Lessons from losing a partner - financial aspects!

This blog has been written from the first hand learnings of a dear friend who unfortunately lost her husband in an untimely manner. It focuses on the financial aspects of the challenges she faced.

What could she have done differently and how? Could she have been better prepared? It’s sad that she had to undergo so much struggle, but does the story need to repeat for several others? Here is my attempt to help you realize the importance of financial awareness, and to equip you with some guidelines and suggestions. 

Couples build a lovely life together. Both work and save towards a better life, share responsibilities of bringing up kids, doing chores around the house and so much more! Unfortunately when it comes to finances, there is usually an imbalance. I have come across several families where the husband manages finances and the wife is unaware of the details. For some reason or the other, the topic doesn’t get proper attention. This makes it very hard for the wife to deal with finances when the husband is not around. People don’t talk about such topics because it’s not easy. Such discussions put us face to face with some of our biggest fears in life. What we need to understand is that it will be much harder to deal with them if not dealt with practically at the right time. When the loss happens and a person is hit with financial surprises and complex puzzles, they rob themselves of the grieving process which is an important step towards healing. All the time, energy and attention goes towards demystifying the financial information. 

Here is what you could do:

Life Insurance

It helps to have good life insurance coverage for both the partners. Yes, even for the non-earning partner! When a non-earning partner is lost, the earning partner cannot work with the same efficiency as they did prior to the loss. If you can, take personal insurance on top of life insurance from work. Know the company through which insurance is and the details around it. You should know what benefits you get from your partner’s employer. For example, some employers may give life insurance, accidental death and dismemberment, survivor income for spouse and children as benefits. 

Estate Planning

It is very important to make a have a will and a trust. As per Investopedia, estate planning involves determining how an individual’s assets will be preserved, managed, and distributed after death or in the event they become incapacitated. Planning tasks include making a will, setting up trusts, naming an executor and beneficiaries, and setting up funeral arrangements. A will is a legal document that provides instructions on how an individual’s property and custody of minor children, if any, should be handled after death.

Financial Planning

I would recommend you to have cash in your bank account that can cover 3 months of house mortgage and the running cost of the house which would include expenses like cell phone bill, electricity, water and gas bills, car insurance, kids tution and hostel fees etc

Know which account auto-payments are set up for various services you are using on a daily basis. Know the source of money in that account. Both the partners should know about this cash’s availability. One needs these expenses immediately. If the surviving partner doesn’t know about this saving, they would worry till they can arrange the required money or find out the money is already arranged. Don't forget kids too silently worry about such things.

Properties

Know details about all properties/timeshares etc. that your family owns. This includes knowing the exact address of the property, where the property papers are located and who the property is mortgaged through. If there are any payments due on the property (taxes, maintenance fees, mortgage, etc.) then their schedule and details about payments made till date. If the property is tenanted, you should know details about the tenant, rent schedule, tenancy agreement etc.

Credit Cards                                                                                                        

Know which credit cards are open, the credit card numbers and any amounts due on the card. Ideally if you have access to each other’s online banking passwords, this should be easy to look up. Alternatively, if you have an auto-pay setup, this is not a huge hassle when you have other higher priorities to deal with. Don’t forget to cancel the credit cards which will no longer be in use.

Some cards provide an additional (paid) insurance (example) to cover job loss, disability and life-loss scenarios. You need to be aware of your partner having signed up for this service before any such event to avail the benefits though. 

Lastly, in case your loved one was in a travel related accident, most credit cards offer some type of insurance to cover the scenario. Being aware of which credit card was used to book the travel helps here.

Account Details

Know the banks with which the accounts are, account numbers, if the access to them is joint or not, how much amount is available and if the money is locked or immediately available for use. Proper nominees need to be assigned for every account. Couples should be encouraged to have joint accounts. If not, the other partner should have permission and knowledge to access them incase one of them is incapacitated or not there any more. This applies to all sorts of accounts -  general transactions, retirement savings, stock options, trading, brokerage account for investments, RRSP, TFSA, RESP. 

Locker Details

Know if your family has a locker, which bank it is with, size and type of the locker, locker number, key to the locker and the nominees who can access it. 

Passwords

Know the passwords to important information like bank accounts, personal computer etc. Tell your partner to write them somewhere so you have them when they would like you to have access to them.

Death Certificates

On the death of a person, their family needs original death certificates to be able to request cancellation of services like closing a bank account, toll tax account, informing various govt and private firms, canceling social insurance, health card, cable connection. They can be obtained from the funeral home. It is advised to get 40 certificates in one go.

It is important that families manage their finances in simple ways and both the partners know all the details. If the kids are old enough, they should also be made aware of the finances to the extent they understand. It is also recommended to have another trusted family member in the loop. It could be your brother, sister, parent or a close trustworthy friend. 

 

You don’t need to be a finance expert to understand all this information. You just need to take the first step and put in conscious and consistent effort. Just like we do safety drills, there needs to be a ‘LIFE DRILL’ and one of the important things to cover is finances.