As I age, so do my clients and although this is not a topic anyone likes to think about, let alone discuss, it is one that needs to be addressed. You are never truly prepared for the emotional loss, however, you can do some planning to help the surviving spouse be more financially prepared. Let’s explore some ideas.
- Have an Estate Plan – This can be as basic or more comprehensive, depending on the size of your estate and your wishes as to how it is distributed. All assets do not automatically pass to the spouse. State laws vary and if you do not have legal documents in place, your spouse could be left with less than you think.
- Organize Your Documents – Have your wills, power of attorney, trust documents, deeds to properties and vehicles in a safe place that is known to both spouses as well as the executor of your estate.
- Create an Inventory – Make a list of what you own, where it is and an approximate value. If you want something to go to a certain individual that too should be in writing. The list should include all accounts you have at banks and financial institutions as well as username and passwords to relevant apps.
- Have Life Insurance – Having Life Insurance is especially important if you are still working with a family. As you age, the price of insurance is a factor you have to weigh. If you have debt and the loss of income of one of the spouses would be a big issue to the remaining spouse. Talk to a financial planner to discuss keeping insurance or the other assets that would be available as income to the surviving spouse so they can maintain the life you have built together.
- Long Term Care Insurance – As a couple you can care for each other, but when one spouse dies and the other is alone where does that care come from? It is hard to rely on kids. Although they may want to help, they are at different stages in their own lives and are dealing with emotional and physical loss also. If you are financially able, the best time to purchase long term care insurance is between the ages of 55-65. Buying too early, you can pay premiums longer but waiting too long makes it more expensive.
- Social Security Benefits – Although you can collect at age 62, collecting before your full retirement age, currently between 66 or 67 you are accepting a reduced benefit for life. The surviving spouse is entitled to the larger of the benefit as a rule, but it is important to know both benefits do not go on after the death of your spouse so there is definitely a change in your monthly income.
- Tax Filing – After your spouse dies, depending on your estate and other holdings, there are forms that need to be filed. Your tax filing states also changes the year after your spouse dies and could move you into another tax bracket. Be sure to talk to a tax advisor or preparer that can assist you and knows the filing requirements.
Always review your documents if you have a life event change and as a rule every 2-3 years. Estate and tax lawas change and you should always know how the changes may affect the documents or plan you have in place.
You can contact me through Coach4Retirees, Inc. or call my cell at 814-931-1043 if you have any questions or would like to learn more.