David Lerner Associates: Be Financially Prepared If Tragedy Strikes
The untimely death of a spouse is perhaps the biggest tragedy that anyone could face. But its negative effects are multiplied exponentially if the surviving spouse was not the financially dominant partner and has no idea how to manage the family’s finances.
If one spouse in your family is primarily responsible for making financial decisions and paying bills, experts say it would be smart for the financially dominant spouse to share critical financial information with him or her in case tragedy strikes. “Primary financial and bill-paying responsibility doesn’t have to shift to the other spouse if he or she isn’t comfortable with this role,” says David Lerner Associates Branch Manager Michael Cody.
“But the other spouse should at least have a basic understanding of the family’s finances and investments and know how to pay the bills in case his or her spouse dies unexpectedly,” he adds. “Also keep in mind that the surviving spouse will be faced with these responsibilities in the midst of tremendous shock and grief. The more planning that is done in advance, the less stressful this time might be.”
Here are four steps to consider:
1. Make sure both spouse’s names are included on assets.This includes real estate, stocks, bonds, bank accounts, etc. If just one spouse is currently listed as the owner of your home, for example, you can easily add the other spouse’s name to the deed by filing a quitclaim deed at your county’s real estate records office. Cody recommends that you specify ownership as “joint tenancy with right of survivorship.”
2. Share online financial accounts and their user names and passwords with your spouse.Many people today perform much of their financial and investment activity online. And each online account requires a user name and password. You should devise some type of system for sharing this information with your spouse — whether this means writing it down and storing it in a secure place (such as a locked safe) or using an online file storage site like BoxCryptor or SecureSafe.
3. Create a last will and testament, a living will and a power of attorney.More than half (57 percent) of adults in the U.S. do not have a last will and testament, according to a survey conducted by Harris Interactive. If you or your spouse dies without a will, distribution of assets could be more complicated.
In addition, a living will gives you the opportunity to express your desires regarding the implementation or withholding of life-sustaining measures if you are unable to communicate them yourself. And a power of attorney will designate your representative to make financial and legal decisions for you if you can’t make them, as well as access your financial accounts and provide guardianship for your children under various conditions that you specify.
4. Consider purchasing life and/or disability insurance.These types of insurance can help provide income to your family after you die or if you become disabled and can no longer work and earn income. Every family must decide how much coverage is appropriate, depending on a number of different factors such as annual income, number of children and their ages, and whether both spouses work. An insurance agent can help you find the right policies and determine the proper coverage amounts.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC.