If You Were Suddenly Single, Would You Be Prepared?
By Shamez Kassam, CFA, MBA
No one likes to think of the future death of a loved one, but considering the events of this past year, we’ve all learned we can’t take life for granted. Being caught unprepared only exacerbates the grief. And considering the difference in life expectancies of men and women, being suddenly single is a possibility women should take seriously.
While there is really no way to prepare emotionally for the loss of a life partner, you can prepare financially. Spending a little time and effort in advance to ensure you can answer the following questions will ease the burden if you find yourself in the excruciatingly difficult time of widowhood. So ask yourself, “If I were suddenly single, would I be prepared?”
Establish Your Estate Plan
This could seem obvious to many people, but it is the first step when planning for the future. An estate plan will determine how the individual’s assets will be preserved and managed after death. You will want to work with a trusted financial advisor to develop an estate plan that will provide for the surviving spouse and children. The estate plan could also establish the deceased’s legacy to a charitable cause or fund the education of descendants, for example.
Your estate plan should include a will or trust that is updated frequently as well as Powers of Attorney for health and finances. Additionally, you will also want to make sure that plans are made for each spouse’s funeral. You do not want to leave a grieving and overwhelmed spouse with the added responsibility of detailed funeral arrangements.
Update Your Life Insurance
Do you and your spouse have life insurance? Life insurance is a great way to protect your loved ones should you pass away. A surviving spouse can use those funds to support themselves as they may need time to recover from the passing of their life partner. The extra funds are helpful to pay the mortgage, bills, or even the children’s tuition, if necessary.
If you already have a policy but your situation has changed, be sure to update the policy so that it fits your needs. As an example, if your family has grown and you had purchased a term life insurance policy in your early 20s, consider purchasing a permanent policy for your growing family.
Of course, remember to update the beneficiaries of any policy or retirement account you may own. The account or policy’s beneficiary should be the intended beneficiary and not an ex-spouse or a deceased person.
Create Wealth Management Strategies
It may be uncomfortable to speak about, but you and your spouse should have an open conversation about what your income would look like without the income of the other partner. How would it change? Would it be significantly less? How would the other person make up that part of the combined income?
Life insurance is a great strategy to supplement the loss of income from a deceased spouse. But consider what the person would do with the funds once they receive them. Is there an investment strategy that would help them stretch those funds for the years they have left?
You and your spouse should consider what the new income would be and create a budget that would support the remaining spouse and any children.
Organize the Details
Finally, one of the most important aspects of financial planning for this chapter in life is to make sure that your important details outlining your investments, savings, life insurance policies, and retirement income benefits are organized in a place that either one of you can access. This means that you both should keep a shared file that has all your account usernames and passwords and is easily accessible. Additionally, you and your spouse should have all of your important documents, like your birth certificates, Social Insurance cards, and other important documents organized in a place where both of you can access them.
Remember That You’re Not Alone
If this topic brings about some anxiety (or even sadness), we understand! Planning for these situations is not an easy or unemotional task, but it is something that must be considered when developing a solid wealth management plan for your future. And it’s important to remember that you don’t have to walk this journey alone. We at Northfront Financial are here to help. If you’re interested in partnering with us as we help you navigate this sensitive issue, please reach out to us at 403-571-8960 or by email at firstname.lastname@example.org.
About Northfront Financial
Northfront Financial, based in Calgary, Alberta is a boutique full-service financial planning firm serving professionals and business owners. We pride ourselves on being a different kind of investment firm. This stems from our humble roots, entrepreneurial spirit, and a culture of integrity and professionalism. Our goal is to offer the best investment products, services, advice, and ideas the financial industry has to offer from our experienced team, which includes individuals with the Chartered Financial Analyst (CFA), Chartered Investment Manager (CIM), and Certified Financial Planner (CFP) designations. To learn more about Northfront Financial and how we can help you, visit our website and schedule a complimentary appointment.