Death of a spouse

Don’t let the death of your spouse be the death of your livelihood too.
By Lisa Praschma, Stone Wealth Management COO and Head of Operations.

The death of a spouse is traumatic enough without having to deal with the aftermath of a possible transition into poverty due to poorly managed financial affairs. A recent survey (Mathew Greenwald & Associates) of women whose partners have died, showed that half of them lost 50 percent of their income following their spouses’ death and 48 percent had difficulty in determining what benefits they were entitled to. Even though women are becoming more involved in their family’s financial affairs, and sometimes may even run them, widowhood is still a significant risk factor when it comes to possibly transitioning into poverty. This could even apply to the seemingly affluent.

Statistically, women across the globe also live longer than men, so it is even more important to be prepared for a life without your spouse, and look at widowhood as ‘when’, rather than ‘if’ – particularly when you’re also staring at stats that claim that more than one in five women living in poverty are 60 and older, and widows accounted for nearly 46% of poor women aged 60 and over. To avoid being one of these sad statistics, take the necessary steps to remain financially secure in widowhood.

Get involved with the family finances
If your husband currently handles all the money issues, change that! Be involved with the financial decision making; be involved in meetings with your financial adviser. It’s found that clients with a dual role in financial matters are more successful than with one decision maker. You should know the location of all-important documents, original wills, safe combinations, keys for safety-deposit boxes, flash drives, computer logins and passwords.

Look at your life insurances
If you have insufficient capital to support your lifestyle, you must ensure that there is life cover in place to replace some of the income after the death of your partner. Consult your financial adviser as to the best way to secure life cover.

Look at your marital regime (antenuptial contract, in or out of community of property, customary marriage)
How you are married will dictate how your and your spouse’s assets are dealt with on death. The impact could be significant, as the following two examples illustrate:

  1. By being married in Community of Property, the very demise of your husband (if for example he was ill prior to death) may drive a once profitable business into insolvency. Being married in Community of Property means that you too will become insolvent and the assets that you thought were yours could be attached by creditors.
  2. If you were married with an antenuptial contract with the application of the accrual system, you may believe that the assets in your name are yours. However, assets that were bought during your marriage may need to be sold to provide enough liquidity to pay for an ex spouse’s maintenance claim.

Your marital regime plays a crucial role in how your assets are dealt with in the event of your spouse’s death. It is therefore essential to understand the implications to ensure that you plan accordingly.

Understanding your benefits
It is important to establish and know what you will receive and when, after the death of your spouse. You also need to understand what benefits you will be entitled to, as this might affect your decisions before your spouse’s death. Ensure that beneficiary nominations are up to date (especially if yours is your spouse’s second marriage), and check that beneficiary nominations (if appropriate) are attached to as many assets as possible. You need to keep these assets from being frozen during the winding up of the estate. This also helps to reduce executor’s fees.

Consolidate your investments
Too many individuals have fragmented and confused portfolios. If your spouse has many individually titled investments, it can lead to a complex and time-consuming mess for the surviving spouse to sort out. The best way to avoid any financial headaches is to build a solid investment strategy and consolidate accounts. Every investment requires its own process, when the owner passes. The investments that don’t require any strategic planning can be easily consolidated, resulting in less time and paperwork.

Work with an experienced financial adviser.
Consult with an independent financial adviser who has the financial IQ to deal with high level planning requirements, to add value across estate, investment, retirement and tax planning. If you don’t have a financial adviser, or you usually just let your husband deal with yours, then it’s time to appoint one or get to know the one you have. You need an adviser you can trust in times of need when things are at their darkest and most difficult.

And finally, in the words of the great Benjamin Franklin, “By failing to prepare, you are preparing to fail.” So, although the thought of your partner in life no longer being with you is probably unbearable, being caught off-guard and unprepared will be far worse and only add to your already significant grief. Make sure you are ready for whatever eventuality – no matter how morbid and foreboding it seems at the time. It will likely give your partner peace of mind, knowing that when they are no longer around, you will still be looked after and financially stable.

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