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A Financial Roadmap for Surviving Spouses

Christine Benz

Christine Benz: Hi, I'm Christine Benz for Morningstar.

Losing a spouse can be a taxing emotionally as well as financially. Here to share some financial tips for surviving spouses is Stacy Francis. She is president of Francis Financial in New York City.

Stacy, thank you so much for being here.

Stacy Francis: Thank you. I'm excited to be here.

Benz: Stacy, in your practice, you work a lot with widows, and widowers to a lesser extent, and I'm wondering if you can share some tips for people who are in this situation. Obviously, they've got a lot going on emotionally, but they also have some financial matters to attend to. What are the key first steps that surviving spouses should take in the wake of the death of a spouse?

Francis: One of the most important steps is really gathering all the important papers, and those papers might include your will, trust, any deeds, business agreements, tax returns, bank accounts, it could be earning statements, definitely a birth and marriage certificate, your Social Security number, any loans or other important papers that would pertain to your loved ones' life affairs. And with that, making sure that you get death certificates. And you will get typically get death certificates directly from the funeral director. I know in my experience I thought maybe five or six would be sufficient. In the end, you may find similar to myself when a loved one passed away that you may need 15 or even 20 death certificates to make sure that all the accounts get transferred properly and Social Security is notified, all of them require death certificates, too.

Benz: OK. Then in terms of handling the estate, what should surviving spouses know about that to the extent that there were estate planning documents in place?

Francis: Well, it's definitely important to really execute the will, and that is to know what the will says. So, make sure that you get a copy of the will, of course, before the person dies. Hopefully, you've had that conversation so that you know where the will is located and that you can easily access that. And at the same time, work with the lawyer who drafted the will. That is the ideal, is to go back to that lawyer who drafted the will, because they themselves have a relationship with possibly yourself and your loved one and can help you go through this very, very tough time, and to be honest, it can be a very confusing and overwhelming time, too.

Benz: Now, what if there is no will or perhaps the attorney who drafted the will is no longer working. What would you advice in those situations?

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Francis: Well, if the attorney is no longer working and they are retired, it's actually an easy solution, and that is, you ask a family member or a trusted advisor for a trust in the state's attorney that you can work with.

However, if they die without a will, it's a completely different issue altogether. If someone dies without a will, it's also called "dying intestate," and the court will appoint an administrator. And if you are the appointed administrator, then your responsibilities are going to be very similar to those of an executor, and that is making sure that the assets are distributed properly, that all the creditors are paid, and overall balancing the estate.

Benz: Now I want to shift gears a little bit from a estate planning matters, Stacy, to talk about managing the household's assets. Some surviving spouses, I am sure, who you encounter have not spent a lot of time with the household's assets, aren't familiar with the financial picture at all, and so someone in that situation may say, "I need a financial advisor." What are your key pieces of advice for finding that advisor for someone who isn't maybe particularly financial savvy?

Francis: Well, the best thing you can do in trying to find that ideal financial advisor is, again, to ask the people in your network that you trust--maybe other friends or family members--who do you work with, with your finances, and ask some questions about who is their ideal client, how often will they meet with me, what is their philosophy, what do they charge, are they fee-only. These are really important pieces.

I can also give you another great resource, and that is a website www.napfa.org. That is a website for fee-only advisors, and those advisors are not allowed to accept commissions. And that may be important to you if you are concerned about being sold insurance or want to make sure someone that you are working with is truly totally unbiased.

Benz: So, are there any alarm bells that should go off if you are interviewing financial advisors, anything that, if you are a surviving spouse, you should automatically be on high alert that maybe this person isn't going to act in your best interests?

Francis: Well, I will tell you, Christine, there are quite a few alarms that should go off. If you hear things like, "Oh, don't worry, my service is free," that is a big alarm. Every advisor gets paid somehow. And if that advisor doesn't properly explain how they get compensated in a way that you understand, it's not your fault. It's their fault. You want to make sure that things are 100% clear.

Number two, if they tell you that they maybe only meet with you once a year, especially if you are a widow or a widower, you want an advisor that is going to be available to you throughout the thick and thin as you travel this new journey, this very painful journey. You want someone who really is going to be available to you. So make sure that you understand the frequency of communication.

Then finally, this sounds like the most simple thing to do, but it also can be the most effective: It's that gut feeling check. And I think we all know that throughout life, you have gut feelings about "can I really trust this person?" And if that gut feeling is telling you "no," even after you've checked their record with the SEC, you've reviewed their ADV, you've reviewed everything that you should be reviewing, maybe even talking to a few of their current clients, even if your gut after that is telling you, "guess what, this is not the right person for me," don't just walk out of that office, run--because this is a very important relationship for you and a relationship that you need to feel 100% confident and comfortable with.

Benz: So, trust your gut--very important. Last thing I want to cover with you, Stacy, is the pitfalls that you have seen surviving spouses fall into in the wake of the passing of their spouse. What are some common traps to avoid if you're someone who has just lost a loved one?

Francis: Well, there are a couple of common traps, and there are two main ones. The first is, putting your head in the sand, and the second is giving away your power.

Putting your head in the sand is often a reaction that we see when people just are very much overwhelmed by the whole process, and particularly the financial end of it. So that's what they do. And they just don't deal with it. They leave their accounts, invest it as they are--they may be appropriate; they may not. They don't really understand and take the time to really understand and comprehend where they are financially after the loss of their loved one.

The second one is, giving their power away. We often see individuals giving away their power to maybe a child. A child who, they are [employed] in finance, or it could be another sister or an aunt--and allowing them to make all of the decisions going forward. And that's a big mistake, too, because they may make the wrong decision for you. So, playing a part in your finances is very important. And if you are overwhelmed, if you feel concerned and mostly likely afraid, then what you need to do, again, is find that ideal financial advisor, investment manager, who is going to be that sounding board, who is going to be on your team to help you navigate through this in a slow way, in a way that really empowers you and gives you comfort and security and knowledge.

Benz: OK. Well, thank you so much, Stacy, for your counsel for people navigating these very difficult times. We appreciate you being here.

Francis: It was lovely to share, and I just so appreciate being part of this amazing program.

Benz: I'm Christine Benz for Morningstar. Thanks so much for watching.