life with a little more confidence and know you are not alone.

The big reward for getting things under control just may be your confidence to make prudent decisions about your money and finance because “I’ve got people on my side.”  

Feel free to reach out to me or any of the advisors in our office as we have experience working with widows and widowers.

Modera Wealth Management., LLC is an SEC registered investment adviser with places of business in Massachusetts, New Jersey, Georgia and Florida. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.

For additional information about Modera, including its registration status, fees and services and/or a copy of our Form ADV Disclosure Brochure, please contact us or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). A full description of the firm’s business operations and service offerings is contained in our Disclosure Brochure which appears as Part 2A of Form ADV. Please read the Disclosure Brochure carefully before you invest or send money.

This article is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accounting-related matters, we recommend you seek the advice of a qualified attorney or accountant. This article is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements and opinions expressed in this article are subject to change without notice based on changes in the law and other conditions

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