Warning: Your Estate Plan May Be Hazardous to Your Spouse

Lisa HandleyBlog, Financial & Estate Planning, Investment Management, Money management, Personal Growth, Relationships, Wisdom for Life

Warning: Your Estate Plan May Be Hazardous to Your Spouse

Here is a statistic I believe will shock you. 

The average age of widowhood is just 56 years old! For men, the average age of becoming a widower is 65.* 

Often estate planning is one of those topics that although important, does not feel urgent. The reality is this is a topic that is very urgent, very important and demands immediate attention. The death of the spouse is one of the most tragic and stressful situations we will face in life. Unfortunately for most couples, at least one spouse is extremely ill-prepared financially for the loss of a partner. Please significantly reduce the stress your spouse will face by taking these 4 key steps. 

  1. Confirm that you will be ok financially. I have been told by those who have been there, that one of the first thoughts after you realize you have lost your spouse is ‘Will I be ok financially?’ It is a critical question. Interestingly, all new clients tell us one of their main concerns is ‘Are we on track to have the financial future we desire?’ Meet with your financial advisor as a couple and have them develop a financial plan to give you the road map to the financial future you desire. This plan also needs to outline the financial position of either spouse at any time, should they lose their partner. If shortfalls or risks are identified that can be minimized, take the necessary steps to do so. 
  2. Find a trusted advisor both spouses are comfortable with. Often one spouse is more involved with the financial aspects of your partnership. There is nothing wrong with this, however, it is important both spouses have a relationship with their trusted advisor(s) and feel comfortable with them. It is also important the advisor knows each spouse as there are differences in personality, objectives, risk tolerances, etc. The litmus test is to ask, ‘If I were on my own, would this person be someone I would be comfortable with?’ There is great comfort in the time of loss knowing you will be OK financially, and having a solid relationship with your trusted advisor means you won’t be on the journey alone. 
  3. Both spouses need experience. This does not mean each spouse needs to be highly fluent in the financial and investment landscape, but it does mean both spouses should be involved in conversations with your trusted advisors and be making financial and investment decisions together. Too often one spouse is making decisions in isolation for the sake of efficiency or because there is limited or no interest on the part of the other spouse. I recognize for many people these can be boring discussions. Including your spouse in financial decisions allows them to be aware of the questions and thought process you use as well as giving them experience in this area. It will also lead to better decisions as a couple. 
  4. Communicate. It is important that the more involved spouse communicates who their trusted advisors are beyond your financial advisor(s), accountant(s) and lawyer(s). This is especially true for business owners. Your spouse should be aware of who these people are, what type of counsel you get from them, and in what situations they can be helpful. It is important your spouse knows your key employees and your bankers. Ideally, you should have a key person your spouse can work with to make decisions regarding the future of the business and to help them implement that plan. This person should know about and agree to the role. You should document your recommendations for the future of the business and how to realize it, keep the plan current and review it annually with your spouse and key person/advisors.

These steps are too urgent and too important not to address immediately. Call your financial advisor today and schedule an appointment to develop your financial plan. If you are a business owner, schedule time in the next week to start documenting your recommendations for the business, should you tragically leave us in the next month.

  *Census Canada 2018

However, if the surviving spouse has had limited interactions regarding finances, they are highly vulnerable and at significant risk for making poor choices, often involving substantial amounts of capital.

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