Steps to Consider Now Toward Estate Planning

A guide to financially prepare for life’s events, for women, and securing any spousal beneficiary’s wishes and assets.
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The Census Bureau reports the average age of widowhood in the United States is only 59 years old. With this being the case, many women should be prepared financially to live another 20-30 years after the death of their spouse. Tragically, I have three clients who unexpectedly lost their husbands to a heart attack, inoperable cancer, and suicide. While this is incredibly heart-wrenching on a personal level, fortunately, they had the financial resources to keep paying the bills. Being single in your fifties is hard, but not having enough money is a hundred times worse.

Talk to your partner now, and make a comprehensive plan just in case the worst happens much sooner than expected.

Here are a few things to consider:

Personal and Organized Information

One of the best ways a couple can prepare for a life event is by creating a binder containing all personal and financial information in one place. This organizer should include social security numbers, beneficiary information, passwords, and the contact information of your professional advisors. Write down any information regarding your personal residence or vacation/rental homes.

In addition, you should include funeral and burial information, where to locate any important financial, insurance, estate, tax, and legal documents.

The best way to protect your standard of living is to buy as much term life insurance as possible.

Term Life Insurance

One of the biggest mistakes couples make is not having enough life insurance or underinsuring their spouse. The best way to protect your standard of living is to buy as much term life insurance as possible.

Term is the cheapest form of insurance and the easiest to get. Use the 4% withdrawal rule when deciding how much insurance you will need.

For example, if your spouse makes $100,000 a year, buy at least $2,000,000 worth of term life insurance. This should provide $80,000 a year of income using a 4% total return withdrawal rate. Also, buy a 30-year term policy which is the longest time frame possible; this will lock in the annual premium for the next three decades.

The earlier in life you buy the life insurance policy, the cheaper the premium. It is also easiest to get insurance before any health issues arise, and much better to buy in your 40s than in your 50s or 60s.

Will and Trusts

Everybody should have a will, which is a road map as to who receives your assets and when, upon your passing. If you have a will, it is also a good idea to set up a revocable living trust to avoid probate. The probate process typically takes a long time, is expensive, and makes your will public record. Irrevocable trusts happen after you die, which move your assets out of your estate and provide creditor protection. Trusts are particularly useful if you are in a second or third marriage and have a blended family. You can specify in a trust which assets you wish to leave to your children apart from your current spouse, who may not be their birth parent.

Get to know the team of experts you work with now, to help guide you through what could be one of the most stressful times of your life.

Team of Professional Advisors

If your spouse handles the family’s finances, then you need to get to know his or her team of advisors. These experts would most likely include an investment advisor, life and property insurance agent, personal banker, mortgage broker, and the executor of your will(s). Make an appointment to meet via Zoom or even better, in person. Establish a relationship so there is a rapport of trust and comfort. You will be glad you did so when you need it most.

If your spouse suddenly passes away, you do not get a second chance to buy life insurance or redo your financial picture, so it is best to be prepared well ahead of time. This means you should have all personal and financial information recorded in an easy-to-find location, and enough life insurance to cover living expenses. Write a will and set up a trust. Get to know the team of experts you work with now, to help guide you through what could be one of the most stressful times of your life. The rule of thumb is, to avoid making any major decisions for at least a year to 18 months because of the trauma from the grief associated with losing a spouse.

The less you must worry about by being organized and in the loop now, the better, especially if your partner handled all of your finances in the first place.

 

Thumbnail Fred Taylor HeadshotFred Taylor is a managing director and partner of Beacon Pointe Advisors’ Denver office. He helps individuals and families build wealth, live off their wealth and leave a legacy for future generations. A former economic advisor to Governor Bill Ritter, Fred has more than 35 years of financial services experience.

 

Important Disclosure:
Frederick Taylor is a Partner, Managing Director at Beacon Pointe Advisors, LLC. The information contained in this article is for general informational purposes only. Opinions referenced are as of the publication date and may be modified due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Past performance is not a guarantee of future results. Beacon Pointe has exercised all reasonable professional care in preparing this information. The information has been obtained from sources we believe to be reliable; however, Beacon Pointe has not independently verified or attested to the accuracy or authenticity of the information. The discussions, outlook, and viewpoints featured are not intended to be investment advice and do not consider specific investment objectives or risk tolerance you may have. All investments involve risks, including the loss of principal. Consult your financial professional for guidance specific to your circumstances.
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