Caring for our loved ones is one of the most important things we can do in life.
But, can we ensure that care continues after we’re gone?
A recent survey of women whose partners died showed that half of them lost at least 50 percent of their income following their loss, and 48 percent had difficulty determining what benefits they were entitled to from Social Security.
In order to ensure that widows and widowers remain financially secure, it is essential to have a sound plan and communicate about that plan with your partner – especially if you are in a household where one partner handles the majority of the financial responsibilities.
“Married couples often make the incorrect assumption that when the first spouse passes away, everything they own is just going to automatically go to the surviving spouse with no trouble at all,” said Matt Gardner an associate attorney with the Hammond Law Group. “However, there are vital steps that each of us must take while living, and certain documents that need to get put in place, to ensure that our surviving spouse is provided for appropriately. Meeting with an attorney is essential in helping couples take a look at creating a trust, or possibly a will. At a bare minimum, people need to take a look at their accounts and all other assets to verify what the ownership of those accounts are, if the accounts are jointly held with their spouse or not, and who is the beneficiary on those accounts.”
Patrick Johnson, a certified financial planner and vice president of private client services with SRS Capital Advisors, agrees that both partners need to be involved in all aspects of financial planning.
“It is critically important to make sure spouses are on the same page as to what will transpire following the death of the other,” said Johnson. “The unnecessary stress and legal hurdles of trying to put in place the desires of the deceased’s spouse – without having proper planning documents in place – can greatly exacerbate the grief and stress of an already unfortunate situation.”
Ensuring that your loved ones are secure in the future means planning here and now. Click here to learn how to help protect your family.
There are many complications that can occur after someone dies.
Even if someone has a will, his or her assets may have to go through a court process known as probate before being passed to any beneficiaries. However, probate is not the only concern if someone’s estate documents are not properly prepared.
“Often married couples that own a home think, ‘Well, we bought the house when we were married, I’m sure both of our names are on the deed for the house.’ I’ve had cases where the surviving spouse could have sworn they were listed as an owner on the deed, but they weren’t. So, in those cases, we need to go through the probate court system after the first spouse passes to get that property legally titled into the surviving spouse’s name,” said Gardner.
Even if the house is in both spouses name, it may not be enough to avoid a court date.
“There are different types of joint ownership, and only one guarantees that the home will pass to the surviving spouse free of a court process. So, upon the first spouses death, if the other form of joint ownership is on the mortgage, it may create the need for court intervention, which means a great disruption to the surviving spouse’s everyday life. Even a straightforward probate court case can take close to a year, and the surviving spouse finds herself or himself needing to hire an attorney and pay court fees, all of which could have been avoided with a good estate plan.
“That’s why it’s important to talk to an attorney and financial advisor today, so you can verify the kind of joint ownership your house is held under and be certain it will pass to the surviving spouse without having to go through any legal hoops,” said Gardner.
Securing Your Families Future
“There’s a misconception that when you do an estate plan you’re just planning for your death, and that’s not fully true,” said Gardner. “There’s a lot I do with my clients that has to do with how their finances are handled as they age and what things look like during their retirement. What if they run into a long-term care situation or become incapacitated? People must have a plan in place to address these types of pre-death issues.
“I may recognize that my client needs a tool like life insurance. I’m going to have a specific recommendation for the beneficiary designation on that insurance policy and direction on how I want the proceeds of the policy to flow through the estate plan to the spouse and next generation. In terms of actually picking out the specific policy itself, I work with a financial planner like Mr. Johnson, someone who has real expertise, and ask for his advice about the right company and product to use in terms of premiums and other ancillary benefits that might be there for the client in any given situation.”
“Estate planning and financial planning do have some overlap, but they are very different disciplines,” said Johnson. “There are so many things that can come up. When clients have their finances and estate plan housed under the same team, it creates better overall efficiency for the client.”
“Hammond Law Group really does a great job of looking out for their clients holistically. They want to ensure that once their clients have established a trust that somebody needs to manage those assets in the trust, certainly while they are alive and often once they have passed away. Together, we’re able to take care of the client on all fronts.”