Someday, you’re going to die.
Thankfully, it probably won’t be at the hands of some enormous gladiator with a mace and a pet lion, but no matter how you go, take a minute right now to imagine what will happen next if you leave a spouse behind.
If you’re a confident DIY investor, with a system you’re happy with and finances firmly in the black, you’ve done right by yourself and your family in life, but you’ve created a system that your spouse might not be able to maintain.
Efficient partners divvy up the work that goes into running a household, it’s true, but most families only have one money nerd.
Either by choice or by necessity, one spouse builds the spreadsheets, checks the statements, and rebalances the investments, while the other…does not. Not as often, anyway, and while it’s easy enough to take over laundry or car maintenance, taking over the finances after years of low participation will leave your spouse vulnerable to confusion, fear, and indecision.
You see, it’s all well and good for you to stress-test your finances, but you’re not the one who’s going to experience the stress, are you?
If your spouse passes away before you, you’ll have the experience and knowledge to deal with the financial side of things, even in your grief. But if you die first, your spouse probably won’t have the confidence to flip the autopilot switch on your money.
In those first few months after you die, your spouse will be faced with too many decisions to count, and so many little but necessary tasks that the big job of figuring out what the new financial picture looks like starts to seem overwhelming, especially for someone who hasn’t been in the driver’s seat for a long time.
How to prepare financially for the death of a spouse
Let’s use my husband as an example, and pretend that A) we’re retired and comfortable, and B) he has a longer life-expectancy than I do.
He doesn’t have much to do with the month-to-month and year-to-year minutiae of bill payments, savings plans, and investing, although he’s aware of our general direction at any given moment.
He’s a smart and capable guy, but if 67-year-old me up and died on him, he’d be very tempted to walk into the nearest bank, drop my will and death certificate on the desk, and say “you handle it”.
A partial list of the to-do list he’d face in the first few months goes something like this: notify OAS and CPP of my death and wait to hear how much his monthly income will be reduced by, transfer registered accounts to his own name and integrate the investments with his own, cancel my credit cards, remove my name from our joint bank accounts, pay bills for the first time in forty-two years, navigate probate if it’s necessary, remember where we keep documents we haven’t referred to in decades, change the name on our utilities accounts, decide what to do with the life insurance money…
Related: Assessing your estate plan
While a lot of these small tasks can be made easier with some planning on both our parts, the very last thing I would want for him is pressure to make decisions just like I would in the midst of all that busy-work and grief.
I’d hate to see him in the position that I’ve seen so many grieving spouses: in the desk across from the bank representative two weeks after the funeral, putting it all into the XYV Monthly Income Fund with a MER of 2.63% because he just doesn’t have the mental energy to withstand the sales pitch.
But: I’ll be dead. My opinion won’t matter anymore, and if he doesn’t feel up to taking over “just like I would”, and wants to hand everything over to someone else so he can concentrate on doing whatever it is he wants to do, so be it.
I would want it to be a reasonably informed decision, though, which is why our disaster plan – no matter how comfortable we get – will always include a life insurance policy or jointly held cash reserve to specifically buy time for him to think.
Said plan also includes joint bank accounts, updated password lists, and – hard for this spreadsheet lover to do, but necessary – he rebalances our investments every other time the calendar tells us to.
I don’t believe there’s any way to truly prepare for the death of a partner. What I do believe is that – financially speaking – there are habits you can put into place now, and specific arrangements you can make that will take at least some of the burden from your spouse in those first few months when it seems that everything has changed.
Sandi Martin is an ex-banker who left the dark side to start Spring Personal Finance, a one woman fee only financial planning practice based in Gravenhurst, Ontario. She and her husband have three kids under five, none of whom are learning the words to “Fidelity Fiduciary Bank” quickly enough. She takes her clients seriously, but not much else.