5 pieces of advice for surviving spouses

More than 1.3 million women and nearly 350,000 men are widowed each year in Canada.

About one in three women over 65 years old live alone and by 80, more than half of women live alone, compared to about 25% of men.

“That means there are many years ahead to be responsible for financial decisions,” said David Chalmers, a financial advisor at Nicola Wealth Management. “The death of a spouse unleashes a deluge of financial tasks for the surviving spouse that can be particularly daunting, even in cases where the survivor has been actively involved in financial matters before becoming a widow.

“It’s especially challenging for widows who aren’t as familiar with investing, insurance policies, taxes or estate planning because their husband handled most of these financial matters.”

To keep on track after losing a spouse, Nicola Wealth Management suggests:

1. Plan for the day a spouse will pass away. Ideally both spouses are involved in planning long before it happens. A qualified financial advisor will be able to review the estate and finalize a plan with you. A plan might include: a detailed life insurance, identifying potential survivor issues, appropriate beneficiary designations, analysis of tax liabilities at death and strategies to maximize tax efficiency.

“We often review our clients’ wills, Powers of Attorney, representation agreements and business agreements to see if there is a gap in the planning and offer helpful suggestions,” said Chalmers. “With business owners, for example, we often point out tax saving strategies.”

2. Don’t make major money decisions right away. When you are in the midst of mourning, it’s difficult to make big decisions. Save them for later when you’ve had a chance to digest the situation and you can make decisions more clearly about your life ahead. In the interim, keep cash available for near-term needs. Some near-term next steps might include: reviewing your cash flow, ensuring bills are paid, claiming government benefits and maintaining enough cash liquidity.

3. Make moving decisions carefully. Although it might be tempting to move in with an adult son or daughter across the country to ease your loneliness, don’t leave your home and community right away. Your major support network, social circles and medical providers are nearby.

4. Don’t be an ATM for others. Widows sometimes fall prey to family, friends and acquaintances that approach them for money after a tragedy when they are more emotionally vulnerable.

“I tell my clients not to succumb to these requests right away and suggest they seek advice from professional advisors,” said Chalmers. “As a financial advisor, I share with them what they can and cannot afford to do. On a few occasions, I have taken on the role of being ‘the bad guy’ who tells a family member to back off and stop.”

5. Once your spouse’s estate has been settled, ensure your finances reflect your new life situation. It is important that your investment portfolio is positioned to reflect your new financial position and your comfort level. This means reviewing your new budget, focusing on cash flow. You’ll also want to re-state the beneficiary designations for your RRSP or RRIF, your TFSA, life insurance policies, entitlements under a group benefit plan. In addition, your will, power of attorney and representation agreement (or advanced directive) may need to be re-drawn. At this point, you can re-think where you want to live. If you live in a house, perhaps you might consider moving to a condo or re-locating near your children and grandchildren.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.