In 2011, we brought on a client on the verge of retirement. Six months into retirement, her husband died of brain cancer. While the wife had what most people would consider to be an estate plan in place, the financial nightmare that followed the human tragedy totally changed how I prioritize these conversations. If your spouse is sick, these things may understandably be the farthest from your mind, but I view them as non-negotiables. 

Review or Create Estate Plan 

Most people think of the will as a tool to transfer assets. And it can be. However, in this context, the most important parts of your legal documents don’t have to do with asset transfer. Financial powers of attorney (POA) make sure you can pay the bills for the things that aren’t titled in your name. A medical POA allows you to make healthcare decisions on behalf of your spouse. In the worst-case scenario, a will names a guardian for minor children. 

Update Titling and Beneficiary Designations 

Most of our client’s assets transfer via trust or beneficiary designations, not their will. This is why it is so important to make sure these are set up according to your wishes. 

Things like retirement accounts, life insurance policies and annuity contracts typically allow or require beneficiary designations. Your home, your bank accounts, and your taxable investment accounts will not. 

Lastly, as you’re going through the process of updating these things, it makes sense to simplify where possible. You may have five different 401(k)s that tell your career story. Modern brokerages have made it possible and easy to consolidate. 

Review Insurance Policies 

I bought term life insurance in 2014 and again in 2021. Outside of the death benefit and the terms, I can tell you very little about the policies. Even for those in the weeds, like me, once this box is checked, it is as easy to forget as your middle kid’s birthday. 

You’ll want to review any long-term care, disability, and life insurance policies to ensure you have adequate coverage but also to make sure that the address, billing information and beneficiaries are up to date.  

Take Inventory of Assets and Access 

When you visit the estate attorney, they will ask for an inventory of your assets and liabilities. There are plenty of software solutions out there that can help you track this and will help you make sure everything is accounted for if your spouse passes. I rely on the financial planning software we use with our clients as it allows me to link my accounts from various institutions and updates them every day. 

Beyond financial assets, you’ll want to inventory your personal property. Things like jewelry can pass via a will or trust but often can be left via a side letter of instruction. 

Finally, you want to make sure you have online access if your spouse passes. Password apps are more popular than they were a few years ago and greatly simplify this, but do you know how to access your spouse’s password app? A spreadsheet or handwritten list also works, but similarly, you need to make sure you know how to access that list. 

Plan for future cash flow 

The death of a spouse, not surprisingly, can be extremely disruptive to your monthly cash flow. You’ll drop to one Social Security benefit and may lose a pension, but you don’t get an equal reduction in your expenses. It’s better if this is not a surprise after the fact. You’ll want to make sure that you can maintain your current lifestyle or at least know what you would have to do to live a life you’re comfortable with. The financial planning software we use with clients can help model these scenarios.

This was a depressing but necessary column to write. If you’ve read this far, you may be in a tough spot. If there is anything I can do to help, my door is open. 

This article is provided for informational and educational purposes only and should not be construed as investment, tax, or legal advice, or as a recommendation regarding any particular strategy. Whether a Roth conversion is appropriate depends on an individual’s financial circumstances, tax situation, investment objectives, and applicable law. Tax laws are subject to change and their application may vary. Examples discussed are hypothetical and are intended solely to illustrate general planning concepts. They do not reflect the experience of any specific client or guarantee future results. Consult your financial, tax, and legal advisors before implementing any strategy.