It’s never an easy conversation to have, but you and your spouse need to prepare financially in the event you are faced with the unexpected death of your spouse. What steps do you need to take so this life situation can be handled as gracefully as possible? And what should you do about your finances, assets, etc.? The answer may surprise you. Why? Because you shouldn’t do anything.
When people go through difficult situations, emotions run high. And we’ve emphasized many times you should never make important decisions (financial or otherwise) when you’re highly stressed and/or emotional. Generally, people make bad decisions when they’re under duress. So, it’s important you don’t make any major changes if you encounter this situation. Instead, give yourself time to grieve and process your new normal before tackling financial issues.
With that being said, it’s critical for people to financially prepare for the sudden death of your spouse. Have a plan in place if your spouse does die suddenly. If you and your spouse don’t plan for this scenario in advance, that’s when problems will arise. I’m sure you’ve heard terrible stories about someone who has passed with no will in place. It leaves a myriad of problems for the surviving family members. Therefore, it’s essential to prepare.
Create a plan in advance
You and your spouse need to have the hard conversations about what you want your life to look like if your spouse passes suddenly. Discuss your lifestyle wishes and then get on the same page by having a will or estate plan delineating your wishes for dividing up assets. You’ll also need to talk about life insurance.
People often ask how much life insurance is enough. There are companies out there who will give you a definitive answer such as you should have ten or twenty times your yearly salary. But we think the best answer depends on your personal situation. Think through the decisions you’ve both made about the lifestyle you want to lead if the other passes. You may want to enlist the help of a financial advisor who will walk you through all of the scenarios you should prepare for.
What other things do you need have in place
But having a will or estate plan and life insurance isn’t enough. You both need to prepare for the legal, financial and psychological challenges if one or the other passes away. Make sure both spouses understand the following:
- Your household assets, incomes and bills
- A list of the financial institutions where you have accounts and the account numbers
- Records of where all pertinent information is
- Beneficiary designations to make sure the correct people inherit your wealth
- Social security benefits and what will happen
How we help you prepare
At Triton, we help you determine a number of areas that will affect your lifestyle if your spouse suddenly passes away:
- Start off by determining how much money your spouse will need to pay off any debt and live comfortably in the house for at least five years.
- If your spouse doesn’t work, you need to think about whether or not he/she would go back to work or continue to remain at home.
- What if kids are involved? It’s important to address college tuition. Discuss the type of school your children may want to attend.
- You should ensure your spouse is on track for having enough money for retirement.
Once you assess all of these things, then you can pinpoint a dollar amount that will work best for you.
And don’t forget, when you realize you don’t have enough life insurance, it’s too late to get it. And the good news is that for the average person life insurance is cheaper than it’s ever been. So, now’s the time to secure life insurance if you don’t already have it. And even if you do, you may want to check rates to see if you may qualify for a better one.
It’s extremely important to think through your personal financial situation before something happens. If you financially prepare for the possible death of either spouse, if it does occur, you can deal with the situation without having to stress over finances.
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