Helping the Surviving Spouse Survive

By Jack Gaffigan and Sandie Doptis, Badge of Honor Memorial Foundation

Having your spouse continue on after your death is something most people never want to think about. If by some chance, the thought enters your mind, it is just a fleeting thought before it is replaced by something a bit more pleasant.

What sort of financial shape would your spouse be in should you die first? What are some of the things you can do to aid your spouse before something like this occurs?

Have A Will

A will is a legal document that outlines who gets your property, your money, and your children if they are minors. There are also many assets that aren’t governed by your will. Suppose you and your brother or sister own a farm in the country and this farm is owned jointly with rights of survivorship. In that case, the property will probably be inherited by your brother or sister, even if your will specifies that everything should go to your spouse. Insurance policies pass on to the named beneficiary no matter what the will says. It is also a good idea to put as many assets as possible (bank accounts, brokerage accounts, vehicles titles, etc.) in joint name with the spouse, so they pass outside of probate. That lowers the size of the estate (and in some states the probate fee or tax) and gets the assets to the survivor immediately. Another idea is to do a pay-on-death or a transfer-on-death designation on accounts, directing that particular assets to a named individual.

Many people forget to change beneficiaries when they get married or divorced. Now would be a good time to check who you have named as beneficiary on any other insurance policy or other accounts that require you to name a beneficiary.

Buy Life Insurance

The main purpose of life insurance is to provide cash to your family after you die. It helps your spouse pay the mortgage, run the household, take care of the children, and provide for the other necessities of life. Without insurance coverage, you leave your assets completely unprotected.

If your department offers life insurance through a payroll deduction plan that is equal to or a multiple of your salary, consider choosing a higher level than just your salary level. Normally the difference in the deduction from your pay is minimal for the greater amount, in comparison to the amount of life insurance that your family will receive if you die.

Keep Your Paperwork In Order

Make sure your spouse knows where the will, life insurance policies, mutual funds, IRA’s and other financial documents are. It would be a good idea to establish a locator system, which lists account numbers, bank locations, credit card accounts, insurance policies etc. This way you are not sending your spouse on a scavenger hunt at a most stressful time. At least once a year you should take the time to educate your spouse by giving him/her a guided tour of your combined finances and especially anything you may own separately. This would also be a good time to consider putting all of your information into the Family Assistance Planning Guide produced by The Badge of Honor Memorial Foundation and available on their website at www.bohmf.org .

Increase Income

There are several things you can do to increase income for a surviving spouse. You may want to delay taking Social Security until you attain full retirement age. By postponing Social Security you will boost the current sum that your spouse receives assuming their benefit hinges on your earnings. You will also increase the survivor’s benefit payable to your spouse.

You may want to buy an immediate-fixed annuity that will generate a check every month for life. If both of you are in good health, you may want to purchase a joint-life annuity that covers you and your spouse, so that the checks will keep coming until both of you die.

And Finally

As we always like to say, if you are unsure of your ability to navigate the tricky waters of financial planning and money management, hire a certified financial planner. It is easy enough to sit down with a planner while both of you are in good health and devise a plan that will take care of both of you through your golden years.

“The doors of wisdom are never shut” – Benjamin Franklin