Two Elephants in the Office

Annuities Mark E. Caner, AEP, ChFC, CLU, CFP®
Elephant in the room with couple

Circuses may be phasing out pachyderms, but financial professionals can’t dismiss the elephant frequently occupying their offices. 

When working with spouses, the immediate need includes helping a couple develop a game plan that anticipates what – beyond the pressing financial, legal and tax considerations – will eventually confront one partner when the other dies. The companion concern comes to the fore when that “someday” arrives. Then the need becomes helping the surviving spouse (almost four times as likely to be the woman1) address practical financial concerns at a time when grief can be emotionally and mentally crippling.

According to the most recent U.S. Census data (2010), only 2.7 percent of men were widowed (approximately 3 million), compared to 9.6 percent of women (approximately 11.4 million).1 Moreover, data from the Social Security Administration shows that, on average, a man reaching age 65 today can expect to live to age 84.3., while a woman turning the same can expect to live to age 86.6.2 Given these realities, a financial professional can expect to more often work with widows than widowers. Regardless, the same considerations apply.

Pragmatic Advance Planning for Couples

Financial professionals who retain surviving spouses as clients are generally those who have worked with both partners as a couple throughout the relationship. Doing so underscores how important it is that the professional actively engage each equally during the planning process. It stands to reason that widows or widowers who feel a financial professional already understand them and their goals will more likely remain a client of that professional after losing their spouse.

Certain standard planning elements, such as insurance, investments, taxes and legal documents, require attention at the death of a spouse. More specifically, what information needs to be easily accessible and exactly what processes should be in place when one partner dies?

Here is information couples may want to consider sharing with one another:

  • Names and contact information for all key financial professionals — insurance agent, accountant, attorney, banking contact, etc. Where will this information be kept? Is there one professional who can help coordinate with the others when a spouse dies?
  • The existence and location of wills, insurance policies and other legal documents, such as powers of attorney, living wills, trusts, etc.
  • The location of real estate documents, including mortgage company statement, titles, deeds, rental or lease agreements, etc.
  • The location of car titles, registrations, loan or lease agreements, and insurance.
  • Benefits department contact information if spouses work or have worked and are entitled to benefits such as a pension, 401(k) plan, stock options, employer-provided life insurance, etc.
  • Proof of military service, if eligible for benefits. 
  • Safe-deposit box. Do both spouses have the box number and a key? There should be a list of its contents — kept somewhere other than in the safe-deposit box itself.
  • Is there a secure online vault for key documents? How is it accessed?
  • Spouses’ Social Security numbers ­ and where original cards are kept.
  • Financial accounts and statements, credit card numbers and contact information, and tax records for the past five years.
  • Original birth certificates, marriage license, divorce decrees, and naturalization papers if applicable (needed when applying for Social Security benefits).
  • Passwords and access information for banking, investment, tax, and other accounts.
  • Funeral arrangements or preferences

While many couples are uncomfortable discussing the inevitable, planning for it can provide a sense of security and relief.

Navigating the Grief Process

Even clients who possess extensive experience with finances may be plagued by distraction and disorientation following a spouse’s death. The survivor may experience a range of emotions, including shock, denial, anger, anxiety, guilt, depression and more. How can the financial professional help? 

Empathetic listening sets the tone for a supportive relationship. Encouraging the survivor to lead the conversations is helpful, as is being open to discussing more than finances. Still, wanting to talk about something and knowing what to say are two different things. A firm recognized for its work in training financial professionals how to support clients in times of grief, loss and transition suggests the following questions and comments:3

  • What kind of a morning has this been for you?
  • I can’t imagine being in your situation.
  • Would you like to tell me what this has been like?
  • What is different for you now compared with the last time we met?
  • What do you wish people knew about your experience right now?
  • Who has been supportive of you, and in what ways?
  • How has this been easier and how has it been harder than you anticipated?
  • I know that when people ask how you are, they usually don’t really want to know. I want to assure you that I do care and will always listen to the truth, even when it’s hard.
Grieving is not a linear process — it ebbs and flows. Financial professionals need to realize this and to work with the bereaved accordingly. In addition, there are financial issues the surviving spouse must address. Providing options as well as a time frame can be helpful. For instance, “I can’t imagine what you are going through now. I would be happy to talk to you and help you when you are ready. When would you want me to call you?” Create a specific time for future contact.

Understand the Demands of a Changed Dynamic

Financial professionals can play a central role in guiding a client through what is often a two-year process of finalizing the past and embarking on the future. In the short term, consider an assessment of the immediate financial situation, particularly cash flow. 

Ask what is coming in, going out and what will change (such as a reduction in Social Security benefit or pension income). Find out what insurance options are available through work or with your personal policies. Help determine whether some assets will need to be liquidated or if new ones need to be invested. Helping the client manage cash flow — and hopefully maintain a desired lifestyle — can help create a solid foundation that supports both the grieving and the future planning processes. 

Encourage the surviving spouse to consult an attorney in regard to developing an estate-planning timeline for actions such as probate closing, estate tax filing, and funding of bypass trusts. Other immediate issues may include applying for Social Security, veterans or employer benefits. Verifying health insurance benefits may also be a priority. 

Help the widower or widow change the spouse’s accounts and their joint accounts to his or her own name. Likewise, update beneficiary designations as needed. Depending on the number of accounts and other assets, this could necessitate a dozen or more death certificates. It is better to have too many than too few. And extras should be kept. Something as seemingly mundane as the transfer of a dog license registration, for example, may require proof that the surviving spouse now has sole ownership of the couple’s pet.  

Moving through the process, it is also important to help a surviving spouse avoid common mistakes. Examples may include rushing into decisions with long-term ramifications, becoming a “checkbook” for children and relatives, trusting a salesperson or others who may be motivated solely by their own self-interest. Offering to give professional perspectives and options can help provide advice in a positive way. 

As your now-single client works through the initial phase and begins to look ahead, the financial professional can help develop a plan of tasks and target dates that are broken into manageable segments. This may include re-evaluating and reallocating an investment portfolio in terms of new realities and future goals, reassessing insurance needs, examining potential tax changes, and encouraging consultation with an attorney to review the estate plan and other documents. 

It is important to empower your client — for example, with active listening and responsive service — as he or she begins constructing a vision, financial and otherwise, for the future. 
IMPORTANT DISCLOSURES

1 Calculated from U.S. Census Bureau Statistical Abstract of the United States 2012, “Table 56. Marital Status of the Population by Sex, Race, and Hispanic Origin: 1990 to 2010.”

2 “Calculators: Life Expectancy,” accessed October 18, 2018.

3 Journal of Financial Planning, “3 Communications Skills for Working with Grieving Clients,” Mar. 2, 2017.

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