The situation: Margaret is a 50-year-old woman who hasn’t worked outside the home for many years. Her husband, Paul, had a high-paying job that allowed Margaret to stay home and raise their two children, one of whom is still in college. Paul also took care of the family finances—everything from paying bills monthly to managing the couple’s assets and retirement planning. Last month, Paul had a totally unexpected heart attack and passed away suddenly. Margaret knows she has assets, but she doesn’t even know what or where they are, let alone how to manage them.
The solution: Unfortunately, I regularly work with people in some version of this situation. Margaret’s predicament would have been challenging enough 10 or 15 years ago, when most banks and financial institutions used paper statements that she might have been able to access for information, but it’s incredibly difficult now when nearly all of these accounts and transactions are online-only.
First of all, situations like this are the reason I so heavily stress having regular conversations about finances with your spouse. It’s fine and in fact quite common for one partner to do most of the finances in a relationship or family, but both partners should at the very least be aware of how bills get paid, what assets the family has, and how those assets are managed. Even if one person in the relationship would rather plug their ears and sing show tunes than have a conversation about money management, the money-managing spouse can sit down and make a list of accounts, assets, and expenses, along with login information. Even something as basic as a yellow legal pad with that information: these are our three accounts, this is the mutual fund we own, this is how our mortgage gets paid.
The more information that can be shared while both partners are still alive, the less the surviving spouse has to go through—and make no mistake, the surviving spouse in this situation has some challenging years ahead of them. On top of grieving their partner, they are now in the position of having no idea how they will remain financially secure, or even of knowing what their financial situation is at all. Very few people are over-insured in terms of life insurance, so there’s often an unclear shortfall for the surviving spouse.
In Margaret’s case, since she doesn’t have access to any of that information, her first step will be to figure out to the best of her ability what (if any) income she has and what her expenses are. That way, she can at least determine for a short-term basis if she has enough income to support herself and the family on a month-to-month basis. She will also need to make a separate list of any assets or liabilities (such as a mortgage) she is sure the family has.
I would also recommend that Margaret enlist the help of a financial planner, who can help her set a budget and undertake the next step: detection. If Margaret is able to log into Paul’s email, she will hopefully be able to find essential documents like bank statements, automatic bill-pay confirmations, and quarterly or annual statements from any investments or other financial instruments Paul purchased. A financial planner can help Margaret do some of that detection work; he or she is more likely to know, for example, what kinds of accounts have quarterly versus annual statements, what kinds of financial instruments Paul might have purchased, and where to look for that information. Hopefully, Paul will have organized his email by folders pertaining to each aspect of the couple’s finances, which will help the search somewhat. A financial planner can work with Margaret to contact Paul’s employer and see what further information she can gain about his compensation package—matching retirement accounts or stock options, for example—that might not occur to her to ask for.
A financial planner can also help Margaret get a handle on her budget and whether or not she’s in an okay financial position or will need to make some sort of drastic change to her lifestyle.
I don’t mean to sound negative, but it’s important to keep in mind that accidents and medical emergencies can happen to any one of us at any time. Whether you’re the finance-managing partner or the person in the relationship who would be happy to never think about money once, it’s incredibly important that you share this information so you don’t end up in a similar situation. Even if the financially literate partner has a short-term medical emergency and is only in the hospital for a few weeks before recovering, the other spouse can still be thrust into a terrifying and potentially disastrous situation.
I recommend going over the bills and statements together regularly, at least until the less financially literate (or simply less enthusiastic) spouse is confident he or she can manage everything alone if need be, but at the very least ensure that all of that information is collected somewhere the surviving partner can access it in an emergency or, god forbid, the sudden passing of their spouse. Hopefully, you’ll never need it, but it’s always better to be safe than sorry.