We often talk about planning a life with our spouse or partner, plotting a path together towards those meaningful milestones that matter most.
There’s one important life conversation, however, that doesn’t always get the attention it deserves. And while the subject might be seen as rather grim, there’s no escaping its reality: every couple should have a solid financial plan in place for the surviving partner after the loss of a spouse or significant other.
The pain of losing a loved one can be unbearably hard to handle. The last thing anyone wants in that tough time is to add the burden of financial stress on top of emotional trauma and heartbreak.
To make sure that doesn’t happen to you or your partner, here are some of the financial planning points you’ll want to work out ahead of time or consider after a loss.
Make sure you have a legal will
It doesn’t matter whether you’re married or not, and it doesn’t matter whether you have kids or not. No matter the circumstances, everyone benefits from having a legal will. Without one, your late partner’s estate may not be divided up as intended or desired.
Remember that wills can – and should – be updated as our situations and preferences evolve. A document that hasn’t changed in decades isn’t likely to represent our most up-to-date financial wishes. Give your will the once-over at least every 10 years and update it as needed.
Consider buying life insurance
There are several reasons to consider buying a life insurance policy that provides a lump-sum, tax-free payment to your spouse after your death. The first, and arguably most important, is to compensate for lost income and help your surviving relatives maintain their standard of living.
Life insurance can also help surviving spouses offset funeral and burial costs, pay off any joint debts you and your late partner may have held, or provide support for children and other dependents.
Get the professional help and advice you need
In general, it’s wise not to make major choices without first consulting with a trusted advisor or financial expert. A surviving spouse never wants to rush into a regretful decision during a time of distress and difficult emotions, so remember to take things slow and get the advice you need before making big moves or choices.
Trusted financial professionals can provide reliable advice and information that helps us see and understand scenarios or consequences we might not have previously considered. Experts can also help us avoid fraud and other risks or offer us alternative approaches to challenging situations.
Life partners may be fortunate enough to establish long-running professional relationships with financial experts that persist and evolve after the death of a spouse. For instance, if you and your late husband worked with a financial advisor, that person will understand your unique situation and know how to best support you in this difficult time, and in the years ahead.
Some couples and surviving spouses enlist the help of an accountant or an estate planning attorney for input and information on how best to plan for the loss of a partner. These experts can provide advice about managing and merging pensions, tax implications in death, and other matters.
Sell assets and consider lifestyle choices to compensate for lost income
If the death of a spouse or partner leaves you with reduced income levels, you may need to make some changes to compensate. When you’re ready, start by building a new budget that accounts for the difference. You might also consider selling off property or assets that don’t have sentimental value, such as vehicles, tools, or equipment.
Some surviving spouses choose to downsize, selling a primary home and moving to a smaller and more affordable property, or possibly sharing space with family. This is a decision, however, that should not be made without soliciting expert advice, in case current housing market conditions don’t favour a sale.