Insights & News

June 2009
Divorce/Widowhood

Widows Need Help with Financial Management


A newly widowed woman—or man—has to deal with many complex estate and financial matters. It can be overwhelming, particularly if the spouse was the primary financial manager and decision maker. There are some aspects of financial management that many struggle with in particular.


• Administer estate and get immediate access to money. Settling
the estate can be anywhere from a six- to eighteen-month process.
Widows usually need help to understand the legal process and
terminology, the complex paperwork involved, and the steps needed to
get accounts and assets re-titled and set up so they’re easy to manage.
Accessing funds during his process can be tricky, depending on how well
the original estate plan was drafted.

• Revise cash-flow projections. The widow may no longer receive
pension payment, but sometimes will receive a survivor pension or death
benefits. Social Security payments may decline. Her new tax status as a
single person may affect her cash flow. Expenses often change.
Sometimes the widow will move to a smaller home. All these items must
be calculated.

• Revisit investments. The widow may have received insurance
money that needs to be invested. She may have new beneficiaries and
different cash-flow needs that may suggest a more conservative or more
aggressive investment approach.

• Revise estate plan—a little or a lot. Depending on how the original
plan was created, a widow may or may not need a substantial revision.
Usually, at least beneficiary designations need to be changed and new
contingent beneficiaries named. New powers of attorney usually are
necessary since there is no longer a spouse. A widow should typically
designate someone else to act on her behalf in case she has an
emergency and can’t manage her own affairs, either temporarily or
permanently.

• Financial education. Often, a recent widow will also need general
financial education if her husband had handled the family’s money.
Competent, honest advice can be hard to find. A financial salesperson
who’s only out to sell a widow mutual funds, annuities or insurance may
seem like your friend but will probably make matters worse. And some
who sincerely want to help are in over their heads. I recommend choosing
a fee-only advisor—one who’s paid by the client, much like a CPA or
lawyer, instead of one who earns commissions by selling products. The
advisor also should have the Certified Financial Planner (CFP®)
designation.


Lyn Dippel, JD, CFP, works with many widows as President and CEO at FAI Wealth Management, a wealth management firm in Columbia, MD, and can be contacted at ldippel@investFAI.com.


IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by FAI Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from FAI Wealth Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. FAI Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of FAI Wealth Management's current written disclosure statement discussing our advisory services and fees is available for review upon request.

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