Financial Decisions in the Wake of Widowhood
Financial Decisions in the Wake of Widowhood

Financial Decisions in the Wake of Widowhood

 

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Financial Decisions in the Wake of Widowhood

Why it’s important to slow down, seek counsel, and develop a plan.

When Margaret’s husband passed away, she experienced multiple emotions of grief: devastation, heartbreak, numbness, and even anger. Her grieving process, however, was complicated by the myriad financial decisions she felt pressured to make in the days immediately following his death. Having abdicated financial leadership to her husband, she felt lost as she decided whether she had enough to sustain her current lifestyle. Her financial worry worsened when her son, John, pressured her for a financial gift. While she felt a strong emotional desire to help her son, she didn’t know if she could afford to give gifts.

Margaret is just one of 12 million American women who are widows. Statistically, women outlive men by 15 years; widows have many years after their husband’s death to be responsible for financial decisions.

Unfortunately, 50% of widowed respondents said that becoming a widow created a financial crisis for them. More than 84% also noted the loss of a spouse made them realize how financial awareness is important.

As Wealth Management Services Director at the Trust Company of Illinois, I find it especially rewarding to help widows find financial stability and independence. My first advice to them is this: allow yourself time. In the year following a spouse’s death, it’s important to take time to process and grieve before you make any weighty financial decisions.

The Worst Advice

The worst piece of financial advice a widow can receive is to immediately start making important decisions. Kids might ask for money right away, before a widow even knows her financial position. People might tell her to downsize, invest, get a job, sell the house, or switch advisors. All of these things might be beneficial, but when she’s grieving, it’s too soon to make those big decisions. Grieving affects one’s thought process, and she needs the perspective that time creates.

I usually tell people not to make major financial decisions in the first year following a spouse’s death, unless there is a pressing need, such as immediate debt (hospital stays, funeral costs) or housing/mortgage issues. I’ve seen situations where widows have made hasty decisions and regretted them; many times they don’t even necessarily remember making the decision or understand the reasoning behind it. Their clarity is clouded.

When emotions have an all-consuming grip, it’s easy to hang onto the seemingly rational advice of others.

Navigating New Financial Territory

In addition to overcoming grief, widows often also experience fear. Usually in a marriage, one person is the “keeper of the finances” and the other defers, as he/she manages other aspects of the relationship. If the widow hasn’t managed the finances, she wonders, “Where do I begin?”

The obvious first step is to gather documentation. But many widows don’t even know where the documents are, let alone where the money is invested. Their investments are hanging in an invisible world that they can’t see. One of the great ways we can help widows begin to grasp their financial situation is through a careful examination of their most recent tax return. In that document, all income should be reported. Most individuals who manage the family finances keep a folder of important financial records. It is here that the widow should begin her search.

It’s also ideal to have a trusted advisor in place ahead of time. If not, it’s best to take it slowly. If a widow truly doesn’t know where to begin, friends or relatives will likely have an accountant, attorney or wealth advisor they can recommend. The key is to talk with multiple people.

It’s also important that an individual like and trust the person they are entrusting with their financial future. While you can’t quantitatively measure the trustworthiness of an advisor, I believe that the best advisors are willing to take things as fast or as slow as a widow needs and be willing to educate her along the way. In some instances, I encourage widows to talk with two or three other advisors to confirm the right fit. I equip them with the following questions:

  • “Are you a fiduciary?” (Are you looking out for my best interest?)
  • “How are you compensated for services?”
  • “Do you sell products?”
  • “How will our relationship work?” (meeting frequency, who initiates meeting, etc.)

Asking these questions will offer widows clarity as they seek a partner to order their finances for the next phase of life.

Widows sometimes see themselves as a burden because they don’t feel equipped to handle financial planning. They’re not a burden and my goal is to educate them by talking to them on their level, in clear terms, without condescension. I provide them with the facts they need to make their decision. My approach errs on the side of empathy. I often tell them, “If it were me, here are the questions I would like to know the answers to, and why.”

That said, widows always know more than they think. They often say they don’t even know what to ask, but as the conversation gets going, they begin to ask great questions.

In Time, Tackle Decisions

After a year has passed, widows can feel more comfortable making major life decisions, such as:

  • "How will I fill my time?"
  • "Should I downsize or move?"
  • “Is now the time to give money to my children?”
  • “Would a job benefit me?”

At this point, she should be able to more reasonably answer all of these questions.

Somewhere over the course of the year, the widow may also decide whether or not to involve her children in her financial planning. I always tell my clients that they can decide how much to tell family members based on their relationship. There are ways to bring others into a meeting without talking specifics; you never have to divulge how much money is involved. If children are demanding to know how much money they’ll receive, it’s better to redirect the conversation so we’re discussing the well-being of their mother, instead of money.

In the case of Margaret, we reviewed her entire financial picture, walked through the planning process, and assessed her needs and goals. We had lengthy discussions about her son, John’s, position and motives, and together we determined the best way to share the proper information with him. I facilitated a meeting with Margaret and John—discussing only high-level information with John, which helped him understand the importance of making sure his mother would not run out of money by giving it all away. We slowed the process down, and, in the end, Margaret was able to help John in smaller, creative ways while maintaining a strong mother-son bond.

Tags:  Economic Survival, Financial Decisions, Financial Planning, Financial Security, Life Transition, Single Women, Widow, Women

Note:  The content of this article is for guidance and information purposes only and is not intended to be construed as advice. Information provided is not intended to provide investment, tax, or legal advice.


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