In most
relationships there is one spouse that handles the couple’s finances. It’s a natural division of labor because it is redundant to have both spouses sign every check to the utility company. But it puts the spouse who is not the financial guru at a real disadvantage if they outlive their partner.
We have heard way too many horror stories about a new widow or widower who is blindsided by debt or taken advantage of by someone who steps in to “help them sort out their finances” after their loved one’s death. This post covers a few key actions couples should take, from a legal point of view, to prepare for a future where only one of them is living.
Make a list of all accounts.
This may sound simple, but in today’s world, where we have an account on virtually every website we visit, making a list of all known financial accounts and digital assets can be a daunting task.
Start with financial accounts. List the company the account is with, what type of account it is, and relevant account numbers and passwords. If there is a particular employee you work with at that institution, list his or her name and contact information as well.
Next move on to insurance policies. Health, auto, home, life, etc.; list them all. Once again list the company, the account number, and password.
After that, gather information on household bills. In many
families there is only one person’s name on a utility account. Water, electric, gas, telecommunications, and garbage are the big ones, but you may have others.
Make sure both spouses know where tax records are kept and how to access things like online paystubs.
Finally, try to make a list of all digital accounts, and the usernames and passwords tied to them. Don’t forget to include things like phone, iPad, or laptop passwords because it won’t do you much good to have account information if you can’t log on to a device to access it.
It should go without saying that all of this very sensitive information should be kept in a secure location. An identity thief would have a heyday if they got their hands on this treasure trove of personal information.
Do joint accounts make sense?
Now it is time to do some planting and pruning. Are there accounts that should be changed so that both partners have full access to them? Are there any accounts that are redundant or that should just be shut down? Have the beneficiary designations on all applicable accounts been updated so that they pass to the appropriate party at the primary account holder’s death? It is time to make sure your accounts are in the shape you want them to be in so you are not surprised later.
This step takes some time, and it is often a good idea to work with an experienced estate planning attorney or financial planner to ensure that you know what is going to happen to certain accounts after a spouse’s death.
Get it in writing
It is great if you and your partner know exactly what you want to have
happen to your assets after you die. Most people don’t have this figured out. But there is a big difference between having an informal understanding with your spouse and having a binding legal document that will ensure your wishes are carried out.
Your future is too important to leave to chance. The default probate laws might work exactly as you want them to, but they probably don’t. It is far better to work with an
estate planning attorney to get your affairs in order than to risk being displeased by the legal system.