Becoming widowed: It could bring some of the most important financial changes in our lives. How do we prepare for - or pick up the pieces after - losing a spouse?
First off, consider a "family playbook" with names of important contacts, account and policy numbers, locations of the wills, and other key documents. (Details in a moment.)
Then decide who's on your team. A white paper, "Women in Transition," by strategic consulting firm Spectrem Group found that, in wealth management, widows are most likely to be entirely adviser-dependent - relying on an investment professional or adviser to make most or all investment decisions. But is one adviser enough?
Spectrem found that widows are heavy users of social media (69 percent are on Facebook) and that they invest conservatively to protect their principal, perhaps because 64 percent believe their spouses prepared well for their financial security before death.
If, however, your spouse didn't prepare, what to do? Consider rejoining the workforce. (More on how below.)
The playbook, the team
"When the husband plays the role of financial caretaker, the wife frequently is completely unprepared to assume those responsibilities. They're left in a state of great distress because they lacked the tools of the deceased spouse," says Julia Fisher, wealth adviser with JPMorgan in Center City.
Fisher found a terrific solution through a past client who had witnessed his mother-in-law's financial terror when her husband died.
"My client came up with what I call the 'Smith Family Playbook,' a notebook that had every piece of information a spouse would need: bank accounts, stock accounts, college accounts, IRAs, 401(k)s, life insurance, real estate."
Each bank account had its own page, including the name on the account, the account number, user name and password, and instructions on when to transfer money between savings and checking.
Each investment fund had its own page, as did each insurance policy, plus financial adviser or contact person. Each piece of property included the title information, repairs, and insurance coverage.
The playbook's last page instructed: "Form a team, and take control," including a lawyer, an accountant, a banker, and a trusted adviser.
"Make a budget, downsize, consider financial aid for school education for the kids," her client wrote to his wife.
Fisher shares this playbook with all her clients.
"He did this to protect his wife, to prepare her for the financial housekeeping. He was a wonderful person who saw how tough it would be for his spouse when he was gone."
Losing a spouse is such a jarring, heartbreaking experience that many widows and widowers make rushed decisions, financial advisers say.
"Don't rush into doing anything: Don't sell the house right away; don't try to cash in an annuity," advises Carol Alesi, director of private-client services for First Niagara in Plymouth Meeting.
Take the time to evaluate with your advisers, at least a few weeks or months, Alesi says, "especially since, with annuities, you don't want to enrich a salesperson with a hasty decision by cashing in an annuity that might charge a huge penalty or surrender charge."
With a nod to the digital age, Alesi and her husband recorded their user names and passwords for all their online accounts. "We had to sit down and go over everything."
Rejoining the workforce
When she was just 17, Allison O'Kelly's father died. Her mother was left an unemployed widow.
"My mom's life changed dramatically. My father died at 54, my mother was a widow at 53," O'Kelly says. "She had stopped working and was completely dependent on my dad's income."
That prompted O’Kelly to found Mom Corps in 2005, a Fort Washington-based, nationally franchised recruiting firm places experienced professionals in flexible work opportunities.
After her first child, O'Kelly left a corporate job and started Mom Corps out of her house. She now has 10 employees and 10 franchises with their own staffs. In addition to flexible work, Mom Corps offers small-group coaching.
"Most likely, if you've been out of the workforce, you have to go back. Many of my friends are stay-at-home moms, they have a husband who has a very senior job, and she depends on that income for their family. If that stopped? Women put themselves at a disadvantage if they're not thinking about the what-ifs that happen."
A year after becoming a widow, O'Kelly's mother went back to work as a specialist in speech therapy for special-needs children.
"I realized I would never put myself in that situation, because of what happened to her. That year was incredibly stressful for my mom," O'Kelly says, "especially with two teenage daughters."
Even as a mother of three children herself, O'Kelly says, she "had to keep my hand in the workforce somehow and never be that vulnerable."
Read more at http://www.philly.com/philly/living/20150308_Investing_in_You__Strategies_when_a_spouse_dies.html#hlVekIthlypsx9v4.99